Area
Indonesia
Commodity Group
Oilseeds, oils and meals
Commodity
Oil palm
Date
01/05/2018
Policy Category
Production
Policy Instrument
Sector development measures
Description
Pledged to expand a countrywide oil palm rejuvenation programme launched in November 2017 to cover 185 000 ha (instead of the originally targeted 20 000 ha) of smallholder plantations in 2018.
Notes
The Indonesian Government pledged to expand a country-wide oil palm replanting programme launched last year (see MPPU Dec.17) to cover 185 000 hectares of smallholder plantations in 2018 as opposed to the original target of 20 000 hectares. The ultimate goal is to replace palms on 5.61 million hectares across the country. The schemes objective is to foster output growth among smallholders by boosting their productivity level, thereby discouraging environmentally contentious expansion of planted area. Replacing palm trees older than 25 years with improved varieties could lift average smallholder yields from 23 tonnes of palm oil per ha to 4 tonnes. The Governments replanting programme is entirely financed by Indonesias Oil Palm Plantation Fund (BPDP-KS), an instrument set up in 2015 to manage a new levy collected on the countrys palm oil exports. In fact, to date the bulk of BPDP-KS funds has been allocated to biodiesel subsidies a policy that is being challenged by the countrys main union of palm oil smallholders. Recently, also the countrys anti-graft agency has called for a more balanced distribution of those funds among stakeholders. Reportedly, last year, BPDP-KS proceeds from levies collected on palm oil exports amounted to IDR 14.2 trillion (USD 1 billion).