PALMOILMAGAZINE, JAKARTA – Indonesia’s palm oil industry is facing new challenges with declining production and exports in 2024. According to the Indonesian Palm Oil Association (GAPKI), crude palm oil (CPO) production in December 2024 fell to 3.87 million tons, a 10.55% decrease from the previous month’s 4.33 million tons. Palm kernel oil (PKO) production also dropped to 361,000 tons from 412,000 tons in November 2024.
Overall, total CPO and PKO production for 2024 reached 52.76 million tons, marking a 3.80% decline from the previous year’s 54.84 million tons. This drop reflects ongoing challenges in palm oil plantation productivity, influenced by weather conditions, government policies, and global market dynamics.
“Despite the decline in production, domestic palm oil consumption increased. In December 2024, CPO and PKO consumption reached 2.19 million tons, up from 2.03 million tons in November. Annually, total consumption for 2024 rose to 23.86 million tons, a 2.78% increase from the previous year’s 23.21 million tons,” stated GAPKI Executive Director Mukti Sardjono in a statement to Palmoilmagazine.com on Friday (March 7, 2025).
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Mukti highlighted that the biggest consumption growth was in the biodiesel sector, which reached 11.45 million tons, a 7.51% increase from the previous year, driven by the government’s mandatory B35 biodiesel program. Meanwhile, consumption in the food and oleochemical sectors saw a slight decline compared to 2023.
Export Challenges
Indonesia’s palm oil exports faced significant pressure. In December 2024, total exports dropped to 2.06 million tons, down 21.88% from 2.64 million tons in the previous month. On an annual basis, palm oil exports fell by 2.68 million tons, from 32.21 million tons in 2023 to 29.53 million tons in 2024.
The sharpest export declines were recorded in China and India, Indonesia’s two largest palm oil markets. Exports to China plummeted by 2.38 million tons, while exports to India fell by 1.14 million tons. Other markets, including Bangladesh, Malaysia, the US, and the European Union, also reported lower demand. However, exports to Pakistan and the Middle East showed an increase, though not enough to offset losses in key markets.
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In terms of export revenue, Indonesia recorded earnings of USD 27.76 billion (IDR 440 trillion) in 2024, an 8.44% decrease from the previous year’s USD 30.32 billion (IDR 463 trillion), despite an increase in average global palm oil prices.
2025 Outlook
Given the current industry landscape, GAPKI estimates Indonesia’s palm oil production will reach 53.6 million tons in 2025. Domestic consumption is projected to rise to 26.1 million tons, with expanded biodiesel use under the B40 program reaching 13.6 million tons.
“However, exports are expected to continue declining to 27.5 million tons, lower than the 2024 level of 29.5 million tons. Contributing factors include protectionist policies in export destinations, competition with other vegetable oils, and fluctuations in global market prices,” Mukti explained.
Despite these challenges, industry players hope for government support in expanding new export markets and strengthening palm oil downstream industries to maintain value-added benefits amid global uncertainties. (P1)
