Indonesia's CPO Exchange and ISCC: Unlocking New Opportunities for Producers and Exporters
Muhammad Imam Taufik • Dec 09, 2023
Indonesia is the world's top producer and exporter of crude palm oil (CPO), a versatile and widely used vegetable oil that has various applications in food, cosmetics, and biofuel. Indonesia's CPO export is a vital sector for the country's economy, as it contributes to the foreign exchange earnings, employment, and rural development. However, Indonesia's CPO export also faces some challenges, such as fluctuating prices, environmental issues, trade barriers, and competition from other vegetable oils. In order to overcome these challenges and enhance its competitiveness and sustainability in the global market, Indonesia has recently launched its own CPO futures exchange, and also encourages its CPO producers and exporters to adopt ISCC certification, a globally recognized and respected scheme that demonstrates the sustainability, traceability, and compliance of CPO production and supply chain. In this article, we will analyze how Indonesia's CPO exchange and ISCC certification can create new opportunities for CPO producers and exporters.
The Trends of Indonesia's CPO Export
The data shows that Indonesia's CPO export volume and value have experienced some fluctuations in the past six years. The export volume reached its highest level in 2019, with 29.5 million tons, while the export value reached its highest level in 2021, with 28.6 billion USD. The export volume and value in 2021 increased by 13.4% and 55.1%, respectively, compared to 2020, mainly due to the high demand for CPO from China, India, and the European Union, as well as the recovery of the global economy from the COVID-19 pandemic. The average export price of CPO in 2021 was also the highest in the past six years, at 1,059 USD per ton, reflecting the tight supply and strong demand in the global market.
The data also shows that Indonesia's CPO export volume and value are projected to decline slightly in 2023, with 19.6 million tons and 17.3 billion USD, respectively. This is a moderate drop of 25.3% and 39.4%, respectively, compared to 2022. The main reasons for this decline are the lower production of CPO in Indonesia due to the natural cycle of oil palm trees, the need for replanting, the labor shortage, and the impact of the La Nina weather phenomenon. Moreover, the demand for CPO from the main importing countries, such as China, India, and the European Union, is also projected to decrease due to the preference for other vegetable oils, the adoption of stricter environmental standards, and the emergence of new trade barriers. The average export price of CPO in 2023 is projected to be 885 USD per ton, which is still higher than the average price in 2018, 2019, and 2020, reflecting the resilience and adaptability of the CPO market.
The data also shows that Indonesia's CPO export destination countries have changed over time, with some countries increasing their imports and some countries decreasing their imports. The top four destination countries for Indonesia's CPO export in the period of January to September 2023 were India, China, Pakistan, and the United States, with export volumes of 3,957 tons, 3,100 tons, 2,022 tons, and 1,164 tons, respectively, and export values of 3,342 million USD, 2,677 million USD, 1,773 million USD, and 1,022 million USD, respectively. These four countries accounted for about 47% of the total export volume and 49% of the total export value of Indonesia's CPO in the same period.
The Benefits of Indonesia's CPO Exchange for CPO Producers and Exporters
Indonesia has officially launched its own CPO futures exchange on October 13, 2023, with the aim of establishing a fair, transparent, and clear benchmark price for CPO that reflects the supply and demand conditions in the domestic and international markets. The CPO exchange is operated by the Indonesia Commodity and Derivatives Exchange (ICDX), which is supervised by the Futures Exchange Supervisory Board (Bappebti). The CPO exchange is designed to place buyers and sellers on an equal footing, allowing for effective price negotiations. Ultimately, it will lead to the establishment of a reference price for CPO that can be used by the CPO industry players and stakeholders, such as producers, exporters, importers, traders, consumers, investors, regulators, and civil society.
The CPO exchange can bring various benefits for Indonesia's CPO producers and exporters, such as:
- Increasing price transparency and stability: The CPO exchange can increase the price transparency and stability of CPO, as it provides a platform for the CPO industry players to discover and monitor the market prices of CPO in real time, based on the actual transactions and contracts. The CPO exchange can also reduce the price volatility and uncertainty of CPO, as it allows the CPO industry players to hedge and manage their price risks, by using the futures contracts and options contracts that are available on the exchange. The CPO exchange can also reduce the price manipulation and distortion of CPO, as it involves an independent and credible third-party verification and settlement system, as well as a strict and transparent regulation and supervision system.
