towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-berau-east-kalimantan-full-publication-9645133a7eccb18e.pdf

This report by the Climate Policy Initiative (CPI) analyzes the palm oil supply chain in the Berau district of East Kalimantan, Indonesia. It examines the potential for increasing production through yield improvement rather than land expansion to support regional sustainability goals. The study identifies significant inefficiencies facing smallholders, including lack of land tenure and financing, while noting that large plantation companies operate more efficiently. It also highlights the absence of local refineries, which results in most crude palm oil (CPO) being exported from the region raw.

• Berau can meet its palm oil production targets and fulfill the total processing capacity of its mills without further land expansion by focusing on productivity improvements. The district's mills have a combined processing capacity of 2.8 million tons of Fresh Fruit Bunches (FFB) per year, but were operating at only 44% capacity as of 2016.
• Under a 'sustainable production scenario' focusing on better agricultural practices, Berau could produce over 2.8 million tons of FFB per year by 2021 at just 90% optimum productivity. This exceeds the potential of a 'business-as-usual' scenario based on land expansion.
• The palm oil industry in Berau is dominated by large companies, which operated 74% of the total planted area and produced 88% of FFB in 2016. Most of these are consolidated into four holding companies: Indofood, Triputra, Kuala Lumpur Kepong, and Teladan Prima.
• Independent smallholders face severe operational barriers that lead to supply chain inefficiencies. Some smallholders in villages such as Biatan Bapinang, Biatan Lempake, and Dumaring supply FFB to mills 40-70 km away despite having a mill within 8-20 km, because they cannot meet specific mill standards or lack agreements.
• Lack of formal land ownership certificates (SHM) and a lack of active cooperatives hinder smallholders' access to finance. Only 28% of independent smallholders surveyed own a land ownership certificate, and 46% are not part of any cooperative.
• Financial constraints prevent smallholders from accessing quality inputs, such as certified seedlings and fertilizers, which leads to lower FFB quality and price discounts of up to 20%.
• Berau lacks crude palm oil (CPO) refineries, meaning the product leaves the region raw and without added value. CPO is sent to refineries in other parts of Indonesia (such as Balikpapan, South Kalimantan, North Sulawesi, and East Java) and to Sabah, Malaysia.
• Company-run plantations are generally more efficient because they are often integrated with mills owned by the same holding group and located in close proximity to the plantations.
• The government of East Kalimantan has committed to preserving 640,000 hectares of natural forests and 50,000 hectares of peatland until 2030, and has implemented a moratorium on new plantation licenses.

APA

Climate Policy Initiative (n.d.). towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-berau-east-kalimantan-full-publication-9645133a7eccb18e.pdf. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/07/Towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-Berau-East-Kalimantan-Full-publication.pdf

Chicago

Climate Policy Initiative. towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-berau-east-kalimantan-full-publication-9645133a7eccb18e.pdf. n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/07/Towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-Berau-East-Kalimantan-Full-publication.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-berau-east-kalimantan-full-publication-9645133a7eccb18e.pdf |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2018/07/Towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-Berau-East-Kalimantan-Full-publication.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiativendtowardsamoresustainableandefficientpalmoilsupplychaininberaueastkalimantanfullpublication9645133a7eccb18epdf, author = {{Climate Policy Initiative}}, title = {{towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-berau-east-kalimantan-full-publication-9645133a7eccb18e.pdf}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/07/Towards-a-more-sustainable-and-efficient-palm-oil-supply-chain-in-Berau-East-Kalimantan-Full-publication.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }