Ministry of Agriculture: Palm oil sustainability and downstream processing key amid global issues
Jakarta - Indonesia’s Ministry of Agriculture has stated that sustainability and downstream processing are key to maintaining national palm oil dominance amid global concerns, whilst ensuring continued economic contribution and farmer welfare.
Hendratmojo Bagus Hudoro, Director of Estate Crop Protection at the Ministry’s Directorate General of Estate Crops, noted that Indonesian palm oil represents a long journey since the 1980s, which has formed the foundation of the current industry.
“If we are only proud of our current achievements without considering the sustainability of our palm oil sector, we risk experiencing declining economic returns. However, we are aware of palm oil’s contribution to the national economy,” he stated at the Good Palm Campaign Forum in Jakarta on Monday.
With over four decades of development, he emphasised that serious strategies are required to guarantee sustainable production and prevent a decline in the sector’s economic contribution.
Palm oil is the largest contributor to sectoral gross domestic product within estate crops, surpassing rubber, coffee, cocoa, and coconut, and serves as a major support for national agricultural revenue.
Indonesia currently holds 16.38 million hectares of palm coverage based on 2019 data, with 2023 production reaching 47 million tonnes and projected to increase to 48.12 million tonnes by 2025.
National productivity averages 3.3 tonnes per hectare, far exceeding soybean productivity of 0.4 tonnes per hectare and proving more efficient in land use than sunflowers.
National palm oil management comprises approximately 42 per cent smallholder plantations, 48 per cent private enterprises, and 8 per cent state-owned enterprises, with productivity variations remaining a priority for government.
In terms of employment, the palm oil industry absorbs approximately 9.7 million direct workers and 6.8 million indirect workers, totalling 16.5 million people affected.
Hendratmojo emphasised that strengthening downstream processing is a strategic agenda, ensuring Indonesia not only exports crude palm oil but also develops derivative products including food, pharmaceuticals, cosmetics, and bioenergy.
The biodiesel programme, progressing from B35 towards B40 and even B50, demonstrates significant potential for palm oil as renewable energy, including bioavtur development for aviation.
With a domestic market of approximately 280 million people, Indonesia possesses substantial capacity to absorb palm oil derivatives should global trade obstacles arise.
In addressing deforestation, labour, and regulatory concerns such as the European Union’s EUDR policy, the government is strengthening governance through mandatory Indonesian Sustainable Palm Oil (ISPO) certification beginning 2026.
ISPO encompasses seven principles: legal compliance, good cultivation practices, environmental management, labour responsibility, social responsibility, transparency, and sustainable business development.
The Ministry is also encouraging cross-sector collaboration to highlight the constructive aspects of palm oil development, whilst establishing the foundation for downstream processing of seven other commodities, allowing palm oil’s success to serve as a model for national estate crop industrialisation.