- Improving market access and competitiveness: The CPO exchange can improve the market access and competitiveness of Indonesia's CPO producers and exporters, as it enables them to reach and connect with more potential buyers and sellers, both domestically and internationally, through the exchange platform. The CPO exchange can also enhance the market value and attractiveness of Indonesia's CPO, as it provides a reliable and reputable reference price for CPO that can be used by the CPO industry players and stakeholders, as well as by the media and the public. The CPO exchange can also increase the market efficiency and convenience of Indonesia's CPO, as it offers a standardized and simplified trading mechanism and procedure for CPO, as well as a fast and secure payment and delivery system for CPO.
- Supporting industry development and innovation: The CPO exchange can support the industry development and innovation of Indonesia's CPO, as it creates a conducive and competitive market environment for CPO, that encourages the CPO industry players to improve their quality and productivity, as well as to diversify their products and services. The CPO exchange can also foster the industry collaboration and cooperation of Indonesia's CPO, as it facilitates the communication and interaction among the CPO industry players and stakeholders, as well as the exchange of information and knowledge among them. The CPO exchange can also stimulate the industry research and education of Indonesia's CPO, as it generates and disseminates valuable market data and analysis for CPO, as well as provides training and capacity building for CPO.
The Benefits of ISCC Certification for CPO Producers and Exporters
ISCC certification is a way to demonstrate that your CPO production and supply chain are sustainable, traceable, and compliant with the relevant regulations and standards. ISCC certification is recognized by the European Commission as fulfilling the sustainability criteria of the Renewable Energy Directive (RED) and the Fuel Quality Directive (FQD), which require biofuels and bioliquids to meet the requirements of greenhouse gas emission reduction, biodiversity protection, and social and labor rights. ISCC certification is also respected by the global market as a credible and reputable scheme that involves an independent third-party audit and verification. ISCC certification is provided by QSI, a certification body that offers ISCC certification services in a timely and cost-effective manner.
ISCC certification can bring various benefits for Indonesia's CPO producers and exporters, such as:
- Accessing the European market: The European market is one of the most important and lucrative markets for Indonesia's CPO export, as it accounted for about 15% of the total export volume and 18% of the total export value in 2021. However, the European market is also one of the most challenging and demanding markets, as it requires biofuels and bioliquids to meet the sustainability criteria of the Renewable Energy Directive (RED) and the Fuel Quality Directive (FQD). These criteria include the reduction of greenhouse gas emissions, the protection of biodiversity, and the respect of social and labor rights. ISCC certification is one of the schemes that are recognized by the European Commission as fulfilling these criteria, and therefore, it can help Indonesia's CPO exporters to access the European market and avoid the risk of being excluded or penalized.
- Reducing greenhouse gas emissions and improving environmental performance: The CPO industry in Indonesia has been making efforts to reduce its negative impacts on the environment, such as deforestation, biodiversity loss, greenhouse gas emissions, and land conflicts. These efforts have been recognized and appreciated by some consumers, NGOs, and governments, especially in the European Union, which is planning to phase out the use of CPO for biofuel by 2030. To support these efforts, Indonesia needs to improve its environmental governance and certification system, as well as to promote the production and consumption of sustainable palm oil, both domestically and internationally. ISCC certification can support Indonesia to achieve this goal, as it requires the measurement and reduction of GHG emissions along the supply chain, as well as the compliance with the principles of good agricultural practices, environmental protection, and social responsibility.
- Enhancing reputation and credibility: The CPO industry in Indonesia has been improving its reputation and credibility in the global market, as it has been addressing the allegations and accusations of being unsustainable and unethical.
If you want to learn more about how ISCC certifications can help your business, please give us a call or visit our website!
