Indonesian Palm Oil Sustainability
Borneo, indonesia
Indonesia is the world’s largest producer and exporter of palm oil. Palm oil is one of the world’s most produced and consumed oils. This cheap, production-efficient and highly stable oil is used in a wide variety of food, cosmetic and hygiene products, and can be used as source for bio-fuel or biodiesel.
Global palm oil production is dominated by Indonesia and Malaysia. These two countries, together, account for around 85 to 86 percent of total global palm oil production.
Major Markets of Palm Oil
China will likely purchase 8 million tons of Indonesian palm oil in 2024. Beijing has been the top buyer of Indonesian palm oil by country since 2019 with imports reaching 8.15 million tons that year.
The Indonesian Palm Oil Association (Gapki) reported that China only bought 6.17 million tons of palm oil from Indonesia in the Covid-hit 2020. The figures then slightly picked up to 6.65 million tons in 2021 and shrank to 6.35 million tons a year later. Indonesia has exported 3.35 million tons of palm oil to China as of the first half of 2023.
“Our palm oil exports to China are expected to slightly rise to 7 million in 2023, and at least 8 million tons next year,” Gapki chairman Eddy Martono told a forum.
In 2017, China only bought 4.6 million tons of palm oil from Indonesia, less that of India (7.79 million tons). The European Union (EU) at the time posted 5.54 million tons of Indonesian palm oil imports.
According to Gapki, Indonesia’s palm oil exports totaled 16.31 million tons in Jan-June 2023, marking a 35.49 percent increase from 12.04 million tons recorded in the same period last year. The growing demand from China and South Asian nations like India, Pakistan, and Bangladesh was what boosted the numbers
Indonesia produced 27.29 million tons of palm oil in Jan-June 2023, up by 16.15 percent from 23.5 million tons recorded in the first half of 2022.
An overview of Indonesian Palm Oil exports from 2013 to 2022 (in Billion U.S. dollars)
Progress towards zero palm oil deforestation
Indonesia has achieved a remarkable reversal in deforestation trends, including deforestation for palm oil production. In 2018-2020, deforestation for palm oil was 45,285 hectares per year – only 18% of its peak in 2008-2012.
Indonesia’s palm oil sector is notable for its widespread adoption of zero-deforestation commitments (ZDCs) – more than 85% of palm oil exports are traded by companies with formal ZDCs.
Indonesia and Malaysia have agreed to strengthen cooperation in protecting the development of the palm oil industry, including to address the European Union’s (EU) policy that discriminates against this commodity. The two countries agreed to immediately carry out a joint mission to the EU to communicate solutions and consequences of the EU Deforestation Regulation (EUDR) which was passed by the EU Parliament in December 2022.
Conclusion
- Indonesian Government is committed to ensuring the sustainability of palm oil industry in Indonesia, despite many challenges. A number of steps have been and will continue to be taken to maintain the industry.
- Indonesian palm oil sector has been proven to be able to improve people’s welfare and reduce poverty and its an ongoing process.
- Indonesia’s palm oil sector has liberated 15 million people from the poverty line since 25 years.
- Research and Development sector should be more assertive to optimize the production mechanism.
- Indonesian Government already been working on effective green marketing strategy that is essential to the longivity of a business of Palm oil.
