Palm oil miniplant innovation for food and energy

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International Conference on Biomass and Bioenergy 2021 (ICBB 2021) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1034 (2022) 012061 doi:10.1088/1755-1315/1034/1/012061
Technology innovation and business model of palm oil

miniplant for food and energy
Dwi Setyaningsih1,2, Farah Fahma1,2, Purwoko1, Aria Tri Wahyudi1, Ilham

Bintang Mahendra1
1
Department of Agroindustrial Technology, Faculty of Agricultural Technology, IPB
University, Dramaga Campus, Post Box 122, Bogor, Indonesia 16680
2
Surfactant and Bioenergy Research Center (SBRC), IPB University, Bogor, Indonesia
Email: dwisetyaningsih@apps.ipb.ac.id
Abstract. Palm oil is Indonesia's main export commodity and has many contributions to the
economy. Palm Oil Mill is built by private or state-owned company with the minimum capacity
of 30 tph and far from smallholder plantations. Transportation costs and delays have caused the
quality of fresh fruit bunch decrease and prices have dropped in the farmer level. This study
aimed to design a palm oil mini plant by evaluating existing technology, innovating process, and
equipment design, also analyzing financial aspect. The methods used in this research were
literature study, laboratory test, interview, and observation. The selected process technology was
sterilization using steam (t = 90 minutes, T = 130°C, P = 300 kPa), threshing with rotating speed
of 21 rpm, heating method in the digester (t = 14 minutes, T = 90°C, v = 23 rpm), extraction of
oil palm fruit with a screw press machine (P = 4500 kPa, v = 11 rpm). The process of refining
Crude Palm Oil (CPO) gone through 3 stages, namely degumming with water degumming,
neutralization using deacidification, and fractionation using the dry method to produce Refined
Palm Oil (RPO). Technological innovations were carried out in vertical sterilizers with the
addition of water to the sterilizer when loading the fruits, the use of augers and improvements to
the sterilization system. The value propositions of palm oil miniplant business model are the ease
of bureaucracy, flexibility of small-scale industry, high quality (FFA<5%), and competitive
prices. The supply chain flow starts from independent smallholder plantations to oil palm
miniplants without going through collectors. The products are CPO, RPO which high
antioxidants activity because of tocopherols and carotenoids content, and Palm Kernel (PK). The
financial feasibility analysis of palm oil mini plant resulted in an NPV of IDR 15,068,339,048,
IRR of 28%, BCR of 11,7 and PBP of 2,8 years. This study showed that the palm oil mill mini
plant is financially feasible to build.
Keywords: mini plant, innovative, mill, Crude Palm Oil, Refined Palm Oil
1. Introduction
Crude Palm Oil (CPO) is the major export commodity and has many benefits for the Indonesian
economy. CPO is a vegetable oil that can be used for food and non-food products. CPO can also be used
as an alternative fuel in the form of pure vegetable oil, green diesel, or biodiesel. One of the products
from the purification of CPO is Red Palm Oil (RPO) which can be used as a functional food because of
its high carotenoid content [1, 2].
Content from this work may be used under the terms of the Creative Commons Attribution 3.0 licence. Any further distribution
of this work must maintain attribution to the author(s) and the title of the work, journal citation and DOI.
Published under licence by IOP Publishing Ltd 1
Independent oil palm farmers depend on Palm Oil Mills (POM) to process the Fresh Fruit Bunches
(FFB) they have produced. POM is generally built away from plantations so that the transportation cost
and risk during delivery of FFB from farmers to POM will be charged to farmers and reduce their income
[3]. Independent oil palm plantations owned by local farmers are mostly controlled by trader so that they
do not receive appropriate benefits. In addition, not all FFB sent by farmers will be accepted by POM
because each POM has certain FFB quality standards so that the FFB received will be sorted and
separated from rejected fruit. In addition, most of the POM set the price of FFB slightly lower, so that
the price obtained by farmers is unfair [1].
The above problems can be overcome by constructing an oil palm miniplant or small-scale factory
around the plantation. Oil palm miniplants can be established by preparing many aspects, including the
need for an analysis to assess the level of demand so that the miniplant is feasible to operate. In general,
this study aimed to develop technological innovations in the process of extracting palm oil from
independent farmer’s FFB as raw materials in a feasible small-scale miniplant and to develop a business
model for utilizing palm oil (CPO) to increase economic value. While the specific objectives of this
study were to evaluate the existing palm oil production process, develop process technology innovations
in the production of effective and efficient palm oil for miniplant scale, design a factory for CPO and
RPO processing units, conduct a financial feasibility study of CPO, RPO and PK at miniplant scale and
determine the business model and supply chain of CPO derivative products for food and energy on a
sustainable and integrated miniplant scale.
2. Methods
2.1. Data Collection Methods

