Economic Value of Fresh Fruit Bunch from Oil Palm Plantation as Feedstock for Bioenergy in Indonesia

Abstract

Oil palm plantation is a very potential source of feedstock for biodiesel production in Indonesia. Its productivity is high in terms of biomass, such as fresh fruit bunch (FFB), trunk and frond. FFB can be processed into crude palm oil (CPO) and further into biodiesel. Currently, most CPO productions are exported even though a domestic demand for biodiesel is increased. The problem might be due to a low added value of biodiesel production from CPO/FFB. The objectives of this study were to estimate the potential production of biomass from oil palm plantation and calculate the economic value of FFB as feedstock for biodiesel. Data were obtained from observation and survey at one of large stated-owned oil palm plantation companies in Indonesia. The results showed that potential production of biomass were 42.10 tons/ha/year based on photosynthetical approach. Further, based on conversion return approach, economic value of FFB when processed into CPO was found about USD 121.82 per ton FFB and this value would decrease to USD 95.20 per ton FFB is processed into biodiesel. This indicates that the CPO production is economically more favorable than biodiesel production. If the price of CPO decreases by more than 15%, implying at least 13% decrease in biodiesel production cost; the expansion of FFB use as bioenergy would be expected as the economic value of FFB derived from biodiesel production would be higher than that obtained from CPO production.