Detail

Indonesia

Oilseeds, oils and meals

Oil palm

01/05/2018

Production

Sector development measures

Pledged to expand a countrywide oil palm rejuvenation programme launched in November 2017 to cover 185 000 ha (instead of the originally targeted 20 000 ha) of smallholder plantations in 2018.

The Indonesian Government pledged to expand a country-wide oil palm replanting programme launched last year (see MPPU Dec.’17) to cover 185 000 hectares of smallholder plantations in 2018 – as opposed to the original target of 20 000 hectares. The ultimate goal is to replace palms on 5.61 million hectares across the country. The scheme’s objective is to foster output growth among smallholders by boosting their productivity level, thereby discouraging environmentally contentious expansion of planted area. Replacing palm trees older than 25 years with improved varieties could lift average smallholder yields from 2–3 tonnes of palm oil per ha to 4 tonnes. The Government’s replanting programme is entirely financed by Indonesia’s Oil Palm Plantation Fund (BPDP-KS), an instrument set up in 2015 to manage a new levy collected on the country’s palm oil exports. In fact, to date the bulk of BPDP-KS funds has been allocated to biodiesel subsidies – a policy that is being challenged by the country’s main union of palm oil smallholders. Recently, also the country’s anti-graft agency has called for a more balanced distribution of those funds among stakeholders. Reportedly, last year, BPDP-KS proceeds from levies collected on palm oil exports amounted to IDR 14.2 trillion (USD 1 billion).