Palm oil production in Indonesia

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A palm oil plantation in Cigudeg, Bogor.

Palm oil production is important to the economy of Indonesia as the country is the world's biggest producer and consumer of the commodity, providing about half of the world's supply.[1] Oil palm plantations stretch across 6 million hectares (roughly twice the size of Belgium). Indonesia plans by 2015 to add 4 million additional hectares destined to oil palm biofuel production.[2] As of 2012, Indonesia produces 35% of the world's certified sustainable palm oil (CSPO).[3]

In addition to servicing traditional markets, Indonesia is looking to put more effort into producing biodiesel. China and India are the major importers of palm oil, accounting for more than a third of global palm oil imports.


The remains of a peat forest in Indragiri Hulu, Riau Province, Indonesia to make way for oil palm plantation.

Production of palm oil in Indonesia has, since 1964, recorded a phenomenal increase from 157,000 tonnes to 33.5 million tonnes in 2014.[4] Palm oil accounts for 11% of Indonesia's export earnings of $5.7bn. Maintaining its status as the world’s largest producer of palm oil, Indonesia has projected a figure of 40 million tonnes by 2020. In this context, the global production figure given by the Food and Agriculture Organization (FAO) was 50 million tonnes for 2012, equivalent to double of the 2002 production.[5] This increase is also reflected in increases of Indonesia’s production of palm oil for the same period, from 10.300 million tonnes in 2002 and 28.50 million tonnes in 2012.[4]

The entire oil production is derived from Indonesia's rainforest which ranks third in the world, the other two being in the Amazon and Congo basins. According to the Indonesian Palm Oil Association, one third of this production is attributed to smallholder farmers and the remaining to multinationals. Palm trees that were planted about 25 years ago have an annual average production rate of 4 tonnes of oil per hectare.

Indonesia is considering plans to increase production this by introducing newer varieties which could double production rate per hectare.[5]

Borneo and Sumatra are the two islands that account for 96% of Indonesia’s palm oil production.[6] As of 2011, there were 7.8 million hectares of palm oil plantations, with 6.1 million hectares of these being productive plantations under harvest, thus making Indonesia the global leader in crude palm oil (CPO) production. According to World Bank reports, nearly 50% of CPO produced in the country is exported in an unprocessed form, while the remaining is processed into cooking oil, about half of which is exported, while the rest is consumed locally.[7]


Palm oil is an essential ingredient for the food industry, used as a cooking oil or in the production of processed foods (such as many types of chocolates, biscuits, chewing gum...) and for the manufacture of cosmetic and hygiene products (soaps, lipstick, washing powder...).[8] It is also valuable as a lubricant in industrial production or for the energy sector for the production of biodiesel.[6]


Major local and global companies are building mills and refineries, including PT Astra Agro Lestari Terbuka (150,000 tpa biodiesel refinery), PT Bakrie Group (a biodiesel factory and new plantations), Surya Dumai Group (biodiesel refinery).[9]

Cargill (sometimes operating through CTP Holdings of Singapore) is building new refineries and mills in Malaysia and Indonesia, expanding its Rotterdam refinery to handle 300,000 tpa of palm oil, acquiring plantations in Sumatra, Kalimantan, and Papua New Guinea.[citation needed]

Robert Kuok's Wilmar International Limited has plantations and 25 refineries across Indonesia, to supply feedstock to the new biodiesel refineries of Singapore, Riau, Indonesia and Rotterdam.[9]

Musim Mas Group has plantations and refineries in Malaysia and Indonesia - Kalimantan, Medan etc. although they are headquartered in Singapore.

Marihat Reaserch Station (MRS), nowadays known as RISPA and located in Medan, is the first research centre for Palm Oil Plantation for Indonesia. One of its well-known experts in soil, who has now retired, in the soil was Ir. Petrus Purba.