Recent posts
Plastic pollution is not just an eyesore – it's a ticking time bomb for our marine ecosystems. Ocean-bound plastic (OBP) poses a particularly severe threat. The key to tackling this lies in understanding two distinct categories of OBP: commercially recyclable and non-commercially recyclable. Knowing this difference will guide our strategies to mitigate the harm caused by OBP before it's too late. Commercially Recyclable OBP: A Path to New Products Commercially recyclable OBP can be sold into existing recycling systems. The key factor is that the price obtained for the recycled material is enough to cover the costs of collecting the OBP in the first place. This economic viability depends heavily on local conditions. The local availability of recycling technology, transportation distances, the density of OBP at a collection site, and the presence of buyers (off-takers) all play a role in whether OBP can be successfully integrated into the recycling value chain. Non-Commercially Recyclable OBP: The Challenge Non-commercially recyclable OBP presents a more difficult problem. This type of OBP cannot be sold to recyclers for several potential reasons: Economics : The sale price may be far less than the cost of collection, making it financially unsustainable. Technical limitations : Current recycling technology may not be suitable for certain types of OBP. Contamination : The OBP may be too heavily degraded or mixed with other materials, making recycling difficult or impossible. Material Composition : Certain plastics are inherently non-recyclable based on their chemical structure. These types of OBP are sometimes referred to as "no value," "negative value," or "low value" materials, as their cleanup and disposal create a cost burden rather than an income source. It's essential to remember that what makes OBP commercially recyclable or not is highly dependent on the local situation. A specific type of plastic might be recyclable in a region with advanced infrastructure and robust recycling markets, yet remain non-commercially recyclable in an area with limited resources and less demand for recycled materials. Addressing the OBP crisis requires a two-pronged approach. For commercially recyclable OBP, expanding collection and recycling infrastructure is crucial. This will turn more waste into a resource, creating value within a circular economy. For non-commercially recyclable OBP, solutions are more complex. We need investment in new recycling technologies, research into alternative disposal methods, and policies focused on preventing this type of plastic from entering the environment in the first place. Understanding the difference between commercially and non-commercially recyclable OBP is a critical step in tackling ocean plastic pollution. It helps guide our efforts toward the most effective solutions in combating this persistent environmental problem. Learn about the OBP Certification Program and how it can benefit your business – visit our website or get in touch with us!
Kartini Day, celebrated annually on April 21st in Indonesia, honors Raden Adjeng Kartini, a pioneer of women's rights and education in the early 20th century. Her unwavering belief in the potential of women to shape society continues to inspire progress towards gender equality. As we reflect on Kartini's legacy, it's vital to recognize the ways women are leading the way in modern advancements – including the field of sustainability certification. Breaking Down Barriers Auditor role in sustainability certification is a critical position that examines an organization's impact on economic, social, and environmental factors – the three pillars of sustainability. Auditors assess how businesses manage resources, their effect on environment and communities, ethical supply chain practices, and adherence to sustainable standards. However, women remain underrepresented. QSI actively works to dismantle this barrier by providing women with the same opportunities and resources as their male counterparts. Leading the Charge in Gender Equality At QSI, we recognize that the path to a sustainable future is paved through equality. We firmly believe that women and men should have the same opportunities to shape a responsible and ethical world, which is why we are actively fostering a workplace where female sustainability auditors thrive. We actively promote a culture that empowers women auditors in several ways: Fair Hiring Practices QSI actively works to dismantle this barrier by implementing blind recruiting practices. This means resumes are reviewed without identifying information like gender, ensuring the selection process focuses solely on qualifications and experience. This approach allows talented women to be judged on their merits, increasing their chances of securing exciting opportunities as an Auditor. Equal Opportunity We ensure women have equal access to challenging assignments and leadership positions. Performance and qualifications are the sole criteria for advancement. Fostering Collaboration We cultivate an inclusive environment where women feel comfortable voicing their ideas and contributing to critical decision-making processes. Flexible Arrangements Support women in balancing work and family responsibilities by offering flexible work options and family-friendly policies. Benefits of a Gender-Balanced Workforce A workforce that reflects the diversity of the world brings a multitude of benefits. Here's how a gender-balanced team of Auditors strengthens QSI: Enhanced Decision-Making Diverse perspectives lead to richer discussions and a more comprehensive understanding of complex issues. Improved Client Service A diverse team of auditors can better relate to a wider range of clients, fostering stronger partnerships and a deeper understanding of their unique challenges and needs. Innovation and Creativity When diverse minds collaborate, innovation thrives. A gender-balanced team can spark new ideas and approaches, leading to a more dynamic and effective organization. Empowering women auditors is not just a matter of fairness; it's a strategic imperative for driving positive change in the sustainability landscape. By harnessing the talents and perspectives of women, we can strengthen the integrity and effectiveness of sustainability certification processes, ultimately contributing to a more resilient and equitable world for generations to come. Let us continue to champion equality, diversity, and inclusion, not just on Kartini's Day, but every day, as we work towards a brighter and more sustainable future for all!
