Few Indonesian industries have shown such robust growth as the domestic palm oil industry during the past 20 years. This growth is reflected by the country’s rapidly rising production and export figures as well as by the growing quantity of its palm oil estate area.
Driven by increased global demand and higher yields, palm oil cultivation has been expanded significantly by Indonesian farmers and conglomerates (at the expense of the environment and at the expense of production figures of other agricultural products such as cocoa or coffee because farmers switched to palm oil plantation due to the promising perspectives).
The majority of Indonesia’s palm oil output is exported. The most important export destination countries are China, India, Pakistan, Malaysia, and the Netherlands. Although the numbers are very insignificant, Indonesia also imports some palm oil, primarily from India.
Indeed, the majority of Indonesian palm oil is exported (see table below). However, due to Indonesia’s expanding population (as well as rapidly expanding middle class) and the government’s support for biodiesel, domestic palm oil demand in Indonesia is growing as well. Rising domestic palm oil demand could in fact mean that crude palm oil (CPO) shipments from Indonesia will stagnate in the years ahead if the government remains committed to the moratorium on conversion of peat-land (read more below).