PUTRAJAYA, Aug 27 (Bernama) -- Indonesia's plan to become the largestproducer of palm oil has raised some concerns at the ongoing MPOBInternational Palm Oil Congress 2003 here, particularly on the amount ofdeforestation activity that would be involved.

Indonesia, currently one of the largest producers of palm oil is expectedto produce 9.57 million tonnes of palm oil in 2003 and 10.15 milliontonnes in 2004. In 2002, oil palm area in Indonesia was estimated at 4.1million hectares spread in 16 provinces with an annual production of 9.1million tonnes.

The country has also identified around 18 million hectares of additionalland suitable for palm oil development in some provinces with Riau, Jambiand Kalimantan likely to become the most preferred sites for palm oilinvestment.

And the concerns are growing.

However, statistician from Indonesian Oil Palm Research Institute, DrLalang Buana, in refuting the notion that oil palm expansion would lead tototal forest destruction in the country, says the areas identified werelong designated for oil palm plantations.

"We have done a few studies on the establishment of oil palm plantationand we found that only about less than three percent of the areas involvedare primary forest," he told Bernama when met at the sidelines of thePIPOC here Wednesday.

"There was a bunch of land that has been long deforested so, we use thisland," he added.

According to Dr Lalang, most of the lands identified were still under theadministration of Indonesia's Department of Forestry.

"We have asked their permission to take over the land and now they havejust released only about 400,000 hectares to be converted into oil palmplantations," he said.

He added that with the support from the market and conducive investmentclimate, the area is expected to increase by 200,000-250,000 hectares peryear, resulting in higher production.

He added that the potential productivity of new planting materials wasaround 10 percent higher than those released 10 years ago, thus the newplanting and replanting would have higher oil productivity.

"The improvement on extraction rate, as well as the expansion rate of200,000-250,000 hectares per year, will make the national average oilproductivity to increase by around one percent," he said.

The country's palm oil production is expected to reach 10.76 milliontonnes in 2005 and increase further to 14.33 million tonnes by 2010 onover 5.80 million hectares of oil palm plantation.

Meanwhile in his paper presented earlier Wednesday, Dr Lalang said worlddemand for palm oil was expected to increase mainly from China, India,Nigeria as well as in Indonesia.

Recent studies have showed that China might need an addition of 400,000tonnes of palm oil per year, Korea aboout 5,000 tonnes, Australia 20,000tonnes, India 230,000 tonnes and Nigeria 30,000 tonnes.

"For these countries alone, oil palm expansion rate needed is around160,000 hectares per year. In addition, new usage of palm oil like fordiesel fuel may further increase the demand sharply," he said.

But the prices are likely to go down slightly due to the usual businesscycle, he said.

"The price cycle is characterized by one major peak and two minor peaks.We have just passed the major peak of the price and we expect it todecline in the next two years following the business cycle," he said.

--BERNAMA