Indonesia dismisses fears of cooking oil shortage as B50 biodiesel program expands

Bahlil Lahadalia, Minister of Energy and Mineral Resources, Indonesia  has rejected public concerns that the government’s upcoming B50 biodiesel program will cause a shortage of cooking oil due to increased use of crude palm oil (CPO), reports Tempo English.

“There is no problem with the supply of cooking oil,” Bahlil said, as reported by Antara on Tuesday, October 28, 2025.

Both biodiesel and cooking oil use CPO as their main ingredient. According to the Ministry of Trade’s Decree No. 1531 of 2022, national cooking oil production requires about 416,000 tons of CPO per month, or roughly 4.99 million tons a year. In comparison, the B50 mandate — which blends 50 percent biodiesel with regular diesel — will need around 5.3 million tons of CPO annually.

To ensure sufficient supply, Bahlil said the government is preparing three strategies: increasing productivity on existing plantations, developing new oil palm areas, and adjusting exports through the Domestic Market Obligation (DMO) policy. “We can slightly reduce exports if needed to meet domestic needs under the B50 policy. That’s one possible approach,” he said.

Minister of Agriculture Andi Amran Sulaiman stated that the government plans to reduce CPO exports by as much as 5.3 million tons to support the rollout of the B50 program in the second half of 2026.

He noted that Indonesia currently produces around 46 million tons of CPO annually, with about 20 million tons used domestically and 26 million tons exported abroad.

Experts have cautioned the government to weigh the economic risks before implementing the program. Bayu Krisnamurthi, an agribusiness professor at Bogor Agricultural University (IPB), warned that increasing the biodiesel blend from B40 to B50 could raise subsidy costs, limit exports, and lead to higher cooking oil prices.

“If not managed properly, this could hurt the competitiveness of Indonesia’s palm oil industry,” Bayu said.

He explained that while the B50 initiative could save up to Rp172 trillion in foreign exchange by cutting diesel imports, it could also cause around Rp190 trillion in lost export income due to lower CPO sales abroad.

“There needs to be a careful balance between energy goals, export growth, and farmers’ welfare,” he added. “Indonesia’s palm oil industry is a strong one — we should make sure we keep it that way.”

Tags: exports, Indonesia, Crude palm oil, Production, biodiesel, cooking oil, shortage