2.1.1. Laboratory Research
The research started with the experiments in laboratory to obtain data of the physical characteristic of
FFB harvested from IPB’s teaching farm and the CPO extraction process. This research was conducted
at the Agroindustrial Technology Research Laboratory, Faculty of Agricultural Technology, Seafast
Center and Surfactant and Bioenergy Research Center (SBRC) IPB University in March 2021. The tools
used were analytical balances, ovens, knives, basins, tools glasses and pans. The materials used in this
study were FFB, CPO samples, neutral isopropanol, KOH 0.1, PP indicator. The characterization of FFB
consisted of physical appearance, maturity, weight, volume, and moisture content, then the analysis for
CPO was fatty acid content.
2.1.2. Observation, Interview and Literature Study

Researchers conducted observations at the IPB's oil palm teaching farm in Jonggol, and Cikabayan, also
Palm Oil Mill owned by PTPN VIII Cikasungka, Bogor, West Java. The results obtained from these
observations were data and information on cultivation technology and processes applied. Interviews
were conducted using two methods, i.e., spontaneous interviews and through a series of structured
questions. Literature study was conducted by reviewing publications like reports, journals and other
written materials.
2.2. Data Analysis

Financial feasibility of CPO miniplant assessed using the investment criteria considered the time value
of money or the effect of time on the value of money, and the discount factor was used to calculate the
amount of money in the present if the amount of money in the future was known [4]. In this analysis,
the investment criteria used were Net Present Value (NPV), internal rate return (IRR), net benefit and
cost ratio (Net B/C Ratio), Payback Period.
2
3. Results and Discussion
3.1. Evaluation of Miniplant Technology

3.1.1. Selection of Fruit Fraction
Harvesting is the initial stage to start oil palm processing. The implementation of the proper harvest at
maturity standards in accordance with the needs of oil palm production has a good impact on the desired
output. Oil palm harvest time is determined based on the maturity level of the fruit which is commonly
called the fraction. Fractions 2 and 3 were chosen as harvest fractions due to the high oil/yield content
and low free fatty acid content. The selection of fractions 2 and 3 was also based on the FFB
transportation time, queue and delay time before processing at the factory.
3.1.2. Energy Sources

Based on the various energy sources in the POM, for this miniplant scale, steam energy and the
electricity from state owned company (PLN) were chosen. The use of these two energy sources is more
effective and economical for miniplant scale. The steam energy system is utilized at the sterilization
station. Utilization of steam energy with oil palm empty fruit bunches and shells can reduce solid waste
generated during the processing of FFB into CPO. As for the use of electricity, PLN was more
economically effective for miniplant scale production, and it was easier and more practical to use. This
electricity sourced from PLN was used to drive machines at all stations except for sterilization.
3.2. CPO Production in Miniplant

CPO processing starts from FFB reception to CPO storage. The process flow diagram and mass balance
of each step can be seen in Figure 1.
3.2.1. Reception and Storage

FFB receipts started from the queue of trucks transporting FFB in and out of the mill through the
weighbridge to determine the gross weight (gross), empty weight (tarra), and net weight (net) of palm
FFB. The specifications of the weighbridge that are used for this oil palm miniplant are 2m x 3m x 12m,
type 1801 N with the capacity of 40 tons, and an automatic digital weighing system. Next, sorting was
done by random sampling. The loading ramp for this minplant consisted of 2 doors, each with a capacity
of 6 tons/door. This door was connected to the scapper conveyor which will carry the FFB to the
sterilizer. The top of the loading ramp was made of steel plate with a slope of 25°. This is useful to make
it easier for FFB to fall into the scrapper conveyor when the loading ramp door is opened. The
specifications for the loading ramp to be used for oil palm miniplants were 210 cm x 110 cm x 3 cm
with a distance between the bulkheads of 45 cm. The scraper conveyor to be used by the palm miniplant
has a length of 8 m x a width of 1 m with a speed of 20 m/min.
3.2.2. Sterilization (boiling)

