Without a roadmap, Indonesia risks a shortage of palm oil supply.
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Indonesia's palm oil demand is projected to continue increasing over the next two decades. However, its supply is potentially insufficient.
This projection was presented by the Indonesian Chamber of Commerce and Industry (Kadin) in its "Single Narrative of Palm Oil" report received by Databoks in March 2024.
According to Kadin, total Indonesian palm oil demand for domestic consumption and export in 2023 reached 53 million tons.
This volume is then projected to increase to 71 million tons in 2035, and 98 million tons in 2050.
"The government continues to encourage demand growth through downstream processing and the development of CPO (crude palm oil) for other industries such as the energy sector," said the Kadin team in its report.
"Regarding demand development in the energy sector, the government has also developed a biodiesel mandate roadmap since 2008, which continues to evolve to this day," it continued.
However, Kadin predicts that, under current conditions, the growth of Indonesia's palm oil supply will not be able to keep pace with the increase in demand.
Kadin estimates that the national palm oil supply in 2035 will only reach 66.2 million tons, and 89.9 million tons in 2050, lower than the demand level.
To anticipate this condition, Kadin believes Indonesia needs a roadmap for palm oil development that encompasses production aspects.
"This roadmap must be based on future consumption projections, both domestically and for export. After identifying consumption needs, we can then determine production needs based on existing land with options for extensification, intensification, or even both," said the Kadin team.
"For strategic commodities like palm oil, the option of reducing land is not a wise option. For example, the discourse of reducing palm oil land due to a 2 million hectare dispute will cause palm oil to experience an opportunity loss in losing export market share, or even our inability to meet domestic food and energy security, which contradicts the Job Creation Law," it continued.
"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."
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