The Palm Scribe

FAO sees Indonesian palm oil production to grow by 25% by 2029

The Food and Agriculture Organization (FAO) is forecasting the palm oil production growth in Indonesia, the world’s top producer of the commodity, to grow by 25 percent in the next decade, one of its experts said Tuesday (15/12.)

“Production growth in Indonesia is expected to be about 25 percent, productivity gains account for 75 percent,” said Holdger Matthey, Senior Economist/Team Leader, Markets and Trade Stream, Food and Agricultural Organization (FAO). 

Addressing the Future Proofed Palm Oil Conference 2020 held online about the outlook for palm oil by 2029, Matthey said that the world’s second largest palm oil producer, Malaysia, was expected to grow by 8 percent for the same period. 

“In the 25 percent growth over the next ten years in Indonesia, five percent are still seen from area (expansion) and the remainder from productivity increases,” he said adding that for Malaysia, the low growth, was attributed to slower expansion of areas and rising labor costs.

Matthey said that Indonesia and Malaysia will also remain as the biggest palm oil producers, accounting for 83 percent of global production in 2029.

He added that emerging production was also expected to expand, mainly for domestic and regional markets.

Matthey said that globally, production growth was expected to come from productivity gains as land use is expected to be stable. But he also said that for example in Columbia a significant share in growth was contributed by area expansion. 

Thailand, Columbia and Nigeria are the largest emerging palm oil producers although Matthey said that although the three had significant growth rates, in total volume their cumulative production was still far below the two major producers Indonesia and Malaysia.

FAO, he said, believed that palm oil will remain an important component of vegetable oil consumption in producing and importing countries and that demand for vegetable oils, including palm oil, would continue to rise as the global population grew.

Palm oil, he said, was an important source of calories, especially in lower income countries, and added that by 2029, it was forecast that palm oil would account for about 3.4 percent of calories in lower middle income and low-income countries.

Besides for food, palm oil was also use to produce biofuel, with palm oil estimated to maintain a stable share of about 30 percent of all biodiesel feedstock. It is also used in the cosmetic and personal care sector.

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