The Indonesian Palm Oil Board (DMSI) expects exports of Indonesian crude palm oil (CPO) as well as its derivatives to fall about six to ten percent to 19-20 million tons in 2014 (from last year’s export realization of 21.2 million tons).
Lower CPO exports are primarily the result of Indonesia’s mandatory biodiesel program which leads to increased domestic consumption of CPO. Traditionally, Indonesia exports about 75 percent of its total CPO production, particularly to the giant economies of China and India.
The Indonesian government introduced a new biofuel policy in 2013 which raised the minimum bio content in diesel to 10 percent from 7.5 percent previously, while for power plants the minimum requirement was doubled to 20 percent. This policy aims to curtail imports of expensive oil (which is the main cause of the country’s wide trade deficit).
Chairman of the DMSI Derom Bangun said that domestic consumption of CPO in 2014 may exceed nine million tons (from 7.5 million tons last year) as a result of the government’s mandatory biodiesel program. However, if the program experiences setbacks, for example due to problematic tenders or troubled distribution, then this year’s domestic consumption of CPO will only be around nine million tons.