Indonesia faces potential 27-million-tonne palm oil supply gap, Gapki warns

Production growth risks falling behind demand

Indonesia could face a palm oil supply deficit of 27 million metric tonnes if production growth fails to keep pace with rising demand, according to the Indonesian Palm Oil Association, known as Gapki. The warning reflects a scenario in which Indonesia’s population continues to increase while national palm oil output records no significant growth.

Gapki communications head Bandung Sahari said the resulting pressure could weaken the industry’s ability to satisfy domestic consumption while maintaining export supplies. The association is calling for higher plantation productivity, stronger workforce skills, technological innovation and better coordination of policy across the palm oil value chain.

The challenge is amplified by restrictions on plantation expansion. Pantau reported that the rate of land expansion has declined since a moratorium on the development of new private-sector palm oil plantations took effect. With limited scope to add acreage, Gapki argues that more output must come from land already under cultivation.

Yield target rises as land expansion slows

Bandung said that if Indonesia’s planted area does not grow, domestic crude palm oil production would need to reach about five metric tonnes per hectare per year to meet demand. That makes replanting, suitable agricultural technology and controlled land management central to the supply outlook, although Gapki did not specify a deadline for achieving the yield level or the period over which the projected deficit could emerge.

The association also called for stricter control of agricultural land conversion so that productive areas are not steadily lost to non-agricultural uses. It wants education and agricultural technology centers strengthened, alongside institutional capacity, skills and entrepreneurship among farmers. Investment and supporting infrastructure are also needed to improve the use of existing agricultural resources, Gapki said.

Any productivity drive must remain consistent with environmental sustainability, Bandung added. The industry therefore faces a dual constraint: it must raise output without relying heavily on new plantation acreage and without sacrificing sustainability standards. This places greater emphasis on the quality of planting material, field management, labor capabilities and the adoption of technology.

Global supply and downstream capacity at stake

Gapki estimates global palm oil supply at around 85 million metric tonnes, of which Indonesia contributes approximately 49 million tonnes, or 58%. Bandung also said Indonesia accounts for 22% of the world’s total vegetable oil supply. Its production outlook therefore matters beyond the domestic market, affecting global vegetable oil availability and industries that use palm-derived products, from food manufacturing to energy.

The warning also highlights a potential mismatch between upstream supply and Indonesia’s investment in processing. Gapki said much of the palm oil industry’s recent investment has been directed toward downstream development. New processing capacity and product innovation, however, cannot deliver their expected value if supplies of raw material are insufficient.

For producers, the immediate priority is to obtain more oil from existing plantations while preserving productive land. Processors face the risk that inadequate feedstock growth could limit capacity utilization, while traders and international buyers remain exposed to changes in Indonesian availability. With the country providing more than half of global palm oil supply, a sustained production shortfall would have implications across the wider vegetable oil and energy markets.