The image of a majestic whale entangled in plastic debris, or a sea turtle mistaking a plastic bag for a jellyfish, is a stark reminder of the growing crisis of ocean plastic pollution. Millions of tons of plastic waste enter our oceans each year, causing devastating consequences for marine ecosystems and ultimately, for ourselves. The fight against this plastic tide requires a multi-pronged approach, and at the very forefront stands a diverse group of individuals and organizations: the Ocean Bound Plastic (OBP) collectors. These dedicated entities play a critical role in intercepting plastic waste before it reaches our precious oceans, but their roles and responsibilities are as varied as the landscapes they operate in. By understanding this intricate network of collectors, we gain a deeper appreciation for the complex yet crucial efforts underway to protect our oceans. Collection Organization Lead the charge in OBP collection, responsible for organizing the systematic retrieval of OBP. These entities, whether companies or other organizations, stick to strict standards outlined in the OBP Collection Organization Standard (OBP-COL-STD). Small Collector While Collection Organizations handle large-scale collection, there's another important group: Small Collectors. These legal entities collect OBP and sell it to certified organizations under the OBP Collection Organization Standard (OBP-COL-STD) or the OBP Neutralization Services Provider Standard (OBP-NEU-STD). Independent Collector On a smaller scale are Independent Collectors, typically individuals or very small groups operating independently. Despite their modest size, Independent Collectors play a crucial role by collecting and selling smaller quantities of OBP, typically below 200 kilograms per day on a monthly average. Supplier Group These are a collaborative effort specifically designed for Small Collectors, which linked contractually to a certified organization, allow smaller entities to pool their resources and expertise. This collaborative approach makes OBP collection more accessible and efficient for smaller organizations, while ensuring adherence to OBP standards. Central to the effectiveness of these collection mechanisms are the standards set forth by the OBP Certification Program. By adhering to guidelines outlined in documents such as the OBP Collection Organization Standard (OBP-COL-STD), collectors ensure that their activities are not only effective but also environmentally responsible. These standards provide a framework for accountability, transparency, and continuous improvement within its ecosystem. If you're interested in learning more about how your organization can get involved in the OBP Certification Program, please visit our website or give us a call . See you, Qualizer !
The International Sustainability and Carbon Certification (ISCC) is a leading force in ensuring the environmentally, socially, and economically responsible production of the feedstock markets. This commitment translates into a set of stringent certification requirements that promote sustainability throughout the entire supply chain. At its core, ISCC aims to foster the sustainable production of biomass and its derived products. A fundamental aspect of this commitment is the prohibition of converting lands with high biodiversity value or carbon stock for biomass production. This prohibition not only safeguards ecosystems but also promotes responsible land management practices. Moreover, ISCC mandates minimum greenhouse gas (GHG) savings, surpassing mere compliance with European legislation. By setting higher benchmarks, ISCC encourages continual improvement and awareness in emission reduction efforts. Diving deeper into ISCC's framework, there are two primary categories of feedstocks: Bio and Bio-Circular materials. Bio At the heart of ISCC’s mission is the preservation of biodiversity and carbon-rich ecosystems. The certification strictly prohibits converting land of high ecological value into biomass production areas, thereby ensuring that the feedstocks market does not contribute to deforestation. This approach not only aligns with European legislation but also fosters global awareness and encourages ongoing efforts to reduce emissions. The Bio feedstock encompasses virgin biomass, the biodegradable portion of products from agriculture, forestry, fisheries, and aquaculture. ISCC's sustainability principles for farms and plantations, encompassing legal requirements and additional environmental, social, and economic considerations, guide responsible production practices. ISCC’s sustainability framework for farms and plantations is encapsulated in six principles. The first principle aligns with the Renewable Energy Directive II (RED II), setting the legal groundwork. The subsequent principles elevate the standard by addressing broader environmental, social, and economic aspects. Adherence to these principles is not just compliance; it’s a commitment to a world free from deforestation, enriched