Indonesia’s palm oil industry is experiencing a transformation as sustainability initiatives gain momentum alongside improved market prospects. ProSpace Indonesia’s latest agricultural commodities report indicates that certified sustainable palm oil production has increased by 32% over the past year, now representing 38% of total national output.
International markets have responded positively, with Indonesian palm oil exports reaching 36.7 million tonnes in 2024, an 8.3% increase year-on-year. The European Union, previously implementing import restrictions, has established new trade frameworks that recognize Indonesia’s sustainability efforts.
“The industry has reached a turning point where sustainability is no longer viewed as a regulatory burden but as a competitive advantage,” explains Dewi Suryani, Agricultural Commodities Analyst at ProSpace. “Producers implementing best practices are securing premium prices and preferred buyer status.”
Technology adoption plays a crucial role in sustainability improvements, with satellite monitoring, blockchain traceability, and precision agriculture reducing environmental impacts while improving yields. Small-holder farmers, who account for 41% of production, are increasingly participating in sustainability programs through cooperative arrangements.
Challenges remain in achieving full traceability across supply chains and rehabilitating previously degraded land. However, government-backed initiatives and private sector investments are addressing these issues systematically.
Current palm oil prices of $1,120 per metric tonne represent a 15% increase from 2024 averages, suggesting continued favorable market conditions.
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