Indonesia Palm Expansion Curbs Seen Thwarting 2020 Output Goal

Business News/Analysis, Farming/Growing, Feedstocks, Field/Orchard/Plantation Crops/Residues, Indonesia, Infrastructure, Sustainability

October 21, 2013

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by Yayat Supriatna (Reuters) An Indonesian rule limiting plantation areas to just 100,000 hectares for new palm oil firms threatens an ambitious output goal of 40 million tonnes by 2020 set by the world’s top producer of the edible oil, an industry group said on Friday.
Analysts say the new rule aims to protect small plantation firms from bigger predators, and will close a loophole allowing major players to set up firms in different provinces.
The new law exempts state-owned firms, co-operatives and listed firms in which small individual investors make up a majority stake, and will not affect companies that already have plantation permits.
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Indonesia, home to the world’s third-largest expanse of tropical forests, should not rely solely on expansion to boost yields, said Deputy Agriculture Minister Rusman Heriawan, adding that betterfarming techniques could also push up output.
The new law will require new palm plantation firms to offer a fifth of their land for development by local farmers where possible, and gradually divest 30 percent of new palm oil mills to co-operatives within 15 years of operation, Heriawan said.
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Output of palm oil, used as an ingredient in food items such as biscuits and ice cream, as well as biofuel, is expected to rise 5 percent this year in the Southeast Asian nation, to range between 27 million and 28 million tonnes. READ MORE

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