biodiversity, and robust ecosystems. Bio-Circular The Bio-Circular feedstock focuses on waste and residues from agriculture, forestry, and even household waste. Bio-circular is a prime example of the Circular Economy in action. Instead of being landfilled or burned, these waste materials are diverted and given a new life. This reduces reliance on finite resources, lowers greenhouse gas emissions, and lessens the pressure on agricultural land. The significance of utilizing waste and residues cannot be overstated. Apart from reducing environmental footprint and reliance on finite resources, these materials alleviate pressure on agricultural land, preventing competition with food or feed crops. Encouragingly, many European Union Member States incentivize the use of biofuels derived from wastes and residues under the Renewable Energy Directive (RED II), aligning with ISCC's mission. Central to ISCC's certification process is the rigorous management of waste and residues throughout the supply chain. Origin points, such as restaurants generating used cooking oil, must ensure that waste is unavoidable and not deliberately created. Additionally, farms and plantations producing agricultural residues must adhere to ISCC sustainability principles, implementing waste management plans and adopting best practices to minimize landfilling and on-site burning. By promoting sustainable feedstock production and responsible waste management practices, ISCC certification paves the way for a greener future. Its commitment to reducing deforestation, minimizing GHG emissions, and fostering a circular economy positions ISCC as a leader in the drive towards a more sustainable and environmentally conscious world. Stay tuned as we are going to discuss the other categories of feedstock markets: circular and renewable! In the meantime, please visit our website or give us a call if you want to know more about the bio and bio-circular of the ISCC certification!
Drop us a line
Contact Us
Share
Plastic pollution is not just an eyesore – it's a ticking time bomb for our marine ecosystems. Ocean-bound plastic (OBP) poses a particularly severe threat. The key to tackling this lies in understanding two distinct categories of OBP: commercially recyclable and non-commercially recyclable. Knowing this difference will guide our strategies to mitigate the harm caused by OBP before it's too late. Commercially Recyclable OBP: A Path to New Products Commercially recyclable OBP can be sold into existing recycling systems. The key factor is that the price obtained for the recycled material is enough to cover the costs of collecting the OBP in the first place. This economic viability depends heavily on local conditions. The local availability of recycling technology, transportation distances, the density of OBP at a collection site, and the presence of buyers (off-takers) all play a role in whether OBP can be successfully integrated into the recycling value chain. Non-Commercially Recyclable OBP: The Challenge Non-commercially recyclable OBP presents a more difficult problem. This type of OBP cannot be sold to recyclers for several potential reasons: Economics : The sale price may be far less than the cost of collection, making it financially unsustainable. Technical limitations : Current recycling technology may not be suitable for certain types of OBP. Contamination : The OBP may be too heavily degraded or mixed with other materials, making recycling difficult or impossible. Material Composition : Certain plastics are inherently non-recyclable based on their chemical structure. These types of OBP are sometimes referred to as "no value," "negative value," or "low value" materials, as their cleanup and disposal create a cost burden rather than an income source. It's essential to remember that what makes OBP commercially recyclable or not is highly dependent on the local situation. A specific type of plastic might be recyclable in a region with advanced infrastructure and robust recycling markets, yet remain non-commercially recyclable in an area with limited resources and less demand for recycled materials. Addressing the OBP crisis requires a two-pronged approach. For commercially recyclable OBP, expanding collection and recycling infrastructure is crucial. This will turn more waste into a resource, creating value within a circular economy. For non-commercially recyclable OBP, solutions are more complex. We need investment in new recycling technologies, research into alternative disposal methods, and policies focused on preventing this type of plastic from entering the environment in the first place. Understanding the difference between commercially and non-commercially recyclable OBP is a critical step in tackling ocean plastic pollution. It helps guide our efforts toward the most effective solutions in combating this persistent environmental problem. Learn about the OBP Certification Program and how it can benefit your business – visit our website or get in touch with us!
