InfoSAWIT, JAKARTA — Indonesia’s palm oil industry is entering a critical transition phase, with future growth increasingly dependent on productivity rather than land expansion, according to the Indonesia Palm Oil Outlook 2026 released by Indonesia Palm Oil Strategic Studies (IPOSS).

The report positions palm oil as a continued pillar of Indonesia’s economy, supporting export earnings, regional development, and national energy security through biodiesel. However, structural challenges are expected to shape the industry’s trajectory in 2026.

“Future growth will no longer come from land expansion, but from productivity improvements, governance certainty, and sustainability,” the report states.

IPOSS projects Indonesia’s palm oil production to reach approximately 49.8 million tonnes in 2026, supported by yield recovery and improved climate conditions. Globally, supply remains concentrated in Indonesia and Malaysia, making both countries key price stabilizers.

Domestic demand is expected to rise sharply due to the B40 biodiesel mandate and the potential transition toward B50. While this may reduce export volumes, IPOSS believes stronger domestic absorption will help stabilize crude palm oil (CPO) prices and reinforce energy resilience.

IPOSS Chairman Nanang Hendarsah said the outlook aims to guide policymakers and industry players through growing market and regulatory complexity.

“The industry can no longer operate on a business-as-usual basis. Productivity-driven transformation and strong governance are essential for Indonesia to remain a global palm oil leader,” he said. (T2)