Indonesia sees slower palm oil expansion from 2010

Indonesia expects palm oil output to grow sharply in the next two years but stricter forest protection may then slow expansion, a senior industry official has said.

Indonesia is set to take over from Malaysia as the world’s top palm oil producer this year because of rapid expansion in the last five years.

“We expect to see output grow by 8 to 9 per cent until 2009. But we have yet to see if we can sustain the growth beyond that period,” Derom Bangun, executive chairman of the Indonesian Palm Oil Producers Association, said in an interview.Indonesia’s crude palm oil output is projected to hit 17.4 million tonnes in 2007, up from 15.9 million tonnes in 2006.

“Expansion plans have been hampered by uncertainties in the legal status of the available land,” said Bangun, adding that the government is now checking that existing plantations are not located inside protected forests.

“Acquiring land is getting more difficult. From 2010 onwards, output will depend on the state of (palm oil) investment in 2007 to 2008,” said Bangun.

Palm oil producers have asked Jakarta to clearly define forest areas that need conserving.

Environmental groups are concerned that rapidly expanding palm oil plantations, partly due to ambitious biofuel plans, are damaging rain forests and driving out rare species.

Indonesia, which currently has 6 million hectares of palm oil plantations, may also restrict expansion by holding companies despite record-high crude palm oil prices.

“The government doesn’t want holding companies to own too much land. Land has become a rare commodity,” said Bangun.

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