The sterilization system used in this palm miniplant was a vertical sterilizer. After the third peak ended
with opening the exhaust valve and condensate valve to remove steam and condensate for 6 minutes, it
was followed by opening the bottom door and removing the boiled FFB.
3
Figure 1. Process flow and mass balance of CPO production in miniplant
3.2.3. Threshing
This oil palm miniplant had 2 thresher machines. Threser drum was a cylindrical separator with a length
of 250 cm and a drum diameter of 116 cm, and an axle diameter of 10 cm. To obtain maximum shelling
on the drum thresher, the rotation must be calculated between 21 rpm.
4
3.2.4. Digesting
The function of the digester is to pulverize and release the fruit flesh from the seeds by pressing the
loose fruit using a rotating stirring knife consisting of 6 blades in the form of 3 blade levels and one
blade level below for the thrower. In operation, the temperature was maintained at 90 °C for 14 minutes
with a rotation of 23 rpm. Oil palm miniplant digester capacity was 1 ton. There were 2 units in use and
a standby unit. The digester capacity was maintained at 75% of the installed capacity, and this aimed to
facilitate pulverization. The power source used to rotate the crusher blades was an electric motor with a
power of 6.3 HP.
3.2.5. Extraction
The press machine for palm oil extraction on palm miniplants was a screw press. This oil palm miniplant
had 2 screw press units. The pressing process occurred with the help of hydraulic power from the power
pack, pressing was using a pressure of 50-60 bar [5] and the screw rotation speed was 10 rpm which
was driven by an electromotor with a power of 2.8 kW, with the highest pressure at beginning. In
addition to providing steam, this tool also sprayed hot water at the oil outlet before entering the oil gutter
by 25% to maintain the temperature at 90-95 °C. The oil that came out of the pressing was fed to the oil
gutter before it entered the vibrating screen. Meanwhile, the fiber and nuts will come out and be carried
by the cake breaker conveyor to enter the kernel station. The screw press used in this miniplant was 2
units with a capacity of 0.532 tons/hour, 1.3 m long and 0.35 wide with a thread diameter of 0.025 m, a
thread length of 0.44 m and a screw rotation of 10 rpm and an electromotor power of 2.8 kWh.
3.2.6. Clarification (purification)

The equipment used in the CPO purification process were vibrating screen, vertical clarifier tank, and
vacuum dryer. This oil palm miniplant had 1 unit of vibrating screen with a capacity of 2 tons. The
vibration generated by the vibrating filter came from an electromotor with a power of 1.85 kW. The
specifications of the vibrating screen used were a flow rate (F) of 759.096 kg/hour with a layer size of
30 mesh and a length of 1 m x 0.5 m. The Vertical Clarifier Tank (VCT) on the oil palm miniplant was
planned to have a diameter of about 1.12 m, and a height of 3.36 m. Through calculations, a thickness
of about 0.166 ft or about 5 cm was obtained. The vacuum dryer on the oil palm miniplant was designed
to have a height of 3.71 m. Volume was 2.9832 m 3 and equipment thickness was 0.165 ft.
3.2.7. Storage
Storage tank is a storage used to store CPO. In addition to being a storage area, storage tanks also
function to maintain the purity of CPO because it protects CPO from contaminants in the form of dirt
and other substances. The storage tank capacity used in this miniplant had a height of 14.92 ft (4.54 m)
and a tank diameter of 9,425 ft (2.87 m), and a tank thickness of 0.238 ft (7.25 cm). Meanwhile, the size
of the agitator on the storage tank was planned with a ratio of 5:7 with the tank. The agitator used a strip
plate with 4 stirring blades with a rotation of 60 rpm which operated for 24 hours/day. The length of the
agitator used was 10.62 ft (3.24 m).
3.2.8. Nut and Fiber Separation

Nut and Fiber Separator is equipment used to separate the nuts or seeds of oil palm with fiber or palm
fiber. This separation machine has parts, i.e., the driving motor, frame, hopper, pulleys, and shaft.
3.3. Innovation of Miniplant Technology

