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How palm oil can help realize the vision of a high-income country – Academia

Of all the perennial crops grown in Indonesia, oil palm plays the most crucial role in the country’s economy in terms of income generation, foreign exchange earnings, regional development, poverty alleviation in rural areas, employment and the sustainable source of numerous types of consumer goods. in the long-term.

Even more promising is that palm oil will also play an increasingly important role as a sustainable source of biofuel. President-elect Prabowo Subianto’s campaign promise to accelerate Indonesia’s transition to renewable energy includes a plan to expand biofuel production by upgrading biodiesel 35, or B35, from palm oil to B50.

Even now, palm oil has become the second-largest non-oil export after coal, which brought in $30.3 billion last year, or 12 percent of total exports. As the world’s largest producer of palm oil, with a total production of 55 million tons by 2023, Indonesia supplied 54 percent of the global palm oil market and a third of the total global vegetable oil supply. Palm oil now also provides more than 45 percent of global vegetable oil consumption.

Even more encouraging amid climate change is that palm oil is the most productive of all vegetable oils. In addition to their exceptional productivity, oil palms also require much less labor and production inputs per unit than other oil crops. That is why palm oil is by far the cheapest oil to produce.

This commodity contributes significantly to poverty alleviation in rural areas, as 40 percent of the estimated 16.5 million hectares of oil palm plantations across the country are owned by 6.7 million smallholder farmers and the palm oil industry directly and indirectly employs 16 million people.

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But the biggest concern about Prabowo’s ambitious biodiesel production program is its impact on the environment, as even now many green NGOs blame the feedstock as one of the main causes of deforestation. Another concern is the likely intensification of competition between food and fuel demand, which could create inflationary pressures. Consumption of palm oil for biodiesel in Indonesia last year was 23.2 million tons, 46 percent of total national consumption, with food accounting for 44 percent and oleochemicals 10 percent.

However, we still believe that the plan to double palm oil production is environmentally, technically and commercially feasible, as there are still large areas outside natural forests that are suitable for oil palm plantation expansion. This crop is also most suitable and best grown in the regions around the equator, such as Indonesia.