Indonesian Palm Oil Industry Warns of Export Decline in 2026

Impact of B50 Biodiesel Policy

The Indonesian palm oil industry is bracing for potential export declines in 2026 following the implementation of the mandatory B50 biodiesel policy. The new regulation requires diesel fuel to contain 50% palm oil, which industry leaders warn could significantly impact export volumes.

Industry Concerns and Market Dynamics

GAPKI chairman Eddy Martono expressed concerns that the B50 implementation will lead to reduced export volumes, particularly if production levels remain stagnant. The current production stagnation in Indonesia and Malaysia, the world's two largest palm oil producers, coupled with increasing global demand, creates a challenging scenario for exporters.

Production and Demand Factors

The industry faces a dual challenge: while global demand for palm oil continues to rise, production has plateaued. This imbalance could be exacerbated by the increased domestic consumption of palm oil for biodiesel production under the B50 mandate.

Policy Implications

The Indonesian government implemented the B50 policy to reduce dependence on fossil fuels and support the domestic palm oil industry. However, the policy's impact on export volumes could have significant implications for the industry's revenue and overall economic contribution.