22/06/2012 (Shanghai Daily) - Indonesia is expected to remain dominant as the world's largest palm-oil producer within the next decade, on the back of its main rival Malaysia's land scarcity and aging plantations, the Jakarta Post quoting report said here on Thursday.

According to the report carried out by Rabobank International, average palm-oil consumption in the world has grown at a faster rate than global supplies over the last 10 years, reaching demand of 2.5 million tons per year compared to production of 2.4 million tons per year, putting pressure on palm-oil producers to intensify their output.

"Due to demand outweighing supply, constraints are now apparent," said the report, titled: Palm Oil Outlook: Palm, the Leader of the Pack.

To meet global demand, palm-oil producers need to expand their plantations by 640,000 hectares of land per year. With that figure in mind, Indonesia's land availability is expected to last for another 12 years, as it still has 16 million to 17 million hectares of land that can be used for oil palm plantations.

On the other hand, Malaysia had mostly exhausted its land supply, leaving the country with only 600,000 hectares of suitable land as of now, said Rabobank International's associate director for food and agribusiness research and advice Pawan Kumar.

"Given the current land situation and the increasing regulatory, environmental and sustainability protocols, Malaysia may run out of suitable land for palm cultivation within three to four years," he said during a press conference in Jakarta on Wednesday.

In addition to land scarcity, Malaysia also faced the problem of aging plantations, with 87 percent of its total planted areas already matured. In comparison, only 76 percent of Indonesia's total planted areas had reached maturity, indicating potential for future production growth in the country, suggested the report.

"The Malaysian plantation sector is relatively mature and there is very little land left for expansion," the report said.