The sterilization process is one of the most important process units because it has a significant effect on
the oil contained in the FFB which determines the success of the next process even in the refining process
to produce high quality palm oil [6]. The indicators used to determine whether the sterilization process
is successful are the amount of oil lost in condensates water and empty fruit bunches (EFB) and fruit
that cannot be separated from empty bunches or unstripped bunch (USB). This will affect the yield of
the resulting CPO. In Indonesia, the types of sterilizers used in POM are horizontal and vertical
5
sterilizers. Both types of sterilizers have their advantages and disadvantages. Small-scale palm oil mills
will be more efficient if they use a vertical sterilizer for the FFB sterilization process. However, the
vertical sterilizer has the disadvantage of higher oil loss than the horizontal sterilizer.
An innovation that can be used to reduce oil loss is the addition of water to the sterilizer before
carried out the sterilization process. The addition of water aims to protect the fall of FFB that enters the
bottom of the sterilizer so as to reduce oil loss due to impact, replace air in the sterilizer so that the
conventional drying process is not needed, help deactivate lipolytic enzymes and stop enzymatic
hydrolysis and oil degradation so that it can control free fatty acid levels in the oil, help in the cleaning
of bunches and fruit from dirt and sand particles trapped in the bunches.
In this process, the water that is put into the sterilizer is 1/3 of the volume of the sterilizer. Water
will flow through a pipe with a flow rate of 1 m/s, water discharge 0.01 m3/s for 80 seconds. After the
sterilizer is filled with water, then the FFB is loaded. Before the sterilization process occurs, this water
is then removed through a pipe that is installed under the sterilizer. Water, oil condensate, dirt, and sand
particles are stored in separate tanks and then settle. The precipitated oil and water will be reused for the
sterilization and pressing process [7].
The use of labor to remove FFB from the sterilizer increases the time of the sterilization process.
Processing time can be reduced by using an auger conveyor to remove FFB. Auger is an important part
in the process of unloading FFB in the sterilizer which functions to push FFB from the sterilizer to the
scrapper conveyor. Auger can experience damage caused by the impact of FFB that enters the sterilizer,
so it needs to be handled using a type of cover so that the falling FFB is directly go to the edge of the
sterilizer.
3.4. Miniplant Factory and Machinery Layout

The oil palm miniplant production process has several activities. The relationship between activities is
depicted in the Activity Relationship Chart. These activities include 1. Reception Station (SP), 2.
Sterilization Station (SS), 3. Threshing Station (ST), 4. Extraction Station (SE), 5. Purification Station
(SPM), 6. Kernel Station (SK), 7. RPO Station (SR), 8. Storage Station (SPS).
1. Reception Station
2. Sterilization
Station
3. Threshing Station
4. Extraction Station
5. Purification Station
6. Kernel Station
7. RPO Station
8. Storage Station
Figure 2. Activity Relationship Chart (ARC)
6
Information: Reason:
A Absolute important 1 Process and material flow
E Very important 2 Nearby area
I Important 3 Communication flow
O Usual closeness 4 Interrupting the process
U No need
X Not expected
Based on the Activity Relationship Chart, the degree of relationship between activities was obtained
by using the Total Closeness Rating (TCR) calculation. The calculation above is presented in Table 1.
Table 1. TCR calculation based on Activity Relationship Chart

Degree of Closeness
Activity SP SS ST SE SPM SK SR SPS A E I O U X Total
34 33 32 31 30 0
SP - A I O U O O O 1 0 1 4 1 0 103
SS A - A E O O U U 2 1 0 2 2 0 197
ST I A - A U O O O 2 0 1 3 1 0 181
SE O E A - A A I I 3 1 2 1 0 0 291
SPM U O U A - U E A 2 1 0 1 3 0 195
SK O O O A O - U E 1 1 0 4 1 0 121
SR O U O I E U - A 1 1 1 2 2 0 125
SPS O U O I A E A - 2 1 1 2 1 0 205
SE>SPS>SS>SPM>ST>SR>SK>SP
Based on the results of the TCR, the highest closeness was obtained at the extraction station (SE) of
291, so that the extraction station was placed earlier than the other stations and was endeavored in the
middle of the production process.
Figure 3. Industrial layout plan
The total available production process area was 153 m 2. The area of each space required by each
station is presented in Table 2.
7
Table 2. CPO industry layout plan

No. Spaces/Activities Length x Width Area (m2) Color
(m)
1. Reception Station (SP) 5x3 15
2. Sterilization Station (SS) 5 x 2.5 12.5
3. Threshing Station (ST) 5x3 15
4. Extraction Station (SE) 3.5 x 3 10.5
5. Purification Station (SPM) 6x3 18
6. Kernel Station (SK) 3.5 x 2.5 8.75
7. RPO Station (SR) 3.5 x 4 14
8. Storage Station (SPS) 3.5 x 45 11.25
1 grid = 0,5 m2
Figure 4. Miniplant factory lay out
8
Figure 5. Miniplant machinery layout
3.5. Analysis of Business Model and Supply Chain

