Indonesia's Mentari Group Ready To Expand Its Palm Oil Business Inline With Steady Global CPO Price

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(Jakarta)  In the last few years, the palm oil plantation industry has indeed faced serious challenges as the world price of CPO (crude palm oil) which was less conducive and also the impact of the Covid-19 pandemic. 

However now Mentari Group management sees that the palm oil business is slowly getting better, at least as reflected in the more conducive CPO price in early 2021, triggered by a number of domestic factors as well as a boost in CPO prices in the global market. 

In the domestic market, for example, the government is intensively pushing to increase biodiesel consumption, which is believed to have an impact on improving domestic demand for palm oil products. 

"We at the Mentari Group are very optimistic, the prospects for the palm oil business in 2021 and 2022 will be even brighter. We will expand by expanding the planting area, opening new palm oil mills and developing the logistics business as a supporting sector," said Harry Poetranto, President Director of the Palm Oil Division of the Mentari Group. . 

Mentari Group is a new player who is growing rapidly in the palm  oil plantation business. This group just started working on the palm oil business in 2014 by establishing the first FFB processing factory in Selensen, Riau. Since then, the Mentari Group has continued to acquire plantations and have made improvements to their productivity.

Currently, the Mentari Group manages palm oil plantations in Riau, Jambi and Central Kalimantan with planted areas of no less than 26.8 thousand hectares. In addition, it also operates three medium-sized palm oil mill (PKS) units, each with a capacity of 60 tons of FFB / hour. 

In 2021, the Mentari Group is targeting to produce 144 thousand tons of CPO. "There is still a lot of room for business development that can be done this year. For example, there is one of our plantations which is too far away from the processing plant. We plan to build a new factory there to make it more efficient, and at the same time seek additional supply (sourcing) of palm fruit from the surrounding oil palm farmers, "said Harry Poetranto.

Initially, Mentari Group engaged in commodity trading such as sugar, molasses and several agricultural products, but later expanded into the upstream palm oil business. Mentari Group also manages transportation and logistics businesses to support the trading and oil palm plantation business, through its two other subsidiaries. 

"We will increase the synergy between business units to strengthen the value chain, and will soon collaborate with investor partners who have the same vision to strengthen growth," Harry explained.

The last two years have been challenging for the Mentari Group, partly due to the fact that the commodity price of palm oil was not yet conducive at that time. Not surprisingly, at that time there was a subsidiary of the Mentari Group, namely PT Mentari Agung Jaya Usaha, which experienced difficulties in making installment payments to several of its creditors which resulted in a dispute in court. 

Luckily the partners were then willing to reconcile and agree to end the dispute in court (homologation), as stated in the decision of the Central Jakarta Commercial Court which was ratified on March 31, 2020. Thus the legal issue has been resolved.

In the future, Mentari Group management believes that the prospect of the palm oil business will be more positive along with the increase in domestic biodiesel consumption as a positive impact of the B30 program that is being promoted by the government. Apart from the domestic aspect, demand on the global market is also likely to improve, which will increase the export volume and the national price of palm oil.

The trend of improving world CPO prices is actually in line with the improvement in other vegetable oil prices on the global market. The World Food and Agriculture Organization (FAO) reported the edible oil price index in February, for example, was at an average of 147.4 points. The index rose 8.6 points (or 6.2%) from January and marks the highest level since April 2012. 

Meanwhile, the Indonesian Palm Oil Association (GAPKI) predicts that CPO production in Indonesia in 2021 will increase at least 3.5% (yoy). to 49 million tons from last year's realization of only 47.4 million tons. (Editor)


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