InfoSAWIT, JAKARTA – President Prabowo Subianto has prioritized achieving food and energy self-sufficiency as a cornerstone of economic development over the next four to five years. This initiative is seen as pivotal for improving the well-being of Indonesia’s 280 million citizens.
The President recognizes the strategic role of palm oil in realizing energy and food security. He is committed to driving the palm oil industry toward a long-term production goal of 100 million tons per year by 2045, doubling the current annual production of around 50 million tons.
In addition, Prabowo aims to increase the palm oil blend in biodiesel from the current 35% (B35) to 40% (B40). Last year, palm oil usage in biodiesel accounted for 46% of total consumption, followed by food industries (44%) and oleochemicals (10%).
Strengthening palm oil production is seen as a timely move given its significant contribution to the economy. At a business conference in Jakarta last month, Putu Juli Ardika, Director General of Agro-Industry at the Ministry of Industry, highlighted that the palm oil industry contributed 3.5% to Indonesia's GDP in 2023, provided employment for 17 million people, and engaged over 5 million stakeholders.
Ardika also noted that industrial growth centers for palm oil have expanded from Java to Sumatra, Kalimantan, and Sulawesi. Palm oil leads in downstream processing, being utilized in 193 manufacturing processes.
Agronomists and industry players believe that doubling palm oil production is technically feasible and environmentally sustainable. Many degraded lands could be converted into plantations without encroaching on primary forests.
However, the industry awaits strategic policies from Prabowo to designate palm oil as a national strategic project. Inter-ministerial coordination is essential, as the industry spans agriculture, industry, energy, environment, trade, forestry, and land-use ministries.
Past policy failures in 2022, including price caps, domestic market obligations (DMO), and an outright export ban, underscored the government’s lack of coordination in managing the industry. The resulting cooking oil crisis highlighted the need for a unified regulatory body for palm oil management.
Policy uncertainty and overlapping authorities remain significant hurdles. Yet, the potential for sustainable plantation expansion is vast, and international perceptions of palm oil are improving.
The Indonesian Palm Oil Association (GAPKI) emphasizes that there is ample degraded land available for use without creating competition between food and energy needs. A University of Maryland study also identified millions of hectares of deforested land before 2020 that could be utilized.
Encouragingly, the European Union has postponed the implementation of its deforestation-free regulation until the end of the year. Furthermore, Hannah Ritchie from Our World in Data described palm oil as an extraordinarily productive crop, yielding more oil per hectare than alternatives like soy or coconut.
With its high productivity, palm oil has the potential to protect forests and natural habitats from being cleared for less efficient crops. The hope is that President Prabowo will soon issue strategic guidelines to position palm oil as a pillar of national food and energy security, integrating industry governance while ensuring high sustainability standards. (*)
