Indonesia to Prioritize Trade Diplomacy for Palm Oil

Thursday, May 31, 2018

Coordinating Minister for Maritime Affairs, Luhut Binsar Pandjaitan, stated that the government would prioritize trade diplomacy that puts forward dialogue and lobbies, especially regarding the EU Parliament’s decision discriminating palm oil products, reported the Antara News on May 09.  Palm oil has become an activator of the country’s economy, as it has provided jobs for some 17.5 million Indonesians, with majority being small-scale farmers. 
A resolution of the EU Parliament proposed the exclusion of palm oil as material source for biodiesel.  Currently, the resolution is yet to receive legal binding, and Indonesia would continue to prevent it from becoming an EU joint decision.  Palm oil has been a strategic industry for the country.  With the increased productivity of palm oil reaching 4-6 tons per hectare from 12 million hectares of land, the country’s palm oil production is expected to reach 40 to 45 million tons.  

In another development, the Indonesian government plans to expand an oil palm replanting program it launched last year to cover 185,000 hectare of plantations in 2018.  The ultimate goal is to replace oil palm trees older than 25 years on a total of 5.61 million hectare of plantations over the entire country. The program is especially intended to help smallholders, whose plantations yields only 2-3 tons of palm oil/ha, as opposed to large corporation-owned plantations with yields of as high as 20 tons/ha.  According to the government, smallholder yields could be boosted to 8 tons/ha annually if old palm trees were replaced with new and better seedlings that could start production within two years of planting.

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