In 2018, 40% of total domestic beef consumption in Indonesia was met by imports. That percentage could be significantly reduced if beef cattle were integrated into even a small portion of Indonesia’s estimated 14 million hectares of oil palm plantations.
For these reasons, the Partnership and BPPT combined their resources to host the inaugural Integrated Cattle and Oil Palm Production (ICOP) Conference in Jakarta in late October 2019.
The conference was the first forum between Indonesia and Australia that specifically discussed the integration of cattle and oil palm production (otherwise known as SISKA), including the commercial opportunities, the day-to-day operational issues, and the inherent challenges of the business model.
ICOP 2019 was attended by over 240 participants and involved more than 20 speakers and research reviewers, including international players from Malaysia, Australia and Papua New Guinea.
“We held this event in collaboration with IACCB together with fellow researchers, academics, industry and government to share research findings and address the challenges of the SISKA model,” said Dr Soni Solistia Wirawan, Deputy Chairman of Agroindustry and Biotechnology for BPPT.
The main challenge in increasing Indonesia’s cattle population is low investment in cattle breeding, which is still considered to be a business with high entry and operating costs and low profitability.
However, there was significant evidence presented at ICOP 2019 to refute misconceptions about the commercial viability of well-managed SISKA enterprises.
Support for SISKA is Stacking Up
At ICOP 2019, delegates were particularly interested in presentations from Sawit Kinabalu Farm in Sabah, Malaysia as well as New Britain Palm Oil in Papua New Guinea. Both plantations have a long and successful history of integrating cattle with oil palms.
Sawit Kinabalu Farm provided evidence dating back to 2002 of increased oil palm yields and compatible cattle rearing on their estate.
New Britain Palm Oil demonstrated how reducing oil palm density to 50% (a half stand system) led to improved pasture growth that maximised beef production, while still consistently achieving fresh fruit bunch yields equal to 68% of full stands. Profitability from the SISKA program was over $6,500 per hectare—39% more than for the full stand oil palm system with no cattle.
BPPT also presented data from its five-year research project on smallholder farms that are using the SISKA model in Riau province. Results showed that well-organised farmer groups are capable of improving productivity using agricultural by-products.
To supplement this research, BBPT outlined its initial findings on the impact of cattle on disease spread, soil quality and fresh fruit production. Importantly, it reported that cattle grazing had no significant impact on the spread of the Ganoderma fungus, which can cause devastating basal stem disease in oil palms. The soil quality and fruit production studies were inconclusive at the time of ICOP 2019, with results expected in early 2020.
Rounding out the case for the SISKA model, Mr Paul Boon from the Indonesia-Australia Commercial Cattle Breeding (IACCB) Program presented the results of research conducted over three years in larger oil palm plantations across South Kalimantan, Central Kalimantan, Bengkulu and Lampung.
Key results of this research included an internal rate of return on cattle investment of between 10% and 16%, positive cash flow beginning in the fourth year, and a payback period of eight to nine years (for further details, see the article on page 8).
These results generated considerable interest from oil palm company representatives, government officials, the Indonesian Oil Palm Association (GAPKI) and the Indonesian Beef Cattle Business Association (GAPUSPINDO).
“In my opinion, results from studies like this should be replicated to other regions,” said Joni Liano, Executive Director of GAPUSPINDO.
Sri Widayanti, Feed Director at the Directorate General of Livestock and Animal Health in the Ministry of Agriculture, reiterated Joni’s confidence.
“I am optimistic that, if we are serious, the integration of cattle and oil palms will accelerate the productivity of both the cattle and the oil palms,” she said.
ICOP 2019 also explored integration challenges, cattle feeding systems, reproductive performance, animal health and financial analyses of the SISKA model. While challenges remain, the overall message was that integrating cattle into oil palm plantations held great commercial potential.
This potential was highlighted by Mr Wisnu Wijaya Soedibjo, Co-Chair of the Partnership and Deputy Chairman for Investment Cooperation of the Indonesia Investment Coordinating Board.
“Cattle breeding on oil palm plantations can provide additional income streams, reduce production costs, and increase productivity for plantation owners,” Mr Soedibjo concluded.
For more information on the 2019 ICOP Conference, visit www.icopconference.org
Kickstarting the Digital Transformation
At ICOP 2019, the Partnership’s IACCB Program launched a suite of three investor tools to help enterprises plan, manage and monitor their cattle breeding businesses more effectively. These digital tools are designed to assist all industry participants, from smallholder farmers to cattle and financial companies.
CALFIN helps institutional investors and cattle breeding businesses make informed investment decisions. The Microsoft Excel-based spreadsheet determines production over a 10-year period to generate a series of reports including cash flow, net present value, internal rate of return, return on investment, and payback period. It will be an invaluable tool for enterprises in the cattle sector as well as banks, financial institutions, and government agencies.
CALPROS is a Microsoft Excel-based spreadsheet tool for new or small-scale breeding enterprises. It allows these enterprises to monitor operational activities and the productivity of cattle and their offspring.
CALPROF is a livestock management software system for larger cattle breeding businesses. It supports day-to-day operations in cattle breeding, fattening and feed processing. The software has integrated features that manage productivity (e.g., pregnancy tests, weighing, calving) linked to financial data (e.g., feed costs, cashflow), and operational data (e.g., shipments, procurement, feed intake and nutrition, concentrate formulation and production, animal health, cattle movements).
For more information, or to download the investor tools, go to iaccbp.org/investor-tools