26/09/2025 (GAPKI), Jakarta - Indonesia will be facing a new competition at the global market of palm oil. Three countries –Brazil, Nigeria, and India, have been serious in developing their own oil palm plantations with a view to reducing their dependence on import and strengthening their domestic production.

Senior Economist of Institute for Development of Economics and Finance (INDEF), M. Fadhil Hasan, said the countries’ steps should get serious attention from Indonesia as the world’s largest producer of palm oil, but there is no need to worry.

According to him, from the perspectives of agronomy and history, the oil palm trees are not foreign plants for those countries.

“I think we don’t need to worry about those foreign countries’ efforts to develop their own oil palm plantations,” Fadhil said during a virtual discussion organized by INDEF on Monday (22/9/2025).

Agronomically and historically, the oil palm originates from Africa, so that the oil crop is an endemic plant in the continent. “Even Nigeria had once in the past become one of the major producers and exporters of palm oil in the world. But then when the country gained big income from crude oil, its agricultural sector was ignored. As a result, currently Nigeria is one of the largest importers of palm oil from Indonesia,” he said.

Fadhil said that Brazil also has a big potential to develop own oil palm plantations as geographically its land areas are very suitable for oil palm cultivation. Meanwhile, India is interested in developing own oil palm plantations because the country wants to reduce its dependence on the imports of palm oil.

“But despite the facts, the capability of those three countries in competing with Indonesia at the global market of vegetable oils are still questionable,” he said.

Fadhil said that when it comes to competition, the key factor that determines one country’s competitiveness is the cost of production. Until now, the cost of production in India, Brazil, and Nigeria is relatively higher than in Indonesia. Such condition makes Indonesia having competitive advantage at the global market.

“But then the question is, will they finally be able to compete with Indonesia? The answer will depend on their cost of production. Until now, I think the cost of production in India, Brazil and Nigeria, is still higher than in Indonesia. So, so far we can still outcompete them in the market,” he said.

According to him, currently Indonesia can still maintain its cost efficiency and stay at its position as the world’s largest producer and exporter of palm oil with strong competitiveness.

But he said that aside from the competition, there are also opportunities for collaborations. “India, for example, is still dependent on the import of palm seedlings from Indonesia as its seedling industry is not yet well developed to cover its own needs,” he said.

Brazil and Nigeria have already had their own seedling industry, but they are still facing problem of high cost of production, ranging from labor cost to other costs of supporting factors.

According to Fadhil, Indonesia’s response to such development should not be by trying to ban or weaken the efforts of other countries in developing own oil palm plantations, but by strengthening the efficiency of its own production cost and marketing.

“I think we’re still able to compete. So, our response should not be, for example, by banning them to expand their oil palm plantations. But we should improve our cost efficiency in the process of production. It should be then the market that will finally determine which one is better or more efficient,” he said.

Palm export to India still big

Director of Agricultural and Forestry Product Exports at the trade ministry (Kemendag), Wijayanto said that India is till a market potential for Indonesia’s exports of palm oil and derivative products.

India makes cooking oil as one of the main commodities. As a result, along with its population and industrial growth, the demand for palm oil from Indonesia is predicted to continue rising.

Despite the fact, the Indonesian government has stated that it will keep prioritizing the local needs. The regulations are designed to ensure the public welfare by making a balance between domestic need and exports.

“Government regulations are focused the most on fulfilling domestic needs for public welfare. We need to consider the balance by prioritizing the domestic needs for foods and energy,” Wijayanto said during the discussion forum.

To ensure the balance, the government has to conduct an inter-ministry coordination, including with agriculture ministry, industry ministry, and the ministry of energy and mineral resources (KESDM).

He said the philosophy of balance should be applied in the policy of export, which prioritizes the domestic needs, especially cooking oil. “This is simultaneously aimed to maintain the stability of price at domestic market and reduce the risk of inflation,” he said.

But he said that despite efforts of keeping the domestic needs, Indonesia is still open for cooperation with India. “The government emphasizes the importance of trade relations based on the constructive and win-win solution principles. That way, the palm oil exports to India can be still strengthened, while ensuring the availability and affordability of palm oil products at domestic market,” he said. (*)

https://gapki.id/en/news/2025/09/24/new-palm-competitors-arising-can-ri-keep-leading-position/