Cri-report.com Overview on Indonesia Palm Oil Industry

The Indonesia palm oil industry has experienced significant growth in recent years. Presently, about 7mn tonnes of palm oil are produced by smallholders representing over 41% of total palm oil plantations.

Shanghai, China (prHWY.com) May 17, 2012 - CRI-report: Indonesia is one of the world's largest producers of palm oil and the industry has been the economy's most valuable agricultural export sector for the last decade. The attractive returns and high prices of palm oil in the international market have encouraged investment in the Indonesian palm oil industry, resulting in significant rural economic development and poverty alleviation.

Before oil producing palm trees were first introduced to West Java, Indonesia as ornamental plants in 1948, they were cultivated commercially on oil palm plantations of the east coast of Sumatra Island in 1911. Until early 1970s palm cultivation was solely done by large plantation companies. Small private companies and farmers came into this business in 1975 when the government established a programme whereby state-owned plantation companies helped farmers grow oil palm. Consequently, there was widespread growth of oil palm areas after 1975 by large companies (both foreign and domestic), state-owned companies and smallholders.

The Indonesia palm oil industry has experienced significant growth in recent years. Driven by strong demand and higher returns, palm planted areas expanded from 1.1mn hectares in 1990 to 7.6mn hectares in 2010. Presently, about 7mn tonnes of palm oil are produced by smallholders representing over 41% of total palm oil plantations according to "Indonesia Palm Oil Industry 2H11" on www.cri-report.com.

The global market of palm oil grew an average of about 8% per year in the last decade with current production of palm oil estimated at over 47mn tonnes according to "Indonesia Palm Oil Industry 2H11" on www.cri-report.com. Indonesia emerged the world's largest producer of palm oil, surpassing Malaysia in 2006, with an annual production of over 20mn tonnes, representing nearly half of the world total. With global demand for palm oil expected to grow further into the future, palm oil offers the most promising economic prospects for Indonesia. "Indonesia Palm Oil Industry 2H11" on www.cri-report.com expects the country's production to double to 40mn tonnes by 2020.

The country should be cautious, however. Despite the expected increase in future demand, restrictions on the conversion of forests to oil palm plantations in Indonesia would reduce the availability of fertile land and impede expansion of the industry. Government policies should aim to improve productivity and not implement anti-growth non-governmental organizations (NGO) policies.

More details, please see: http://www.cri-report.com/oil-gas/1105-indonesia-palm-oil-industry-2h11.html

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Tag Words: producer, output, palm oil, history, annual growth, promising future

Categories: Business

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