Bussiness model canvass analysis of oil palm miniplants was resulted that miniplant designed as a
small-scale factory which will produce Crude Palm Oil (CPO), Palm Kernel (PK) and Red Palm Oil
(RPO). There were four groups/organizations involved that were categorized as customers, FFB
suppliers, CPO buyers, RPO buyers and Palm Kernel (PK) buyers. Oil palm miniplants offer advantages
to buyers of CPO, RPO and PK, namely good product quality, ease of bureaucracy, competitive prices,
and flexibility of minimum purchase quantity. According to Kuspandi (interview), many small
companies need CPO, RPO and PK products in small quantities.
In the oil palm miniplant supply chain system, the first activity carried out is harvesting in the
plantation. After the FFB is collected in one place, it will be continued with the transportation process
to the oil palm miniplant. Transportation is a very important factor to consider because in this stage free
fatty acid levels in the fruit can be increased which have an impact on the quality and yield of palm oil
products. The most basic difference between oil palm mills and oil palm miniplants is that FFB is
delivered directly to the oil palm miniplant without going through trader or collectors. FFB that have
arrived at the oil palm miniplant will immediately be processed into CPO, PK, and RPO products.
Industrial consumers will become consumers of CPO and PK, while RPO will be marketed to the
marketplace because the products have been packaged for retail.
3.6. Miniplant Products and Wastes

3.6.1. Crude Palm Oil
CPO is vegetable oil derived from oil palm plants, reddish orange in color obtained from the
compression process (extraction) of palm fruit flesh [8]. The main components of palm oil are
triglycerides [9], and several components are also found such as carotenoids, tocopherols, tocotrienols,
sterols, triteRPenic alcohols, phospholipids, glycolipids, teRPenic hydrocarbons, and aliphatic in palm
oil [10]. The content of carotene and tocopherol in palm oil will affect the stability and nutrition of the
oil [11]. As raw material for industry, CPO must have good quality and be adapted to the desired product
characteristics. If it is processed into food products, the quality of CPO needed will focus more on the
melting point and solid fat content, while making non-food products will focus on the fatty acid
composition [2]. CPO can be used as ingredient for food, cosmetic, chemical, oleochemical, and animal
feed industry The requirements for the quality of CPO based on SNI can be seen in the following table.
9
Table 3. Quality requirements for CPO

Test Parameters Unit Quality Requirements
Color - Reddish orange
Moisture and impurities % mass fraction 0.5 max
Free fatty acid (as palmitic acid) % mass fraction 0.5 max
Iodine number G Iodine/100g 50 - 55
Source: National Standardization Agency, 2006
The fatty acids contained in CPO are mostly saturated fatty acids, namely palmitic acid. Saturated
fatty acids have only single bonds between their constituent carbon atoms, while unsaturated fatty acids
have at least one double bond between their constituent carbon atoms. Saturated fatty acids are more
stable or less reactive than unsaturated fatty acids. Furthermore, the double bonds in unsaturated fatty
acids easily react with oxygen or are easily oxidized. The presence of double bonds in unsaturated fatty
acids makes it have 2 forms, namely cis and trans where cis is unstable and trans is stable. Palm oil has
physico-chemical properties including color, odor, flavor, solubility, melting point and polymorphism,
boiling point (boiling point), flash point and fire point, iodine number, and saponification number. These
properties may change depending on the purity and quality of the palm oil.
3.6.2. Refined Palm Oil

Refined Palm Oil (RPO) is a derivative product of CPO which is processed while still retaining the
content of carotene compounds, especially β-carotene. The purification stage was performed by
degumming process using the acid degumming method, neutralization with the addition of NaOH
(deacidification), and deodorization using a stripping agent, the selection of each purification method
because it is more economical, easy to obtain, and efficient for miniplant scale palm production. RPO
can be used as functional food because it acts as a carrier for provitamin A and vitamin E [1]. RPO as a
functional food can act as a provitamin A carrier and be a solution to overcome the problem of vitamin
A deficiency (VAC). VAC is one of the most common micronutrient deficiencies in children. Inadequate
intake of vitamin A in children can increase the prevalence of stunting, a condition where height for age
is below the standard (short body/stunted) and underweight. In addition, RPO can also be used as a
natural colorant for example in sauce products, as well as a food fortification for oil or fat-based food
products, such as margarine and peanut butter [12]. Other RPO processing applications are processed
into edible oil, RPO has the potential to be made into stir fry oil, sachet oil for instant noodles, and salad
dressings. This application is possible because RPO will not undergo high heat processing which can
damage the carotenoids contained therein.
3.6.3. Palm Kernel

