(Actually) the color of palm oil is reddish yellow, however, the standard (color) of processed palm oil (in Indonesia) is white—as influenced by European standards.
Jakarta (ANTARA) - Cooperatives and Small and Medium Enterprises (SMEs) Minister Teten Masduki has said that his ministry will build three red palm oil factories on a pilot basis in Central Kalimantan, Riau, and Jambi provinces.

For this purpose, the ministry will establish a joint task force with the Indonesian Sustainable Oil Palm Farmers Forum (Forstabi) and the Revolving Fund Management Institution for Micro, Small, and Medium Enterprises (LPDB-KUMKM).

"One of President Joko Widodo's directives is to build a red palm oil factory to meet the domestic demand," the minister said after holding a meeting with Forstabi at the ministry’s headquarters in Jakarta on Tuesday.

Currently, 42 percent of the 16 million hectares of area under oil palm in Indonesia is managed by several independent smallholders, who account for 35 percent of the total domestic production of crude palm oil (CPO).

In addition to improving domestic CPO supply, the establishment of the red palm oil factories is aimed at increasing the price of fresh fruit bunches (FFB), Masduki informed.

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The factories will only process red palm oil since the production cost of the oil is lower and it is considered healthier than other kinds of palm oil, he said.

The development of the palm oil facilities is also aimed at creating a new palm oil production standard -- not to change the current palm oil production standard of large industries, he added.

“(Actually) the color of palm oil is reddish yellow, however, the standard (color) of processed palm oil (in Indonesia) is white—as influenced by European standards,” he noted.

Further, Malaysia has started to manufacture red palm oil and export it to China to fulfill its demand as a Vitamin A source, he said.

One of the officials of Forstabi, Rukaiyah Rafik, said that the attempt to build pilot red palm oil factories is a relief for independent smallholders in Indonesia.

So far, smallholders have faced instability in FFB prices and a drastic decrease in FFB sales, especially when the exports of CPO were halted since they were very dependent on demand from large industries, she added.

"It is expected that they will no longer only produce FFB, but they can also sell processed palm oil,” she said.
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Translator: Baqir Alatas, Uyu Liman
Editor: Suharto
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