The government is encouraging smallholder palm oil replanting, ISPO strengthening, and downstreaming through the B50 biodiesel program

Bali, 12 November 2026 – Coordinating Minister for Economic Affairs Airlangga Hartarto affirmed that palm oil remains one of the most strategic commodities for the national economy, with palm oil production in 2026 projected to reach around 60 million tons. He delivered the message through a video recording at the opening of The 22nd Indonesian Palm Oil Conference and 2027 Price Outlook (IPOC 2026) in Bali, Thursday (12/11/2026).

Airlangga was unable to attend in person due to an urgent agenda. He expressed his appreciation to the Indonesian Palm Oil Association (GAPKI) and the committee for bringing together policymakers, industry players, researchers, and stakeholders to discuss the future of the Indonesian palm oil industry.

Palm Oil’s Contribution to GDP and 2026 Palm Oil Export Performance

“Palm oil remains one of Indonesia’s most strategic commodities,” said Airlangga. The plantation subsector contributed 5.15 percent to national Gross Domestic Product (GDP) in the third quarter of 2026, with palm oil as the largest contributor.

This strategic position is reflected in export performance. Throughout January–October 2026, palm oil export value reached US$28.84 billion, up 60 percent compared to the same period last year. Export volume was recorded at 33.8 million tons, growing 6 percent year-on-year.

Airlangga also highlighted palm oil’s advantage in land efficiency. Palm oil productivity reaches around 4 tons per hectare, while other major vegetable oils such as sunflower, rapeseed, and soybean yield less than 0.7 tons per hectare.

Smallholder Palm Oil Replanting and Support for Farmers

So that the benefits of the palm oil industry are felt by smallholder farmers, the government continues to run the smallholder palm oil replanting program (PSR), assistance for plantation infrastructure, and human resource development. The HR program includes education scholarships, technical training, and capacity building.

“These programs are aimed at increasing productivity without expanding plantation areas,” said Airlangga.

These efforts are reflected in the increase in crude palm oil (CPO) production from 52.76 million tons to 56.55 million tons in 2025. In 2026, total palm oil production is projected at around 60 million tons, with domestic consumption of around 27.89 million tons and exports of around 35 million tons.

ISPO Strengthening and Downstreaming Through B50 Biodiesel

Indonesia continues to strengthen Indonesian Sustainable Palm Oil (ISPO) as a national instrument to ensure palm oil production meets sustainability standards. The government is also developing an ISPO Information System to integrate plantation certification data with supply chain information.

According to Airlangga, this step is important not only for sustainability and the fulfillment of market requirements, but also as a strong foundation for the downstream industry. One example is the mandatory implementation of the B50 biodiesel program starting July 2026.

Biodiesel needs are estimated to rise from 15.6 million kiloliters under the B40 program to around 16.7 million kiloliters under B50. The program is projected to reduce greenhouse gas emissions by around 44.46 million tons of CO2 equivalent. Besides biodiesel, Indonesia is also exploring the development of sustainable aviation fuel (SAF) as part of the energy transition agenda.

Collaboration for the Future of the Indonesian Palm Oil Industry

Airlangga acknowledged that the challenges facing the palm oil industry are complex, but the opportunities are also large. Therefore, he emphasized the importance of sustainable collaboration among stakeholders, both at the national and international levels.

“I am confident that IPOC 2026 will be an important platform to strengthen collaboration, exchange ideas, and formulate practical solutions for the future of the palm oil industry,” he said.

With collaboration and shared commitment, Airlangga is optimistic that the Indonesian palm oil industry will continue to contribute positively to global food security, become a pillar of energy resilience, and at the same time a source of sustainable economic resilience.

Also present at the event were Minister of National Development Planning/Head of Bappenas Rachmat Pambudy, Deputy Minister of Foreign Affairs Arif Havas Oegroseno, and GAPKI Chairman Eddy Martono. (*)