Palm Kernel (PK) is the fruit of the oil palm plant that has been separated from the pulp and shell
and then dried. Palm oil (CPO) is different from palm kernel oil (PKO) which is produced from the
kernel of the fruit. The difference is in the color and saturated fat content. The color of palm kernel oil
is clear. Furthermore, for its saturated fat content, CPO contains 41% saturated fat, while PKO contains
81% saturated fat [13].
3.6.4. Solid and Liquid Wastes

Oil palm miniplant waste can be utilized in oil palm plantations to avoid environmental pollution
and overcome the need for fertilizers [14]. In addition to producing CPO, palm oil processing also
produces waste. From the mass balance calculations, it is known that oil palm miniplants produce CPO
products of 21.3% or 2,130 kg, RPO 4% or 406 kg, PK 5% or 486 kg, empty fruit bunches (EFB) up to
22% or 2200 kg, coir (Fiber) 11% or 1,070 kg, shell 6% or 583.9 kg and liquid waste or Palm Oil Mill
Effluent (POME) as much as 52% or 5,233 kg. The wastewater treatment contains organic compounds
with a pond (lagoon) system for the tropical area.
10
3.7. Financial Analysis

The financial aspect examined the estimation of investment capital, operational costs, and
investment criteria. This analysis aimed to investigate the feasibility of a miniplant project with a
capacity of 1-ton FFB per hour which was established in Jonggol. Determination of project costs in the
design of CPO, RPO and PK production needs to be performed before determining the financial analysis.
Several costs and aspects of the calculation of production costs were assumed to simplify the calculation.
Some of the assumptions used in this calculation are as follows:
Table 4. Assumptions of processing unit income

No Description Unit Value
1 Production of CPO per year Kg/year 562.576
2 Production of RPO per year Kg/year 30.527
3 Production of PK per year Kg/year 128.468
4 Diskon rate % 0%
5 Need for FFB raw material Kg/year 2.640.000
6 Electricity requirement Kwh/day 19
3
7 Water requirement m /day 13
8 Phosphoric acid requirement Kg/day 1
9 NaOH requirement Kg/day 43
10 Fuel requirement liter/month 3
11 Machinery and building maintenance costs % 10
12 Purchase of FFB Kg 1.000
13 Cost %/year 10
14 Increase in operating %/year 5
15 increase in selling %/year 5
Table 5. Assumptions for production capacity

No Description Unit Value
The number of working days
1 per month day 22
Number of working hours
2 per day hour 10
The number of months of
3 work per year month 12
Number of working hours
4 per year day 264
5 Capacity per day ton/hour 10
6 Capacity per hour ton/hour 1
7 CPO production per day kg 2.130
8 RPO production per day kg 406
9 PK production per day kg 486
10 Selling price of CPO IDR/kg 8,500
11 Selling price of RPO IDR/kg 50,000
12 Selling price of PK IDR/kg 4,900
11
3.7.1. Fixed cost

Fixed costs are the types of costs that are fixed during a period of work. This cost does not depend
on the number of products (number of working hours of a equipment/machine). Fixed costs in processing
oil palm in miniplants were employee salaries, machine maintenance cost, building maintenance cost,
land and building tax cost, and depreciation cost (Table 6).
Table 6. Fixed costs of processing oil palm in oil palm miniplant

No Description Cost (IDR/Year)
1 Employee salaries 396,000,000
3 Machine maintenance 109,272,460
4 Building maintenance 1,147,500
6 Land and building tax 311,475
7 Depreciation 168,911,589
Total 675,643,024
3.7.2. Variable Cost

Variable costs are costs incurred when the tool/machine operates, and the amount depends on the
number of working hours of use. Variable costs in processing palm oil in oil palm miniplants were the
purchase of FFB, purchase of diesel oil, purchase of lubricants, electricity cost, water cost, waste
transportation cost, purchase of NaOH, purchase of phosphoric acid, purchase of CPO, PK packaging
cost, and delivery cost to downstream industries. Details of the variable costs of processing oil palm in
this oil palm miniplant are presented in table 7.
Table 7. Variable costs in the oil palm miniplant

No Description Cost (IDR/Year)
1 FFB purchase 4,039,200,00
2 Purchase of diesel oil 108,000
4 Purchase of lubricants 546,000
5 Electricity cost 55,915,358
6 Water cost 48,048,000
7 Waste transportation 5,000,000
8 Purchase of NaOH 166,320,000
9 Purchase of phosphoric acid 4,169,532
10 Purchase of CPO 944,568,048
11 PK packaging cost 12,846,768
12 Delivery cost to downstream industries 20,000,000
Total 5,296,721,706
3.7.3. Investment Cost

