Palm oil production in Indonesia may decline

Indonesia’s crude palm oil production could fall by 2 million tonnes this year compared to 2025 levels due to dry weather associated with the El Niño phenomenon and high fertilizer prices caused by the war in the Middle East, Eddy Martono, head of the country’s palm oil producers’ association (GAPKI), said on Wednesday.

Martono noted that fertilizer prices have risen 30% since the outbreak of the war in the Middle East and expressed concern that smallholder farmers, who account for 37% of Indonesia’s oil palm plantations, may reduce or delay fertilizer use.

“If El Niño occurs, it will lead to a decline (in production), and if fertilizer is applied before the end of the semester, production could be reduced by 1-2 million tonnes,” he told reporters.

Indonesia’s meteorological agency predicts a longer and more severe dry season in 2026 compared to last year, increasing the likelihood of drought.

Setiyono, chairman of the ASPEKPIR oil palm farmers’ group, stated that prices for some fertilizers have increased by more than 50%, and his group members are using organic fertilizers to reduce costs.

According to the GAPKI palm oil industry association, Indonesia will produce 51.66 million tonnes of crude palm oil in 2025, a 7.3% increase from the previous year.

The U.S. Department of Agriculture (USDA) expects Indonesia’s palm oil production to reach 48 million tonnes, up from 46.7 million tonnes the previous year.

Tags: prices, palm oil