Kartini Day, celebrated annually on April 21st in Indonesia, honors Raden Adjeng Kartini, a pioneer of women's rights and education in the early 20th century. Her unwavering belief in the potential of women to shape society continues to inspire progress towards gender equality. As we reflect on Kartini's legacy, it's vital to recognize the ways women are leading the way in modern advancements – including the field of sustainability certification. Breaking Down Barriers Auditor role in sustainability certification is a critical position that examines an organization's impact on economic, social, and environmental factors – the three pillars of sustainability. Auditors assess how businesses manage resources, their effect on environment and communities, ethical supply chain practices, and adherence to sustainable standards. However, women remain underrepresented. QSI actively works to dismantle this barrier by providing women with the same opportunities and resources as their male counterparts. Leading the Charge in Gender Equality At QSI, we recognize that the path to a sustainable future is paved through equality. We firmly believe that women and men should have the same opportunities to shape a responsible and ethical world, which is why we are actively fostering a workplace where female sustainability auditors thrive. We actively promote a culture that empowers women auditors in several ways: Fair Hiring Practices QSI actively works to dismantle this barrier by implementing blind recruiting practices. This means resumes are reviewed without identifying information like gender, ensuring the selection process focuses solely on qualifications and experience. This approach allows talented women to be judged on their merits, increasing their chances of securing exciting opportunities as an Auditor. Equal Opportunity We ensure women have equal access to challenging assignments and leadership positions. Performance and qualifications are the sole criteria for advancement. Fostering Collaboration We cultivate an inclusive environment where women feel comfortable voicing their ideas and contributing to critical decision-making processes. Flexible Arrangements Support women in balancing work and family responsibilities by offering flexible work options and family-friendly policies. Benefits of a Gender-Balanced Workforce A workforce that reflects the diversity of the world brings a multitude of benefits. Here's how a gender-balanced team of Auditors strengthens QSI: Enhanced Decision-Making Diverse perspectives lead to richer discussions and a more comprehensive understanding of complex issues. Improved Client Service A diverse team of auditors can better relate to a wider range of clients, fostering stronger partnerships and a deeper understanding of their unique challenges and needs. Innovation and Creativity When diverse minds collaborate, innovation thrives. A gender-balanced team can spark new ideas and approaches, leading to a more dynamic and effective organization. Empowering women auditors is not just a matter of fairness; it's a strategic imperative for driving positive change in the sustainability landscape. By harnessing the talents and perspectives of women, we can strengthen the integrity and effectiveness of sustainability certification processes, ultimately contributing to a more resilient and equitable world for generations to come. Let us continue to champion equality, diversity, and inclusion, not just on Kartini's Day, but every day, as we work towards a brighter and more sustainable future for all!
The image of a majestic whale entangled in plastic debris, or a sea turtle mistaking a plastic bag for a jellyfish, is a stark reminder of the growing crisis of ocean plastic pollution. Millions of tons of plastic waste enter our oceans each year, causing devastating consequences for marine ecosystems and ultimately, for ourselves. The fight against this plastic tide requires a multi-pronged approach, and at the very forefront stands a diverse group of individuals and organizations: the Ocean Bound Plastic (OBP) collectors. These dedicated entities play a critical role in intercepting plastic waste before it reaches our precious oceans, but their roles and responsibilities are as varied as the landscapes they operate in. By understanding this intricate network of collectors, we gain a deeper appreciation for the complex yet crucial efforts underway to protect our oceans. Collection Organization Lead the charge in OBP collection, responsible for organizing the systematic retrieval of OBP. These entities, whether companies or other organizations, stick to strict standards outlined in the OBP Collection Organization Standard (OBP-COL-STD). Small Collector While Collection Organizations handle large-scale collection, there's another important group: Small Collectors. These legal entities collect OBP and sell it to certified organizations under the OBP Collection Organization Standard (OBP-COL-STD) or the OBP Neutralization Services Provider Standard (OBP-NEU-STD). Independent Collector On a smaller scale are Independent Collectors, typically individuals or very small groups operating independently. Despite their modest size, Independent Collectors play a crucial role by collecting and selling smaller quantities of OBP, typically below 200 kilograms per day on a monthly average. Supplier Group These are a collaborative effort specifically designed for Small Collectors, which linked contractually to a certified organization, allow smaller entities to pool their resources and expertise. This collaborative approach makes OBP collection more accessible and efficient for smaller organizations, while ensuring adherence to OBP standards. Central to the effectiveness of these collection mechanisms are the standards set forth by the OBP Certification Program. By adhering to guidelines outlined in documents such as the OBP Collection Organization Standard (OBP-COL-STD), collectors ensure that their activities are not only effective but also environmentally responsible. These standards provide a framework for accountability, transparency, and continuous improvement within its ecosystem. If you're interested in learning more about how your organization can get involved in the OBP Certification Program, please visit our website or give us a call . See you, Qualizer !