January 16, 2025
JAKARTA – President Prabowo Subianto might not have thought his remarks would spark a controversy when he recently suggested that Indonesia expand oil palm plantations without worrying about deforestation.
His statement sent the wrong signal about his administration’s stance on the sustainability of the commodity. Worse, his words undermine years of progress in curbing deforestation from the palm oil industry, which is partly thanks to moratoriums on the issuance of new permits and licenses for oil palm plantations decades ago.
The statement could be dangerous if industries interpret it as the time to ditch sustainable practices or if foreign buyers lose faith in Indonesian palm oil products and switch to other substitutes or other producing countries with better sustainability standards.
It is easy to take pride in palm oil, with the commodity and its products Indonesia’s top exports and now perhaps poised to play a pivotal role in the President’s energy security dream through the biodiesel programs.
Despite the ambition, efforts to boost palm oil production should not sacrifice the environment. There are still many sustainable ways to enhance output, especially through long-neglected replanting efforts rather than by clearing forests to open new plantations.
The government through the Oil Palm Plantation Fund Management Agency (BPDPKS) channeled over Rp 179 trillion (US$10.36 billion) in subsidies to the biodiesel program from 2015 to 2023, according to research by Auriga Nusantara.
Meanwhile, the agency only disbursed Rp 8.5 trillion for replanting efforts within the same period, according to BPDPKS data from November 2023.
Others measures to boost production can also include better seeds and fertilizers, which universities and research institutions in Indonesia have knowledge about and can produce.
Losing forests will not only deprive Indonesia of its invaluable biodiversity but will also make it harder for the country to meet its net-zero emissions targets, especially after the Prabowo administration plans to accelerate the process to achieve the goal by 2050.
And oil palms, although they do have leaves, are not the same as complex forest ecosystems. Experts have suggested that oil palm plantations can not only reduce the ability to capture carbon but also suck up nutrients that will make it difficult to restore natural forests.
During the Asia-Pacific Economic Cooperation (APEC) summit in November last year, Prabowo may have thought the country could be self-sufficient in green energy by relying on its natural resources, including forms of bioenergy like palm-oil based biodiesel. However, Prabowo must also remember if the source of the biodiesel leads to deforestation, then there is nothing green in the biodiesel just as there is nothing green about electric vehicles if the power is still sourced from coal-fired power plants.
Furthermore, President Prabowo will need to evaluate millions of hectares of oil palm plantations in the country, following findings last year that over 3.3 million of them were illegal. The Development Finance Comptroller (BPKP) has pointed out a lack of compliance that led to Rp 300 trillion in potential lost revenue.
A blind expansion drive would only lead to more illegal plantations and more revenue losses for the government, especially if it continues neglecting its homework of improving compliance in the palm oil industry.
Plans to boost palm oil production should come with adequate measures to maintain adequate farmgate prices and an increase in supply should not mean that smallholders earn less.
The government also needs to step up efforts to assert the country’s control over palm oil prices, which are currently still tied to Malaysia’s commodity exchange and will likely remain that way in the years to come even though Indonesia has already established its own exchange for the commodity.
It would be ironic if Indonesia, with all its palm oil glory, must settle for following standards that others have set despite the country’s pride as the world’s leading palm oil producer.