Differences in Organization Structure and the Supply Chain of Private with State-Owned Palm Oil Mills in North Sumatra, Indonesia

Abstract

Indonesia is the world’s largest palm oil producer. The Central Statistics Agency (BPS) noted that Indonesia will produce 45.58 million tons of palm oil in 2022. This number has increased by 1.02% compared to the previous year, which reached 45.12 million tons. The palm oil industry comprises on-farms producing fresh fruit bunches (FFB) and processing industries. The processing industry can be divided into two main divisions: factories that crush FFB into crude palm oil (CPO) and factories that process CPO into various refined palm oil products. There are three actors in Indonesia’s palm oil processing business: the private sector, the government (BUMN), and small farmers. This study aims to find organizational and supply chain differences between state-owned palm oil mill companies (BUMN) and private palm oil mills. Data were obtained from documents, publications, agency research reports, or other supporting sources. This study uses a qualitative descriptive analysis method. The results showed differences in production capacity, organizational structure, and supply chain between state-owned and private palm oil mills. However, the two palm oil mills same produce CPO and palm kernels.