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Informist, Tuesday, Jul. 29, 2025

 

MUMBAI – Indonesia's palm oil industry is suffering from stunted growth because of factors that need to be quickly resolved to avoid losing market competitiveness in the future, according to an industry body. Two main problems facing the industry are stagnant production growth and legal uncertainty, Mukti Sardjono, Executive Director of Indonesian Palm Oil Association (GAPKI) said during a recent event, as per a Tuesday release.

 

"Nationally, our palm oil production is not only stagnant, but it tends to decrease. One of its causes is the slow implementation of replanting program for smallholders' palm plantations and the legal problems of plantation areas due to their suspected encroachment of forest areas," said Mukti at the 3rd Technology and Talent Palm Oil Mill Indonesia (TPOMI) 2025.

 

India is heavily dependent on Indonesia for its needs of edible oils. It imported 982,000 tonnes of palm oil from Indonesia in first eight months of oil year 2024-25 (Nov-Oct), lower than 1.38 million tonnes a year ago.

 

Although consumption of palm oil has been rising in Indonesia. production is stagnant, Mukti said. In 2024, Indonesia's domestic consumption of palm oil reached 23.8 million tonnes, significantly higher from the previous year. The consumption for biodiesel production had even surpassed the consumption for foods, especially after the implementation of mandatory B40 policy, he said.

 

Going further, demand for palm oil from this segment can be expected to rise, he said. "With the implementation of B40 mandatory program, the need of CPO for biodiesel production is estimated at 13 million tonnes."

 

However, its production has not been able to match the growth in consumption. As of April 2025, production of crude palm oil only reached 16.49 million tonnes, which was stagnant compared to that of the same period last year. "As a result, exports of CPO saw a decrease, affecting the state income from palm export levy and subsidy fund of biodiesel," Mukti said.

 

One of the problems facing the palm oil mills is the inconsistency of quality of fresh fruit bunches they received for processing. Many palm mills received fresh fruit bunches with low quality--either being not quite ripe yet or already rotten, causing lower extraction and low quality of CPO. "If we want to raise our competitiveness, the industrial burdens should be reduced, while pursuing efforts to increase productivity and volume of production," he said.

 

In addition to that, the palm mills still use its old production equipment and facilities, especially boiler and turbine.

 

"We need a strong institution to allow our palm oil industries to play their important role effectively and efficiently in providing foods, energy, developing downstream industries, and contributing foreign exchange to the state. That's why the special national board of palm oil should be established soon," Mukti said.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Abhijit Doshi

Edited by Akul Nishant Akhoury

 

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