Importance of Palm Oil for Indonesia – Statistics & Analysis of Plantations, Production, Export
Palm oil ranks among the most important agricultural commodities of Indonesia as this country is the world’s biggest producer of palm oil. This implies that Indonesia generates important foreign exchange earnings from palm oil exports and is a source of income for millions of workers on the plantations.
Moreover, domestic consumption of palm oil is also rising rapidly. Not only because palm oil is used in a wide range of products (such as in cosmetics and food), but also because the Indonesian government has high ambitions for its biodiesel program (which will consume an increasing amount of domestically-produced palm oil in the period ahead).
In this article, we present an analysis and various statistics related to Indonesia’s palm oil sector.
When we take a look at the latest gross domestic product (or GDP) data, then we see that ‘agriculture, forestry and fishery’ contributed 13.78 percent to Indonesian GDP in the second quarter of 2024 (which makes this the biggest sector in the economy after the manufacturing sector).
Meanwhile, the key subsector within agriculture, forestry and fishery is plantations. This subsector contributes around four percent to Indonesian GDP, and accounts for almost one-third of the agriculture, forestry and fishery sector. And thus, plantations play an important role in the Indonesian economy. Within the plantations subsector, palm oil plays a key role.
Global Palm Oil Production
As mentioned above, Indonesia is the world’s biggest producer of palm oil (by a wide margin). Based on data from the US Department of Agriculture (USDA), total global palm oil production reached 79.03 million metric tons in 2023. Indonesia supplied 46.5 million metric tons of that total, implying the country contributed 59 percent of global palm oil production in 2023. The world’s second biggest palm oil grower is Malaysia, which supplied 19.25 million tons (24 percent of total) in 2023.
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