Since 2015, the Indonesian Oil Palm Estate Fund (BPDPKS), which is tasked with strengthening and promoting sustainable practices in the industry, has been imposing a $50 per ton export levy on crude palm oil and $30 per ton levy on crude palm oil derivative products when prices drop below $750. (Antara Photo/M. Rusman)

Indonesia’s CPO Production to Fall by Up to 30 Percent Due to El Nino, Haze


SEPTEMBER 06, 2015

Jakarta. Crude palm oil production in Indonesia, the world’s largest palm oil producer, could fall by up to 30 percent to a range of 27-28 million tons next year due to the ongoing El Nino weather phenomenon, which is damaging crops across the country, according to a representative at an industry association.

“[CPO] production can plunge between 20 percent and 30 percent next year because of effects from El Nino, as well as the haze crisis,” Franky Oesman Widjaja, vice chairman of agribusiness and food at the Indonesian Chamber of Commerce and Industry (Kadin), said in a forum discussion on Friday, adding that the forecast will depend on how bad the El Nino phenomenon will impact the nation.

According to Franky, who's also chief executive officer at Sinar Mas Group's plantation unit Golden-Agri Resources,  the El Nino phenomenon and the ongoing haze problems in Sumatra are disrupting the photosynthesis process by keeping sunlight from the plants.

Indonesia's dry season this year is expected to last much longer than usual due to the El Nino phenomenon. The prolonged drought is also heightening fire risks across the archipelago.

As of last Friday, six provinces have declared a state of emergency as haze from the wildfires on Sumatra and Kalimantan worsened, including Riau, Jambi, South Sumatra, West Kalimantan, Central Kalimantan and South Kalimantan.