A Review of Integrated Cattle Oil Palm Production in Malaysia, Papua New Guinea and Indonesia

Indonesia is the world’s largest oil palm producer and has the potential to increase cattle production through integrated cattle oil palm production (ICOP) and to reduce the reliance on live cattle and beef imports from overseas. However, there are challenges that could dampen the achievement of that potential. This paper presents the results from a review of literature on ICOP that has been implemented in Malaysia, Papua New Guinea, and Indonesia, as well as from field work conducted in Riau province, the largest palm oil producer in Indonesia. Major constraints to adoption facing companies are: additional investments required to professionally manage the production and marketing of cattle, an unstable beef market, relatively low profitability from cattle farming, the lack of infrastructure to support an efficient cattle/beef supply chain, and concerns over soil compaction and the spread of Ganoderma disease. One key finding from this study is that ICOP may be more applicable to smallholders because, to varying degrees, their mixed farming systems are already integrated and cattle sales can increase income substantially. Secondly, the environmental benefit from ICOP, particularly in terms of reductions in herbicide and synthetic fertiliser use, seems to be more clear-cut than financial benefits/returns, which depend largely on management, markets and the policy settings. Therefore, greener business models that place more or equal emphasis on both financial and environmental benefits warrant serious consideration by both policymakers and the private sector. The greener approach will also lend support to sustainable oil palm initiatives.