10/01/2012 (Business Recorder) - Palm oil exports from Indonesia, the world's largest producer, dropped 5 percent to 19.4 million tonnes last year, the agriculture ministry said on Monday, highlighting rising domestic consumption.

The fall in exports came even as palm output rose a modest 2.5 percent in 2011 from the previous year, to 22.51 million tonnes, the ministry said in a statement.

Key hurdles in Indonesia's palm oil sector include difficulties in bank financing, poor infrastructure and relatively low productivity, said Gamal Nasir, director-general of plantation at the agriculture ministry.

Rising demand for palm oil - used in cosmetics, cookies and ice cream - has led to deforestation that has prompted an Indonesian moratorium on new permits to clear forests from May last year.

In August, Indonesia raised the minimum for the crude palm oil export tax to 7.5 percent from 1.5 pct previously.

The agriculture ministry did not provide a forecast for 2012.

Last week, the Indonesian Palm Oil Association said it expects crude palm oil exports to rise as much as 9 percent to 17.5-18 million tonnes and for output to increase 6 percent to 25 million tonnes.