In August 2011, the governor of Aceh issued a permit for Indonesian palm oil firm PT Kallista Alam to develop around 1,600 hectares in Tripa.[10] Indonesian palm oil producer Triputra Agro Persada will reportedly increase its planted area by about two-thirds from 2013 by 2015.[11]

Environmental impact[edit]

Wild orangutan spotted in Kutai National Park, Borneo, Indonesia.
Sumatran tiger (Panthera tigris)

Since agricultural land is limited, in order to plant monocultures of oil palms, land used for other cultivations or the tropical forest need to be cleared. Of the total logging in Indonesia, up to 80% is reported to be performed illegally.[12] A major environmental threat is then the destruction of rainforests in Indonesia, which was estimated at 0.84 Mha of primary forest per year from 2000 to 2012.[13] This entails a reduction in biodiversity and an alteration of ecosystems which causes the destruction of the habitats of endangered species such as Borneo pygmy elephants, Sumatran elephants, Sumatran tigers, Sumatran rhinoceroses, and the various species of orangutan that can be found only on the forests of Borneo and Sumatra.

Deforestation also makes Indonesia one of the biggest emitters of greenhouse gases. Carbon Dioxide (CO2) is released in the atmosphere massively with the cutting of tropical peatlands, which are carbon sinks, according to Greenpeace.[14] Another cause are illegal forest fires to clear land for palm oil plantations. According to WWF for example, in 1997 around 0.81 to 2.57 gigatons of carbon were released by the fires which represented "13-40% of the mean annual global carbon emissions from fossil fuels that year".[15]

Industrial palm tree plantations also impacts negatively the quality of soils, water and the air because they often rely on the use of agrochemicals products, such as pesticides or fertilizers.[13]

Remedial measures[edit]

A government moratorium on the clearing of new forest was effective from 2011 to 2015.

The Indonesian Palm Oil Board has planned to adopt new planting materials on the older plantations which could double yields compared to the present annual rate of 4 tonnes of oil per hectare. In addition, the government will encourage development of degraded lands found suitable to grow palm trees. This area is reported to be 14 million hectares in the four provinces of Kalimantan, on the Indonesian part of the Borneo island.[5]

In 2018, the Indonesian president signed a moratorium on new palm oil development that will last three years.[16] In this moratorium, opening of new palm oil plantations will be delayed to reduce conflicts, as well as requiring all central and provincial governments to re-evalute current permits.

Impacts on local communities[edit]

The expansion of the palm oil industry is driven by its profitability, and it has the potential to develop new jobs and improve the standards of living of people and small-holders when conducted sustainably.[17][18] According to the UNDP, there are about 16 million jobs that depend on the palm oil sector.[19]

On the other side, deforestation for oil palm plantation development also endangers indigenous tribes and local communities as it entails the destruction of living spaces or land appropriation.[20] For example, in regions like Kalimantan, the local livelihoods of Dayak communities and their traditions of shifting cultivation, are undermined by the development of palm oil production and monocultures.[21] This often results in human rights violations and confrontation between large-scale producers and local communities whose land is appropriated.[22] Colchester, for example, found that in 2010, there had been more than 630 land disputes linked to oil palm production in Indonesia.[23]

The industry of palm oil also causes pollution of air and water which increase health risks to the populations of Indonesia.

Sustainable Palm Oil[edit]

In response to critiques on the industry by environmental and human rights group, efforts are made towards more sustainability of the industry. According to the Roundtable on Sustainable Palm Oil (RSPO), that applies to palm oils which are produced to increase the food supply while keeping in mind the goals to "safeguard social interests, communities and workers" or to "protect the environment and wildlife" for example.[24]

In 2011, Indonesia’s Sustainable Palm Oil System (ISPO) was introduced. It is a mandatory certification scheme to ensure the quality and the respect of norms regarding the environment, workers and respect of local populations that should apply to all producers.[19]

The Roundtable on Sustainable Palm Oil (RSPO) is also active in the region in providing certifications of sustainability for the produces who match the standards.

