Speakers during the 19th Indonesian Palm Oil Conference (IPOC) 2023 last week might have strongly convinced the participants about the global market uncertainty facing the palm oil industry due to geopolitical tensions in Ukraine and the Middle East, trade barriers and slow growth of global economy. Many challenges are looming ahead. But so are many opportunities that can be worked out to survive and thrive during the global uncertainties.

The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono stated during the world’s largest event of palm oil that palm oil industry players are optimistic despite having to weather through the incoming economic headwinds. Apparently, based on the presentations of the conference speakers, there are still untapped opportunities that can be exploited to create tailwinds to push the palm oil industry forward.

Eddy said there is still a chance to increase palm oil export to China, which is Indonesia’s largest importer of palm oil. “Before Covid-19 pandemic, palm oil export to China reached 8.0 million tons per year. But it decreased to 6.0 million tons during the pandemic. We hope we can increase it to 7.0 million tons this year, and hopefully to 8.0 million tons next year (2024),” he told around 1,500 participants of the conference.

Bloomberg Commodity Analyst Alvin Tai told the conference participants that Indonesia can still expand its palm oil market in China during the next few years. “But considering the declining trend of China’s population it might be difficult to do so in the long term,” he said.

The Executive Director of the Solvent Extractors’ Association of India, B V Mehta said that India can be still a promising market for Indonesia, especially if the ASEAN country revised its export policy to allow more export of crude palm oil (CPO) to India,

According to him, the local consumption of vegetable oils in India has significantly increased from 14.1 million tons in 2008-2009 to 22.5 million tons in 2021-2022. “Domestic production of vegetable oils has been slowing, while demand has been continually rising. As a result India has to increase its imports, of which 60 percent are palm oil from Indonesia, Malaysia, and Thailand,” Mehta told the IPOC 2023 participants in Nusa Dua, Bali, on Friday, 03 November 2023.

During the same occasion, Uryupina Alisa Eduardovna of Mgimo University (Moscow, Russia) showed an opportunity for Indonesia to expand its palm oil exports to member countries of the Eurasian Economic Union (EAEU). The EAEU has been actively seeking dialogs with member countries of ASEAN to realize free trade agreements. “Negotiations are now progressing well between Indonesia and EAEU. This could become a potential way to increase palm oil import from Indonesia,” she said.

According to her, during the last five years (2017 – 2022) the imports of vegetable oils to EAEU have been growing by 24 percent. Main importers of vegetable oils in EAEU are Russia (95%), Kazakhstan (3%), and Belarus (1.5%).

Eddy Martono reminded the industry players that they need to take all necessary steps to strengthen their resiliency while keeping global competitiveness and improving productivity, efficiency and versatility of the palm oil.

“A number of steps that can be taken to strengthen the resiliency include the implementation of the government’s replanting program, and the production program of renewable energy sources based on palm oil,” Eddy said, referring to biodiesel, bioethanol, biomass and bioavtur as sustainable aviation fuel (SAF).

He mentioned that the Indonesian government has been committed to implementing the biodiesel mandatory program as a way to reduce import of diesel fuel and carbon emission to realize the net zero emission by 2060. “We believe that with the right policy from the government, the palm oil industry can grow robustly amid the global market uncertainties,” he said.

Yudo Dwiananda Priaadi, New and Renewable Energy and Energy Conservation (EBTKE) Director General at the ministry of energy and mineral resources (MEMR), said that to support the implementation of the biodiesel program Indonesia will need more supply of palm oil as the feedstock for production of the biofuel and bioavture.  “As a mandatory program, as of September 2023 the B35 production had reached 8.9 million kiloliters. It is projected to reach 13.15 million kiloliters in 2023 and 13.9 million kiloliters in 2025,” said Yudo during the IPOC 2023.

Orlando Rodriguez, the market analyst of Agriculture Research Refinitiv, said that rising demand for bioenergi has increased the global need for palm oil. Global demand for vegetable oils is projected to increase due to the acceleration of renewable energy programs. “The USA is predicted to raise its production of bioethanol, Biodiesel, and renewable diesel,” he said.

According to him, in 2022 the country’s production of bioethanol reached 14 million gallons, while biodiesel at 17 million gallons. “I predict that biofuel production will keep rising until 2025. It will push up demand for vegetable oils,” he said.

Besides biodiesel, Yudo said that Indonesia is also developing bioethanol, biogasoline and bioavture by using palm oil as feedstock. “We’ve managed to produce bioavture with a mixture of 2.4% under collaboration with other stakeholders, including the research team of Bandung Institute of Technology (ITB). It has been successfully put into a flight test with the aircraft of CN-235-220 FTB. We hope to start its commercial production in 2026,” Yudo said.

Apical Group’s Green Energy General Manager Aika Yuri Winata underlined the importance of regional cooperation, especially in ASEAN, in producing and using the bioavture as sustainable aviation fuel (SAF) in the aviation industry.

“The global aviation sector is a major contributor of CO2 emission, accounting for 3.0% of total emissions in 2019. The SAF came up as the most promising alternative to replace the conventional aviation fuel based on fossil fuels. It is able to cut CO2 emission by up to 90%,” said Aika.

To benefit from the potential market of green energy, Aika said that the Indonesian government needs to design business-friendly policies and seriously seek regional cooperation to realize the use of bioavture in regional flights. “Indonesia as the world’s largest producer of palm oil is required to increase palm oil production, reduce the high production cost of bioavtur, and integrate all policies to support the production of bioenergy, especially bioavture,” she said. Benget Besalicto ST