Investment costs are costs incurred for the purchase of capital goods. Investment costs in oil palm
processing in oil palm miniplants were investment in land, buildings, permits, loading ramp, scales,
conveyor, vertical sterilizer conveyor, thresher drum, digester, screw press, vibrating screen, vertical
clarifier tank, vacuum dryer, storage tank, mixing tank, nut fibre separator, ripple mill, and pump Details
of the investment costs for palm oil processing are presented in Table 8.
12
Table 8. Cost of oil palm investment in oil palm miniplant

Age
Description Quantity Price Total
(Year)
Land 3000 IDR 100,000 IDR 300,000,000
Building 2000 20 IDR 75,000 IDR 11,475,000
Permits 5 IDR 5,000,000 IDR 10,000,000
Scales 1 10 IDR 75,000,000 IDR 75,000,000
Loading ramp 1 10 IDR 36,320,000 IDR 36,320,000
Conveyor 5 10 IDR 15,000,000 IDR 75,000,000
Vertical sterilizer
IDR 90,000,000 IDR 180,000,000
Conveyor 2 10
Thresher drum 2 10 IDR 35,000,000 IDR 70,000,000
Digester 2 10 IDR 21,700,000 IDR 43,400,000
Screw press 2 10 IDR 50,000,000 IDR 100,000,000
Vibrating screen 1 10 IDR 80,000,000 IDR 80,000,000
Vertical clarifier tank 1 10 IDR 38,000,000 IDR 38,000,000
Vacuum dryer 1 10 IDR 69,619,200 IDR 69,619,200
Mixing tank 2 10 IDR 90,000,000 IDR 180,000,000
Storage tank 2 10 IDR 31,500,000 IDR 63,000,000
Nut fibre separator 1 10 IDR 35,000,000 IDR 35,000,000
Ripple mill 1 10 IDR 36,000,000 IDR 36,000,000
Pump 4 10 IDR 2,846,350 IDR 11,385,400
TOTAL IDR 1,414,199,600
3.7.4. Production Cost

The cost of goods manufactured serves as the basis for setting the selling price and profit. The
information needed in calculating the cost of production was the cost of raw materials and direct labor
costs. These components must be calculated appropriately to determine the selling price and profit. One
of the goals to be achieved by the company is to obtain maximum profit. This is because the amount of
profit earned by a company can be used as a reference and a measure of the progress of a company.
The cost of CPO production was obtained to produce CPO for one year with a CPO processing
capacity of 562,320 kg per year, it was found that the selling price of CPO products was at least IDR
8,419 with a total sales production price of IDR 4,733,952,807 the selling price of CPO was estimated
at IDR 8,500 the profit earned was IDR 4,779,720. The cost of production of RPO for one year with an
RPO processing capacity of 107,184 kg per year was at least IDR 14,970 per kg with a total sales
production price of IDR 1,604,516,145 so that the selling price of RPO was estimated at IDR 50,000
per kg with a profit of IDR 5.359.200.000. The production cost of PK for one year with a processing
capacity of PK was 128,468 kg per year at a minimum of IDR 2,035 per kg with a total production price
of IDR 253,478,873 so that the selling price of PK was estimated at IDR 4,900 per kg with a profit of
IDR 629,491,632.
The indicators of financial analysis in determining the feasibility of this oil palm miniplant design
were Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP), and Net
Benefit/Cost Ratio (Net B/C Ratio). The results of the financial analysis are presented in Table 9.
13
Table 9. Financial analysis of oil palm miniplant