See also[edit]


  1. ^ McClanahan, Paige (11 September 2013). "Can Indonesia increase palm oil output without destroying its forest? Environmentalists doubt the world's biggest palm oil producer can implement ambitious plans without damaging woodland". The Guardian. Retrieved 22 September 2013.
  2. ^ "Palm oil". Greenpeace. Retrieved 22 September 2013.
  3. ^ Sarif, Edy (17 June 2011). "Malaysia expected to maintain position as world's largest producer of Certified Sustainable Palm Oil". The Malaysian Star. Retrieved 22 September 2013.
  4. ^ a b "Indonesia Palm Oil Production by Year". Retrieved 22 September 2013.
  5. ^ a b c "Can Indonesia increase palm oil output without destroying its forest?". The Guardian. 11 September 2013. Retrieved 22 September 2013.
  6. ^ a b "Indonesia's Palm Oil Industry Rife With Human-Rights Abuses". Businessweek. 18 July 2013. Retrieved 23 September 2013.
  7. ^ "Fact File – Indonesia world leader in palm oil production". Ceentre for International Forest Research. 8 July 2013. Retrieved 23 September 2013.
  8. ^ "Can Indonesia increase palm oil output without destroying its forest?". The Guardian. 11 September 2013. Retrieved 22 September 2013.
  9. ^ a b Corporate power: The palm-oil-biodiesel nexus Grain 2007
  10. ^ Stop Burning Rain Forests for Palm Oil; The world's growing appetite for cheap palm oil is destroying rain forests and amplifying climate change 6 December 2012 Scientific American
  11. ^ Benny Subianto Forbes 2013
  12. ^ Riskanalys av glas, järn, betong och gips 29 March 2011. s.19–20 (in Swedish)
  13. ^ a b Petrenko, C., Paltseva, J., & Searle, S. (2016). Ecological Impacts of Palm Oil Production in Indonesia. International Council On Clean Transportation. Retrieved from
  14. ^ "Indonesia". Greenpeace International. Retrieved 2017-11-29.
  15. ^ "Palm oil & climate change". Retrieved 2017-11-29.
  16. ^ "Indonesia Has Put a Temporary Ban on New Palm Oil Plantations". Time. 2018-09-21. Retrieved 2018-09-24. |first1= missing |last1= in Authors list (help)
  17. ^ The Economic Benefit of Palm Oil to Indonesia. (2011). Retrieved 21 November 2017, from
  18. ^ Feintrenie, L., Chong, W., & Levang, P. (2010). Why do Farmers Prefer Oil Palm? Lessons Learnt from Bungo District, Indonesia. Small-Scale Forestry, 9(3), 379-396.
  19. ^ a b "Sustainable Palm Oil for All". UNDP in Indonesia. Retrieved 2017-11-30.
  20. ^ "Finding Their Forests Flush With Foes, Provincial Tribes Push for Logging Ban". Jakarta Globe. 10 October 2010.
  21. ^ Obidzinski, Krystof; Andriani, Rubeta; Komarudin, Heru; Andrianto, Agus (2012-03-16). "Environmental and Social Impacts of Oil Palm Plantations and their Implications for Biofuel Production in Indonesia". Ecology and Society. 17 (1). doi:10.5751/es-04775-170125. ISSN 1708-3087.
  22. ^ Abram, Nicola K.; Meijaard, Erik; Wilson, Kerrie A.; Davis, Jacqueline T.; Wells, Jessie A.; Ancrenaz, Marc; Budiharta, Sugeng; Durrant, Alexandra; Fakhruzzi, Afif. "Oil palm–community conflict mapping in Indonesia: A case for better community liaison in planning for development initiatives". Applied Geography. 78: 33–44. doi:10.1016/j.apgeog.2016.10.005.
  23. ^ Colchester, M. 2010. Land acquisition, human rights violations, and indigenous peoples on the palm oil frontier.Forest Peoples Programme, Moreton-in-Marsh, UK.
  24. ^ "Sustainable palm oil". Retrieved 2017-11-30.

External links[edit]

Media related to Oil palm plantations in Indonesia at Wikimedia Commons