InfoSAWIT, MUSI BANYUASIN – Cooperatives are being encouraged to take a larger role in Indonesia’s downstream palm oil industry. The move was marked by the inauguration of the KUD Sejahtera Palm Oil Mill in Musi Banyuasin Regency, South Sumatra, which is being positioned as a model for cooperative-based palm oil downstream development.
Minister of Cooperatives Ferry Juliantono inaugurated the mill on Wednesday (August 12). The processing facility is expected not only to strengthen the cooperative’s business capacity but also to increase the value captured by smallholder oil palm farmers.
Ferry said the KUD Sejahtera Palm Oil Mill demonstrates that cooperatives can move beyond their traditional role as raw material suppliers and become active players in plantation processing.
“Alhamdulillah, today I had the opportunity to see firsthand the palm oil or CPO mill owned by KUD Sejahtera. This palm oil mill will serve as an example that we can replicate in other regions,” Ferry said in an official statement received by InfoSAWIT on Wednesday (August 12, 2026).
According to Ferry, the expansion of cooperative-owned processing facilities could create greater opportunities for oil palm farmers to capture additional value from their crops.
So far, many oil palm farmers who are members of cooperatives have remained concentrated in the upstream segment, selling fresh fruit bunches (FFB) to processing companies. Cooperative ownership of palm oil mills could change that position by giving farmers greater access to the industrial value chain.
Ferry also opened the possibility of developing cooperative businesses further downstream into refining. With more cooperatives owning CPO mills, the production of cooking oil and other palm oil derivatives could gradually be developed.
“If more cooperatives own mills, there is no reason why we could not eventually develop refineries and produce our own cooking oil, which could then be sold to the KDKMP,” he said.
Cooperatives and Agrinas Palma
The prospects for cooperative-based palm oil downstream development are also expected to expand through potential cooperation with PT Agrinas Palma Nusantara (Persero). The company has been mandated to manage oil palm areas resulting from forest-area enforcement conducted by the Forest Area Enforcement Task Force (Satgas PKH).
Some of these areas could subsequently be managed through partnerships with cooperatives. Cooperation among Agrinas Palma, cooperatives and smallholder plantations is expected to strengthen productivity while securing raw material supplies for downstream industries.
Ferry said the government would continue expanding cooperative-based downstream development, with more cooperatives expected to enter palm oil processing.
“In time, we will also move into processing downstream products. There are around 20 to 40 cooperatives that will establish palm oil processing plants,” he said.
KUD Sejahtera Expands Mill Capacity
Head of the Presidential Staff Office (KSP), retired General TNI Dudung Abdurachman, welcomed the inauguration. He said the cooperative-owned CPO mill demonstrated the potential for cooperatives to become a stronger pillar of the people’s economy.
Dudung said cooperatives have a strategic role in driving economic activity at the regional level. Stronger cooperatives at the village level, he added, could improve communities’ access to economic services and essential goods.
“Congratulations to KUD Sejahtera. This must be managed properly, and the benefits must be felt by the community, especially farmers. There must be a real impact, with members becoming more prosperous and the cooperative making tangible progress,” he said.
South Sumatra Governor Herman Deru also described the inauguration as an important moment for the development of the cooperative movement in the province. He said the processing facility showed that cooperatives could grow and compete with other business entities, including private companies and state-owned enterprises.
Meanwhile, KUD Sejahtera Chairman Tamrin said the mill’s processing capacity has increased to 45 tons of FFB per hour, up from 30 tons previously.
The mill’s raw materials are supplied by oil palm farmers and cooperative members. The purchase price of FFB is also determined in advance, providing farmers with greater certainty regarding the selling price of their harvest.
The development of KUD Sejahtera illustrates a broader shift in the cooperative model, from simply collecting and supplying FFB toward processing and capturing greater value within the palm oil supply chain. (T2)