Indicator Value
Net Present Value IDR 15,068,339,048
(NPV)
Internal Rate of Return 28%
(IRR)
Payback Period (PBP) 2.8 year
Net Benefit/Cost Ratio 11.7
(Net B/C Ratio)
4. Conclusion
Processing activity in the oil palm miniplants started with selecting the level of maturity of oil palm
(fraction) and identifying the energy sources. This miniplant will receive the fractions of 2, 3 and 4. The
energy sources was steam generated from biomass boiler, and electricity from PLN. The reception
station was divided into 4 stages, i.e., queuing, weighbridge, sorting, and loading ramp. Sorting on FFB
influenced the quality of CPO. The production stage started at the sterilization station using a vertical
sterilizer. The use of this type considers the size of the miniplant plant and the ease of FFB
transportation. The threshing and pulverizing station used a thresher and digester. The extraction station
employed a screw press, and this equipment was chosen because of the higher yield and energy
efficiency. The technological innovation for the oil palm miniplant project was the addition of water
into the sterilizer, which was useful for reducing oil loss, replacing air in the sterilizer, helping to
deactivate lipolytic enzymes, and assisting in FFB cleaning. In addition, the use of an auger protected
by a cover helped in the process of removing FFB so that it will save time in the sterilization process.
This oil palm miniplant produced CPO, RPO and PK. Palm oil miniplant canvas business model based
on the value proposition which were the ease of bureaucracy, small scale industry friendly, <5% free
fatty acids, and competitive prices. The key partners were performed by strategic alliances between non-
competitors and buyer-supplier relationships. The channel used was through farmer groups or union.
The supply chain flow started from independent smallholder plantations to oil palm miniplants to be
processed into CPO, PK, and RPO and continued to small industrial customers and retail market.
The oil palm miniplant has production capacity of 1-ton FFB/hour, produced 1,704.77 kg of CPO,
486.62 kg of PK, and 406.36 kg of RPO. The palm oil miniplant has a land area of 3,000 m2 and a
factory area of around 153 m2 with 14 pieces of equipment consisting of scales, loading ramp, scraper
conveyor, vertical sterilizer conveyor, thresher drum, digester, screw press, vibrating screen, vertical
clarifyer tank, vacuum dryer, stirred tank, storage tank, ripple mill, and nut fiber separator. Palm oil mill
effluents and solid waste will be processed to avoid contamination. Based on the financial analysis, this
miniplant obtained a positive NPV of IDR 15,068,339,048, the IRR value of 28%, Payback Period to
cover investment costs was 2.8 years for a project period of 10 years. Meanwhile, the value of Net B/C
> 1 was 11.7. These results indicated that this project was feasible.
References
[1] Basiron Y and Weng CK. 2004. The oil palm and its sustainability. Journal of Oil Palm
Research.16(1): 1-10.
[2] Hasibuan HA. 2012. Kajian mutu dan karakteristik minyak sawit indonesia serta produk
fraksinasinya. Jurnal Standardisasi. 14(1): 13-21.
[3] Saragih IK, Rachmina D, Krisnamurthi B. 2019. Analisis status keberlanjutan perkebunan kelapa
sawit rakyat Provinsi Jambi. Jurnal Agribisnis Indonesia. 8(1): 17-32.
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Agribisnis FEM IPB.
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[5] Hasballah T dan Siahaan EWB. 2018. Pengaruh tekanan screw press pada proses pengepresan daging
buah menjadi crude palm oil. Jurnal Darma Agung. 1(26): 722-729.
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15

Palm oil miniplant innovation for food and energy

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Technology innovation and business model of palm oil

Dwi Setyaningsih1,2, Farah Fahma1,2, Purwoko1, Aria Tri Wahyudi1, Ilham

2.1. Data Collection Methods

2.1.2. Observation, Interview and Literature Study

2.2. Data Analysis

3. Results and Discussion

3.1. Evaluation of Miniplant Technology

3.1.2. Energy Sources

3.2. CPO Production in Miniplant

3.2.1. Reception and Storage

3.2.2. Sterilization (boiling)

Figure 1. Process flow and mass balance of CPO production in miniplant

3.2.6. Clarification (purification)

3.2.8. Nut and Fiber Separation

3.3. Innovation of Miniplant Technology

3.4. Miniplant Factory and Machinery Layout

Figure 2. Activity Relationship Chart (ARC)

Table 1. TCR calculation based on Activity Relationship Chart

Figure 3. Industrial layout plan

Table 2. CPO industry layout plan

Figure 4. Miniplant factory lay out

Figure 5. Miniplant machinery layout

3.5. Analysis of Business Model and Supply Chain

3.6. Miniplant Products and Wastes

Table 3. Quality requirements for CPO

3.6.2. Refined Palm Oil

3.6.3. Palm Kernel

3.6.4. Solid and Liquid Wastes

3.7. Financial Analysis

Table 4. Assumptions of processing unit income

Table 5. Assumptions for production capacity

3.7.1. Fixed cost

Table 6. Fixed costs of processing oil palm in oil palm miniplant

3.7.2. Variable Cost

Table 7. Variable costs in the oil palm miniplant

3.7.3. Investment Cost

Table 8. Cost of oil palm investment in oil palm miniplant

3.7.4. Production Cost

Table 9. Financial analysis of oil palm miniplant

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