GNV News, March 12, 2025

The possibility of rising prices for palm oil, which is used in a wide range of products, has been pointed out. In 2025, the Indonesian government raised the mandatory blend of palm oil in biodiesel fuel from 35% to 40%. Raising it to 50% in 2026 is under consideration. If this policy is implemented, domestic demand for palm oil in Indonesia will increase, and there is a forecast that Indonesia’s palm oil exports will decrease from 29.5 million tons in 2024 to just 20 million tons by 2030.

However, increasing production is not easy. For example, there are issues of environmental destruction associated with plantation development, and since 2018 no new permits for plantation development have been issued in Indonesia. In addition, as trees age after planting, palm oil yields decline; but because it takes 3–4 years after replanting before they begin producing palm oil, producers sometimes refrain from replanting.

Currently, Indonesia accounts for 58% of global palm oil production. Therefore, changes in palm oil demand in Indonesia affect other countries. The price of palm oil is already higher than that of soybean oil worldwide. Going forward, this increase in palm oil prices could have spillover effects on the prices of other fuels such as soybean oil and sunflower oil.

Learn more about palm oil production and deforestation → 「Malaysia: Can deforestation be stopped?」

Learn more about efforts to protect forests → 「World: What is TFFF, the new fund to protect forests」

An Indonesian palm oil plantation (Photo: ILO Asia Pacific / Flickr [CC BY-NC-ND 2.0])