InfoSAWIT, JAKARTA – The Indonesian palm oil industry is facing new challenges as production and exports saw a decline in 2024. According to data from the Indonesian Palm Oil Entrepreneurs Association (GAPKI), crude palm oil (CPO) production in December 2024 reached 3.87 million tons, a decrease of 10.55% from the previous month, which recorded 4.33 million tons. Palm kernel oil (PKO) production also fell to 361,000 tons from 412,000 tons in November 2024.

Overall, the total production of CPO and PKO throughout 2024 reached 52.76 million tons, down 3.80% compared to the previous year, which was 54.84 million tons. This decline indicates challenges in palm oil plantation productivity, influenced by weather factors, policies, and global market dynamics.

"Despite the decrease in production, domestic consumption of palm oil has actually increased. In December 2024, consumption of CPO and PKO reached 2.19 million tons, up from 2.03 million tons in November. Annually, total consumption for 2024 reached 23.86 million tons, an increase of 2.78% compared to the previous year’s 23.21 million tons," noted GAPKI Executive Director Mukti Sardjono in a statement to InfoSAWIT on Friday.

Mukti further explained that the largest increase in consumption occurred in the biodiesel sector, which reached 11.45 million tons, a rise of 7.51% from the previous year, driven by the government’s B35 biodiesel mandate. Meanwhile, consumption in the food and oleochemical sectors saw a slight decline compared to 2023.

On the export front, palm oil exports faced significant pressure. In December 2024, total exports dropped to 2.06 million tons, a decrease of 21.88% from the previous month’s 2.64 million tons. Year-on-year, Indonesia's palm oil exports fell by 2.68 million tons, from 32.21 million tons in 2023 to 29.53 million tons in 2024.

The largest declines in exports were recorded to China and India, Indonesia's two main palm oil markets. Exports to China fell by 2.38 million tons, while exports to India decreased by 1.14 million tons. Other countries, including Bangladesh, Malaysia, the US, and the European Union, also reported decreased demand. Conversely, exports to Pakistan and the Middle East saw an increase, although it was not enough to offset the declines in major markets.

In terms of export value, Indonesia recorded revenues of USD 27.76 billion (IDR 440 trillion) in 2024, down 8.44% from the previous year’s USD 30.32 billion (IDR 463 trillion). This decline occurred despite an increase in the average price of palm oil in the global market.

2025 Outlook
With various factors affecting the palm oil industry, GAPKI predicts that Indonesia's palm oil production will reach 53.6 million tons in 2025. Domestic consumption is expected to rise to 26.1 million tons, with biodiesel usage expanding to B40, reaching 13.6 million tons.

"However, exports are expected to continue declining to 27.5 million tons, lower than the 2024 figure of 29.5 million tons. Factors influencing this include protectionist policies in export destination countries, competition with other vegetable oils, and developments in global market prices," Mukti stated.

Despite these challenges, industry players hope for government support in expanding new export markets and strengthening the downstream processing of palm oil products to maintain the industry's added value amid global challenges. (T2)