Indonesia’s palm oil output is projected to recover in 2026, supported by plantation recovery and higher fertilizer application, while aging palms and slow replanting remain key challenges.
PALMOILMAGAZINE, BOGOR — Indonesia’s palm oil production is projected to rise again in 2026, with national output expected to reach around 50.31 million tonnes.
The forecast indicates that Indonesia’s palm oil industry still has room for growth despite challenges including an aging plantation base, the need to accelerate replanting, and changing production costs.
According to a presentation by Rizki Amalia of the Indonesian Oil Palm Research Center (PPKS), part of PT Riset Perkebunan Nusantara, the MODUS forecasting model estimated Indonesia’s palm oil production at 49.50 million tonnes in 2025, before increasing to 50.31 million tonnes in 2026.
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The presentation was delivered as part of the 2026 Plantation Commodity Outlook in Bogor on Oct. 28, 2025.
The projection points to a gradual recovery in national palm oil output after production declined in 2024.
Actual production reached 50.84 million tonnes in 2023, before falling to 48.16 million tonnes in 2024. Output was subsequently projected to recover to 49.50 million tonnes in 2025 and increase further in 2026.
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Recovery from Dry Weather Supports Production
The recovery from the effects of dry weather in 2023 is one of the factors supporting the production outlook.
Drought can affect oil palm growth and productivity, with the impact often becoming visible in production in subsequent periods. As plantations recover from water stress, yields are expected to gradually improve.
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Fertilizer application is another important factor supporting productivity. The 2026 outlook noted that fertilizer application increased as fertilizer prices recovered to more favorable levels.
Higher fertilizer application is expected to help maintain plant health and support national production.
However, the industry also faces the challenge of an increasingly aging plantation base. A growing proportion of old and senescent palms could put pressure on productivity unless replanting is accelerated.
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Smallholder Replanting Remains a Challenge
The age profile of plantations is particularly important for smallholders, many of whom require replanting to restore plantation productivity.
Data presented in the 2026 Palm Oil Commodity Outlook showed that replanting between 2016 and 2025 covered approximately 384,618 hectares and involved 169,494 smallholders, with total funding disbursements reaching around IDR 10.86 trillion as of May 2025.
However, replanting programs continue to face a range of obstacles, including socioeconomic conditions, administrative and technical requirements, financing mechanisms, and the readiness of business partners.
Delays in replanting could have broader implications for national productivity, including the risk of declining yields and potential imbalances between palm oil supply and demand.
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Future Growth Cannot Rely on Expanding Plantation Area
Indonesia’s future palm oil production growth cannot rely solely on expanding plantation areas. Improving productivity on existing plantations will be equally important.
Data presented in the outlook put Indonesia’s total oil palm plantation area at approximately 16.83 million hectares, including around 13.68 million hectares of mature or producing palms.
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The 2025 ownership structure comprised approximately 9.16 million hectares of private plantations, 6.90 million hectares managed by smallholders, and 600,000 hectares operated by state-owned plantations.
The figures highlight the substantial role played by smallholders in Indonesia’s palm oil industry. Improving smallholder productivity will therefore be critical to sustaining national production growth.
The 2026 outlook recommends strengthening the implementation of Good Agricultural Practices (GAP) among smallholders, accelerating replanting through innovative financing schemes, and expanding the use of technology and innovation to improve productivity.
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Production Outlook Faces Market and Biodiesel Dynamics
With a combination of plantation recovery, improved fertilizer application, higher productivity, and accelerated replanting, Indonesia’s palm oil production is projected to reach 50.31 million tonnes in 2026.
However, higher production will take place against a backdrop of changing global market conditions, domestic consumption, biodiesel demand, and palm oil prices.
The second part of the 2026 Palm Oil Commodity Outlook will address the outlook for CPO prices, the impact of Indonesia’s biodiesel program, and the challenges and strategies facing the country’s palm oil industry in 2026. (P2)
