Indonesia's Production of Palm Oil Grows 25.6% in First Half of 2013


Indonesia's production of crude palm oil (CPO) in the first six months of 2013 rose 25.64 percent compared to semester I-2012 to 14.7 million tons, which is a little over half of this year's CPO production target. Despite weak global demand for the commodity (accompanied by falling CPO prices), growth was accomplished due to new seeds that became productive and because the total size of Indonesian palm oil estates continues to expand. Productive estates now stand at 9.4 million hectares from 8.7 million hectares last year.

Of the total CPO production in Semester I-2013, four million tons have been consumed domestically for the production of food, oleo-chemicals and biodiesel. The domestic food industry is the biggest consumer of Indonesian CPO with 2.9 million tons, followed by oleo-chemicals (600 thousand tons) and biodiesel (480 thousand tons).

Total domestic consumption of Indonesia's CPO production in 2013 is expected to reach 7.8 million tons, while total production is assumed to rise to 29.4 million tons this year.

Global palm oil production is dominated by Indonesia and Malaysia. These two countries together account for around 85 to 90 percent of total global palm oil production. Currently, Indonesia is the largest producer and exporter of palm oil worldwide. However, Indonesia has often been criticized by environmentalist groups for giving too much room for palm oil plantation development (resulting in forest fires, deforestation and destruction of carbon-rich peat lands).