28/09/2011 (Jakarta Globe) - Indonesia’s palm oil producers are forecast to increase production this year as their cultivated areas expand, according to a company executive.

Palm oil production in the country is set to increase 10 percent this year to 26 million tons, Teguh Patriawan, the president director of midsize palm oil producer Nusantara Sawit Persada, said on Monday.

Output was 23.6 million tons last year. The total value of the commodity is expected to rise 7 percent to $15 billion this year.

Teguh cited an estimate from the Indonesian Chamber of Commerce and Industry (Kadin). He is also a vice chairman for plantation affairs at Kadin.

“Domestic consumption will account for 8.6 million tons and the remaining 17.4 million tons will be for exports,’’ he said.

Last year, of the total 23.6 million tons of palm oil output, 7.5 million tons were sold in the domestic market and 16.1 million tons were sold overseas.

Palm oil producers in Indonesia need more cultivated area to increase output by 2020, Teguh said. “Indonesia needs an additional four million hectares of land by 2020 to meet rising global demand,’’ he said.

The country is the world’s biggest palm oil producer, just ahead of Malaysia.

Teguh said demand would continue to increase with global population growth, rising purchasing power and the increasing use of palm oil as an alternative source of energy.

Crude palm oil prices are expected to continue to decline in line with falling crude oil prices and the coming harvest, Fadhil Hasan, the chairman of the Indonesian Palm Oil Producers Association (Gapki), said earlier this month.

December-delivery palm oil contracts slumped as much as 4.5 percent to 2,857 ringgit ($898) per ton in Malaysia on Monday.

Gapki had set its palm oil export target at 18 million tons this year, which would be a 15 percent increase from last year.

Harry M. Nadir, chief financial officer at Bakrie Sumetera Plantations, said last month that the company’s crude palm oil production was forecast to increase 10 percent to 15 percent as an additional 2,000 hectares of palm plantation matured this year.

He forecast Bakrie Sumatera’s crude palm oil production this year would reach 360,000 to 400,000 tons.

Industry analysts have said demand from growing economies such as India and China should help drive palm oil production from Indonesia.

Exports this year to India, the biggest buyer, are estimated at six million tons, while China, the third-largest market, is expected to import 2.5 million tons, Gapki estimated earlier this month.