Monday, August 8, 2011

Essential oil business development in Indonesia

Essential oil business development in Indonesia needs to consider many complex factors, ranging from actors, technical and management of cultivation, processing technology, to the marketing. Intensification programs of essential oil plant need to consider absorption of markets, and prefer the commodity area grouping programs as well as intensification to improve its productivity and quality of raw materials, so it does not pose a risk of loss for farmers. Its plant farming is developed in the appropriate area, using top quality of plant material, and applying a good way of cultivation (good agricultural practices) to improve productivity and quality.
In the downstream, the essential oil industry should be developed that relies on the availability of raw materials and chemicals. Plant engineering and processing as well as R & D is undertaken by the Indonesian people themselves, so they do not only export raw materials but also high value processed commodities.
Volatile oil price fluctuations and levels, among others, are determined by supply and demand. So the government and exporters are expected to play an active role in providing guidance and counseling to farmers and distillers to anticipate market conditions and needs of the world. Attitude of openness of all businesses in terms of information components and cost structure of farming, refining, trading, and export and the level of prices in export markets can improve the harmonization of relationships between business actors.
Its value-added commodities can be improved because the technology to produce derivative commodities or conversion of its natural commodities into high value-added products has been available. The results of research and development need to be disseminated to the business. It required the support and joint efforts between government and business to the intensive dissemination of technology progresses, including the utilization of human resources at universities and research / development institutions.
Formulation and implementation of standardized processes (Good Agricultural Practices & Good Manufacturing Practices), standard equipment, quality standards applicable and needed in world trade, and prices associated with the quality standards should be promoted. It required the support of all stakeholders in order to realize and implement the various standards.
Increased profits can be pursued through the use of high quality raw materials, processing with appropriate technology, as well as increased efficiency of processing and marketing. The more intensive facilitation and coaching from the government / universities / research institutes and exporters needed to disseminate the appropriate technology to farmers and refiners.
Governments need to socialize the conditions and regulations on essential oil businesses development, both nationally and internationally. Improved access to capital for farmers and refiners, as well as institutional strengthening / farmers' associations and refiners in the region should continue to be pursued.
In every essential oil production centers, forum for communication of all relevant actors and agencies should be held periodically to seek solutions to problems faced and develop several action strategies for essential oil business development. The existence of “essential sites” to maintain the networking and communication among stakeholders at central and local governments can also support the efforts.
In order to integrate and harmonize the national essential oil community activities, all the stakeholders have agreed to form the Indonesia Council of Essential Oils. This council serves as a vehicle to: (1) to unite, protect and defend the interests of all stakeholders in the face of globalization, (2) improve the competitiveness and the "glory" of the commodities in the international world, and (3) enhance cooperation in the development of its value-added products.
Referring to the Estates Act No.18/2004 of Indonesia, the government is obliged to facilitate the establishment of commodity boards, so that the Council should be formed immediately. The establishment of the board of commodities is carried by the stakeholders. The small team which is a special task force representing various departments from government can be formed. This team can be a strategic partner in managing the Council and improve the performance and competitiveness of essential oil commodities, so that Indonesia become the world's major producer of volatile oil. Furthermore, the essential oil business development in Indonesia requires a strong commitment from the players to execute all the strategies and rules that have been agreed.

Reference: Molide Rizal and Muhamad Djazuli, 2006. Strategi Pengembangan Minyak Atsiri di Indonesia. Warta Penelitian dan Pengembangan Pertanian Vol. 28, No. 5, 2006)

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