PALMOILMAGAZINE, SINGAPORE – Despite facing fresh regulatory challenges from the Indonesian government, Bumitama Agri Ltd, a leading palm oil producer operating in Indonesia, remains confident in continuing its sustainable and responsible business practices.
During a recent shareholders’ meeting, the company acknowledged the impact of the government’s renewed push to clarify land boundaries—particularly where overlaps exist with forest areas and spatial plans. As part of the updated regulations, palm oil companies are now required to obtain formal land certificates to prove that their land is “clean and clear.”
“We are currently awaiting further guidance from the government so we can fully assess the implications and take the necessary steps to comply with the new regulations,” Bumitama’s management stated, as reported by Palmoilmagazine.com on Monday (June 2, 2025), citing the Minutes of the Annual General Meeting. The company expects greater clarity within the next three months.
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The company also addressed speculation regarding the transfer of confiscated plantation lands—formerly managed by private firms—to newly formed state-owned enterprises (BUMNs). While no official announcement has been made, Bumitama noted the possibility of these BUMNs offering operational cooperation schemes with management fees in return.
Despite regulatory uncertainties, Bumitama Agri reiterated its strong commitment to legal compliance and sustainable development. “We continue to prioritize regulatory alignment and strengthen our sustainability initiatives in response to the evolving industry landscape,” the company emphasized.
On the operational front, Bumitama reported a decline in palm oil production, in line with broader industry trends—down between 6% and 16% in surrounding regions. The drop is attributed to extreme weather events in recent years, including three consecutive La Niña periods (2020), El Niño in 2023, and another La Niña in 2024. However, production is expected to rebound by up to 5% this year as weather conditions improve.
According to its 2024 Annual Report, the company also explained a 16% increase in the cost of goods sold, which outpaced its 9% revenue growth. This was primarily due to increased purchases of third-party fresh fruit bunches (FFB) to maintain optimal mill utilization amid lower internal yields.
Despite ongoing pressure from commodity price volatility, extreme weather, and rising fertilizer costs, Bumitama Agri remains optimistic about the road ahead. “We have weathered similar challenges in the past while still delivering solid financial and operational performance. Our principle of ‘Excellence Through Discipline’ continues to guide our operations,” stated the Chairman of the Board.
The company concluded by reaffirming its commitment to agility and resilience in the face of domestic and global uncertainties—protecting shareholder interests while advancing sustainable business growth. (P2)
