Challenges on Meeting Sustainable Palm Oil Goal and Standard in Indonesia

Palm oil is an essential contributor to the Indonesian economy,  particularly in rural livelihoods. The Central Bureau of Statistics noted that in 2017, Indonesia’s export of palm oil and its derivative products was still the largest foreign exchange contributor to Indonesia.

Indonesia is the largest producer of palm oil in the world. Indonesia produced more than 35 million tons of palm oil, 25 million tons of which were exported worldwide. The export value of Indonesian palm oil is around $17 billion, making up more than 12 percent of total exports in the country. It is predicted that up to 10 years, the volume and export value of palm oil and its derivative products will continue to increase.

Since palm oil has a positive contribution to Indonesia’s economy and creating benefits to the wellbeing of farmers, so the efforts of many countries to ban the export of palm oil Indonesia can be considered as an attempt to disrupt the national interests of Indonesia.

This is of course a challenge for Indonesia to respond and make it as opportunities to increase palm oil exports worldwide. Another challenge is how to increase sustainable palm oil production that is environmentally friendly, undeforestration, improve people’s welfare, health and safety. All these challenges need to be properly addressed so that Indonesian palm oil exports are acceptable worldwide, palm oil production is sustainable, and palm oil revenue can continue to contribute substantially to the Indonesian economy.

Negative Campaign on Palm Oil

In the midst of Indonesia’s struggle to become the world’s vegetable oil producer, palm oil, the world’s top vegetable oil commodity, continues to be cornered by issues such as environment, forest and land fires, and unsustainable palm oil management.

For example, in April 2017, the European Parliament adopted a resolution on palm oil and deforestation, which Indonesia subsequently criticized on the basis that it discriminated against local palm oil manufacturers and disregarded the nation’s efforts to introduce sustainable practices to the industry. Here, Indonesia faces the challenge to explain well Indonesia’s strategy and activities to manage sustainable palm oil to the all stakeholders. Indonesia should be able to ward off the negative campaign that the European Parliament has done so far.

In this regards, the Indonesian government responded the European parliament resolution by enhancing an intensive dialogue with its European partners. Indonesia explained it’s strategy and activities to manage sustainable palm oil to the European Parliament and countries of the Europen Union. Indonesia explained its effort to develop its own, public sustainability standards and certifications scheme for palm oil called Indonesian Sustainable Palm Oil (ISPO).

ISPO is a policy mandating a sustainable palm oil governance and certification system so-called ISPO. ISPO was built in 2011 and has two goals: Firstly, to improve Indonesian palm oil’s global competitiveness through a set of government directives and regulations. Secondly, it sets national standards for sustainability practices of Indonesian palm oil companies. Since then ISPO certification has been mandatory for palm oil mills, estates and suppliers in the country.

In practice, ISPO implements 7 principles that must be implemented namely promoting good plantation governance, environmental protection, conservation principles, environmental protection, farmers’ welfare, sustainable business, community and social responsibility and plantation management with a licensing system.

ISPO covers 100 stringent central and regional government regulations. These range from environmental management, labour practices, and legality aspects to health and safety and best practices in plantation management.

According to data from the Ministry of Agriculture, until August 2017 the number of oil palm plantations that have been certified ISPO has amounted to 306 companies, one self-help cooperative and one plasma cooperative. The amount is equivalent to 16.7% of the national oil palm estates (11.9 million hectares) or 8.1 million tons of palm oil (from 36 million tons of national palm oil). While in the certification process there are 350 companies that will get an ISPO certificate.

Challenges on Productivity

Although Indonesia has extensive oil palm planting areas, the main problem is low productivity, especially in smallholder plantations that produce an average of 2.5 tons per hectare. The low productivity can not be separated from the number of palm trees that begin to age, or aged over 25 years.

For that reason, the Indonesian government is intensively doing replanting program especially in Sumatera area which has long been oil palm plantation. Replanting began by rejuvenating 4,460 hectares of land in Musi Banyuasin Regency.

For comparison, Malaysian and Vietnamese palm oil productivity now stands at 8 tons per hectare per year. Surprisingly, Indonesia, whose fertile land produces only 2.5 tons per hectare per year. Increased yield of Indonesian palm oil production makes Indonesia an important country for producers of raw materials for food and medicine,

In addressing this issue, Indonesia should start to select the appropriate technology such as water saving technology, biodiversity technology and biotechnology comprehensively. Improvements in plantation technology are needed to address the imbalance between population explosions, both land and productivity.

In this regard, Indonesia encourage technology research cooperation with other countries. For example, working with fellow oil palm producing countries, Malaysia, Indonesia is strengthening cooperation on oil palm development to improve smallholder productivity and competitiveness in the global era. The strategic steps taken include the harmonization of ISPO and Malaysia Sustainable Palm Oil, the development of palm oil research and innovation, the development of industrial cooperation towards value-added production. Also encourage various regulations and technical support to improve the quality of palm production to be more competitive in the world vegetable oil trade


In order to answers the challenges and seize opportunities on meeting sustainable palm oil goal and standard, Indonesia is expected to continue pioneering the implementation of its sustainable palm oil standard and enhance cooperation of technology utilization to increase productivity of oil palm plantation.



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