Climate Change Costs Palm Oil Industry Billions in Lost Yields

The palm oil industry faces mounting challenges from climate change, with prolonged droughts and rising temperatures threatening yields in major producing countries.

In Indonesia, key plantation regions such as Lampung, South Kalimantan, and South Sumatra have experienced severe water deficits, leading to production declines of up to 10 percent annually, according to the SMART Research Institute. If this trend continues, the industry could face potential losses of $4.6 billion per year.

To address this challenge, scientists at SMART Research Institute have developed drought-tolerant palm oil varieties using advanced genetic selection methods. Their research, spanning over a decade, identified 14 promising candidates, with two top-performing varieties—SD14 and SD63—showing resilience under extreme drought conditions.

“Climate change is becoming more unpredictable, and its impact on plantations is significant. That’s why we are developing genetically enhanced seedlings to improve drought tolerance,” said Reni Subawati, a researcher at SMART Research Institute, at the International Conference on Oil Palm & Environment (ICOPE) 2025 in Bali, on Friday.

Using Chlorophyll Fluorescence technology and a Drought Factor Index (DFI), researchers efficiently screened palm varieties. Field trials in South Kalimantan demonstrated that SD14 and SD63 outperformed conventional varieties, maintaining 14–27 percent higher yields even during extreme droughts, such as those recorded in 2014 and 2015.

However, these varieties are classified as intermediate tolerant, meaning they still experience some production declines during drought but at significantly lower rates than standard palms.

“We can’t promise a 100 percent drought-resistant variety, but these cultivars can greatly reduce productivity losses caused by water shortages,” Reni explained.

SD14 is currently undergoing official release approval by Indonesia’s Varietal Release Assessment Team (TPPV), with final administrative processes underway. Once approved, this innovation is expected to help plantations mitigate the financial impact of climate-related droughts.

Climate change is also disrupting Colombia’s palm oil industry. Speaking at ICOPE, Ivan Mauricio Ayala Diaz of Cenipalma warned that rising global temperatures, greenhouse gas emissions, and land-use changes are severely impacting ecosystems, wildlife, human populations, and palm plantations.

One of the most pressing concerns is the decline in fruit production and pollination efficiency, with Colombian plantations suffering from heat-related ecological stress.

“In the past 15 years, Colombia has lost 168,000 hectares of palm plantations due to disease outbreaks caused by climate change, leading to millions of dollars in losses,” Diaz explained.

To counter these effects, Cenipalma has adopted agronomic techniques and artificial irrigation to enhance resilience. Research in northern and southern Colombia found that implementing dripper irrigation systems increased yields by up to 90 percent, while soil moisture conservation techniques reduced erosion by 50 percent.

In addition to improved irrigation, Cenipalma is utilizing genomic selection and EST (Expressed Sequence Tag) techniques to breed palm oil varieties with greater resistance to heat stress and drought. The center has also identified that ammonium-based fertilizers are more effective than nitrate-based fertilizers in promoting palm tree growth.

Tags: droughts, Indonesia, rising temperatures, yields, palm oil, climate change