JAKARTA – The Indonesian Palm Oil Association (GAPKI) has warned that Indonesia could not realize its target of palm oil production at 92 million tons in 2045 if the country fails to resolve two main problems related to the aging condition oil palm trees and moratorium policy of oil palm plantation licensing.
GAPKI Secretary General M. Hadi Sugeng Wahyudiono reminded the government and palm oil stakeholders to quickly tackle the problems. Considering the rising local demand to meet rising human needs and to feed rising industrial needs, Indonesia could become an importer of crude palm oil (CPO) in 2029 if it fails to resolve the challenges soon.
“Based on data from Sucofindo, if the exports are maintained at current level of 30-32 million tons per year, while production is projected to reach only 59 million tons in 2025, we’ll see a shortage of supply in 2029. It means that we’ll have to import CPO,” Hadi said during a public discussion in Jakarta on Wednesday (19/06/2024).
According to Hadi, considering the current condition there is a big possibility that Indonesia will become a CPO importer. “We’ve seen our domestic demand has been continually rising during the last five years. But at the same time, our production has been stagnant,” he said.
The local consumption had increased from 32.3% of total production in 2019 to 42.8% of total production in February 2024. The consumption of CPO for biodiesel production had surpassed the consumption for foods in 2023. The data shows that percentage of consumption to total production tends to continually increase. “This is a worrying phenomenon that should grab our attention to find a solution,” he said.
He said that Indonesia has been challenged by the weakening palm oil production since 2010. As comparison the yield of CPO in 2010 reached 4.3 ton per hectare per year. But then the yield has decreased up to 3.3 tons per Ha per year.
According to him the stagnant production and productivity of palm oil was caused by two factors, namely the composition of aging oil palm plantations that had reached 6.57 million hectares or 40% of total plantation areas and the palm oil moratorium policy. “The aging condition requires replanting to increase production and productivity,” he said.
But he said such weakening production is not only seen in Indonesia. Malaysia is also experiencing the aging condition of its oil palm plantations due to lateness in replanting its smallholders’ plantations.
Hadi said that due to the government policy of moratorium, Indonesia’s oil palm growers could not expand their plantation areas. Currently, GAPKI has been pursuing a number of programs to raise the CPO production. The programs include supporting the implementation of replanting for smallholders at 150,000 Ha per year and plantation companies at 300,000 Ha, so totally 500,000 Ha per year.
“If we do replanting of total 500,000 Ha per year, then in 2045 we’ll have total production of 65 million tons, an increase of 10% compared to the current production. It is still below the target of 92 million tons per year. But actually, the production can be still raised higher if the replanting program is pursued more aggressively,” he said.
Hadi expressed the hope of palm oil industry players for the government to revise its oil palm moratorium policy. Indonesia needs at least 4.5 million Ha of degraded land areas for the expansion of palm plantations to resolve the production problem.
“Currently, Indonesia has a total palm plantation areas at 16.8 million hectares. Actually, by utilizing the degraded land areas for an expansion of 4.5 million hectares, we can increase our production to meet the target of 92 million tons per year and our exports at 42 million tons. We need to keep our exports at appropriate volume, averagely half of total production, for financial purposes, such as for the palm oil fund collected by BPDPKS (the oil palm plantation fund management board),” he said.
But in the meantime, Hadi reminded that the potential production will still be reduced if the government proceeds with its plan of subjecting the 2.4 million Ha of oil palm plantations (suspected encroaching forest areas) under the article 110 B of the omnibus law on job creation. “If it is implemented, Indonesia will lose production between 7 – 10 million tons per year,” said Hadi. (*)
Source: sawitindonesia.com
