Indonesia May Become Biggest Palm Oil Producer, Astra Agro Says
Indonesia May Become Biggest Palm Oil Producer, Astra Agro Says
Claire Leow Bloomberg/ Jakarta
Indonesia may overtake Malaysia as the world's biggest palm oil producer because it has more land to expand plantations, said Benny Tjoeng, president director of PT Astra Agro Lestari.
Indonesia has six times more arable land than Malaysia, of which 5.2 million hectares is planted to oil palms. Malaysia is growing the crop over 3.9 million hectares, Tjoeng told a palm oil producers' conference in Bali. Astra Agro is Indonesia's largest publicly traded plantation company.
"Consumption of vegetable and animal oils has risen every year in the last 25 years, at a compound annual growth rate of 4 percent a year," to an estimated 21 kilograms per capita this year, Tjoeng said. "Palm oil consumption has grown 10.6 percent in the same period. The potential is clear."
Indonesia wants to alleviate rural poverty in a country where more than half the 238 million people live on less than US$2 a day, a measure of poverty by the World Bank. It has expanded oil palm cultivation 86 percent from a total of 2.8 million hectares in 1998, according to government data.
Still, Malaysia produces more palm oil because it has more mature plantations and yields are higher at 3.9 tons per hectare on average compared with 3.4 tons in Indonesia, Tjoeng said. Malaysia shares a border with Indonesia on the island of Borneo.
Indonesia can lift crop yields by allocating more land to oil palms, Tjoeng said.
Malaysia and Indonesia produce 80 percent of the world's palm oil, crushed from an oversized pineapple-like fruit and processed into oils used in cooking, packaged foods and in toiletries such as shampoo and soap. China, India and Pakistan are the world's largest consumers of the oil.
Indonesian palm oil is traditionally cultivated in Sumatra and Kalimantan provinces. Malaysia's crops are mostly from Sarawak and Sabah states, on the northern part of Borneo island where Kalimantan is also located.
Indonesia's palm oil output may rise 11 percent to 13.6 million tons this year, the Indonesian Palm Oil Producers' Association has said. The Malaysian Palm Oil Association has forecast production of 14.9 million tons for this year.