Home News Commodities

Indonesia's halt to palm oil expansion is set to expire soon

Bloomberg9/19/2021 09:34 PM GMT+08  • 2 min read
Indonesia's halt to palm oil expansion is set to expire soon
The price of palm oil has surged almost 50% in the past year due to tight supply
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

Indonesia’s moratorium on new oil palm plantation permits is set to expire this week as the industry awaits clarity on whether the government will extend the policy.

President Joko Widodo ordered a stop to permit issuance for new plantations and expansion of existing ones for three years in a decree signed Sept. 19, 2018. That order expanded on an earlier ban on permits for plantations on primary forest and peat land.

As palm prices surge almost 50% in the past year due to tight supply, the government has given few signs on whether the moratorium would remain. The breakneck expansion of plantations through Southeast Asia has come at the expense of vast swathes of tropical rainforest.

An extension could lead prices to climb higher as there’s been slow replanting of old oil palm trees, said Christopher Andre Benas, an analyst at RHB Sekuritas.

Since the moratorium, the government has found about 3 million hectares of palm oil plantation operating without permits in forest areas. The Southeast Asian country has identified about 16.4 million hectares of land planted with the crop, of which 6.72 million hectares belong to smallholders.

Crude palm oil production is set to rise but land expansion could grow slower as existing plantations take advantage of their land bank, said Sathia Varqa, owner of Palm Oil Analytics in Singapore. He expects Indonesia’s output to rise by 2 million tons to 48 million tons this year as production increases in frontier areas like Kalimantan. The policy makes a difference in deforestation if it’s well implemented, he added.

Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.