Palm Oil Production Growth in Indonesia, Yet Exports Anticipated to Drop by 4% in 2024

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Palm oil mill. Photo by: Sawit Fest 2021 / Arie Basuki

PALMOILMAGAZINE, KARACHI – During the Pakistan Edible Oil Conference in Karachi on January 14, 2023, Eddy Martono, Chairman of the Indonesian Palm Oil Association (IPOA), shared a noteworthy projection regarding the global interest in (crude) palm oil (CPO) production in Indonesia.

Eddy anticipated that the stagnant production levels could impact the export performance of this vital commodity by up to four percent in 2024. “The palm oil production was expected to experience a modest increase of not more than 5%. However, if the mandatory biodiesel program (biodiesel 35 percent/B35) were extended, domestic needs in Indonesia would be capped at 25 million tons.”

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Consequently, palm oil exports might decrease by approximately 4.13%, totaling around 29 million tons. This scenario could have significant implications, particularly for the Indonesian economy, which heavily relies on palm oil exports.

Also Read: Heightened Palm Oil Demand by China and Pakistan

Chairman of Foreign Affairs IPOA, Fadhil Hasan did say something interesting about the situation. Besides B35, palm oil consumption would escalate in oleochemical product. The decreasing palm oil exports have been happening since 2020 to China, India, European Union, Pakistan, and the United States of America as the main importer countries. Oleochemical would be increasing that means there is trending shift in the industries.

The decreasing palm oil production in Indonesia since 20o5 would be a serious concern. As in the official statement to Palmoilmagazine.com, Monday (15/1/2024), Fadhil Hasan told that the decreasing production reached 10% in 2005 – 2010; 7,4% in 2010 – 2015; 3,2% in 2015 – 2020, and be stagnant after the periods. This created imbalance between increasing demands and limited supplies.

Thomas Mielke from Oil World delivered perspective about the decreasing palm oil production to many countries in the world. Though palm oil industries in Indonesia would dominate vegetable oil markets in 2024 within 32% of vegetable oil production and 53% exports, the decreasing production would significantly deliver impacts when the consumption increases in the world.

Mielke told the increasing palm oil production would be about 1,7 million tons per year, much smaller than the average increasing production in one last decade since 2020 that reached 2,9 million tons. The main factor is the decreasing production in Indonesia as the biggest producer and exporter in the world. (T2)

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