PALMOILMAGAZINE, JAKARTA – Advances in technology have demonstrated that palm oil is not only valuable for the food and cosmetics industries but also holds great potential as a renewable energy source. Biodiesel and biogasoline derived from palm oil present a significant opportunity for Indonesia to reduce its reliance on fossil fuels. Strengthening palm oil production would not only meet domestic energy needs but also enhance biofuel exports.
In the coming years, Indonesia’s oil palm plantation area is projected to reach 17.3 million hectares out of the 20.5 million hectares that have received permits. Of this total, smallholder farmers manage 6.7 million hectares, private plantations control 10 million hectares, and state-owned plantations account for only 0.6 million hectares. This indicates that the palm oil industry is still largely dominated by the private sector. Therefore, policies must focus on expanding the state’s role in plantation management to support national energy programs.
The government’s decision to reclaim 221,000 hectares of problematic private plantations and transfer them to state-owned enterprises (BUMN) is a strategic move. However, many plantations remain underproductive due to mismanagement and financial challenges. Transferring these plantations to BUMN could lead to more professional and efficient management.
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Palm Oil Production Needs and Challenges
Indonesia currently produces around 50 million tons of palm oil annually, with a productivity rate of only 35% of its maximum potential. Domestic consumption includes 10 million tons for food, 3 million tons for oleochemicals, and 12 million tons for biodiesel, totaling 25 million tons. This leaves a surplus of 25 million tons available for export to stabilize market prices.
However, if Indonesia aims to fully rely on palm oil for biofuel, demand will rise dramatically. With national fuel consumption at 130 million kiloliters and domestic fossil fuel production at only 30 million kiloliters, at least 100 million tons of palm oil would be required annually. If exports are maintained at 25 million tons, total palm oil demand would reach 125 million tons—leaving a production gap of 75 million tons.
To address this shortfall, concrete measures are needed, including subsidized fertilizers, improved farm management, and accelerated planting on permitted land. By intensifying and optimizing existing plantations, national production could reach 100 million tons per year without large-scale land expansion.
Sustainable Land Management Strategies
If palm oil exports remain at a minimum of 25 million tons per year, an additional 8 million hectares of plantations would be needed to meet production targets. Available land, including secondary forests and idle land, could be utilized strategically. Data indicates that Indonesia has approximately 24.5 million hectares of secondary forests and 20.5 million hectares of idle land that could be converted into palm oil or rubber plantations. However, this must be done responsibly to ensure environmental sustainability.
As an alternative, portions of this land could be allocated for rubber and sugarcane cultivation—both of which are strategic commodities. Additionally, crops such as rice and maize, which are classified as C4 plants, play a crucial role in absorbing carbon dioxide more efficiently than other plant species.
To achieve energy independence through palm oil, targeted policies and strong implementation strategies are required, including:
- Enhancing plantation productivity through intensification and the adoption of agronomic technology.
- Providing subsidized fertilizers to significantly boost yields.
- Utilizing permitted but unplanted palm oil land through accelerated planting initiatives.
- Expanding the role of state-owned enterprises (BUMN) by acquiring underperforming private plantations and managing unproductive land.
- Developing infrastructure support, such as improving plantation road networks and increasing biofuel production capacity through state-owned refineries.
By implementing these measures, Indonesia can achieve sustainable energy independence through palm oil. However, this must be accompanied by strong regulations to ensure land use and resource management align with environmental balance and national interests. If managed effectively, palm oil could serve as both a domestic energy solution and a strategic foreign exchange earner for Indonesia in the future.
Author: Memet Hakim | Social & Environmental Analyst, Advisor to APIB & APP TNI
Disclaimer: This article represents the author’s personal views and is solely their responsibility.
