Indonesian President Joko Widodo has ordered the nation's Minister of Environment and Forestry Siti Nurbaya to issue a moratorium on new palm oil concessions in a number of provinces. Although Widodo wants Indonesia - the world's top producer and exporter of crude palm oil (CPO) - to raise CPO output, he believes this increase can be achieved by increasing productivity of existing palm oil plantations, not by adding new plantations. Indonesia is often criticized by environmentalist groups for its forestry policies and poor law enforcement (which led to the severe haze that spread through Southeast Asia last year).
President Widodo (usually called Jokowi) said much progress can be made (in terms of productivity) by focusing on existing palm oil plantations. Productivity of Indonesian palm oil plantations is low due to the weak quality of seeds that are used as well as the slow progress that is made in terms of the rejuvenation of trees (replanting). The older generations of trees have reduced production capacity (Widodo believes palm oil plantations can become twice as productive if farming techniques are changed). However, smallholders - who account for around 40 percent of Indonesia's total CPO output - lack the financial means and awareness to invest in younger trees.
The moratorium on new palm oil concessions comes in addition to the older moratorium on new permits to clear rain forests and peat lands. This older moratorium came into effect on 20 May 2011 and has been extended for a two-year period in May 2015. Widodo added that there could also come a moratorium on new concessions in the mining sector. All these moratoriums are efforts to safeguard Indonesia's rich biodiversity. Future generations - both domestically and globally - should be able to enjoy this richness.
Palm oil is one of Indonesia's key foreign exchange earners. In 2015 Southeast Asia's largest economy collected nearly USD $19 billion through exports of crude palm oil. The sector also provides employment to 6 million people.
However, Indonesian farmers traditional slash and burn practices, aimed at the expansion of palm oil as well as pulp & paper plantations (in combination with authorities' incapability to curtail this practice) have caused great disasters. For example, last year's forest fires on parts of Sumatra and Kalimantan and the subsequent toxic haze that spread to other parts of Southeast Asia were one of the world's most severe natural disasters ever. Between June and October 2015 more than 100,000 man-made forest fires destroyed 2.6 million hectares of land. This also caused great economic costs for Indonesia. According to a World Bank report an estimated at IDR 221 trillion (approx. USD $16 billion or 1.9 percent of the country's gross domestic product and more than twice the reconstruction costs after the tsunami in Aceh in late-2004) was destroyed in these fires.
Indonesian Palm Oil Production and Export Statistics:
(in USD billion)
¹ indicates forecast
Sources: Indonesian Palm Oil Producers Association (Gapki) & Indonesian Ministry of Agriculture