JAKARTA, RAKYAT NEWS – The Indonesian Ministry of Agriculture (Kementan) is currently prioritizing the development of Crude Palm Oil (CPO) to support the biodiesel programs B35 and B40, rather than focusing on the 50% biodiesel (B50) blend slated for the coming year.

Minister of Agriculture, Andi Amran Sulaiman, stated on February 17, 2025, that the government has yet to discuss the readiness of CPO production to support the B50 biodiesel program. Instead, the immediate focus is on the successful implementation of the B40 program, which aims to increase the biodiesel blend from 35% to 40%.

Minister Amran explained that the B40 program is already in progress, and the government will only begin planning for B50 once the outcomes of B40 are fully assessed. “We will gradually move towards B50, depending on how B40 progresses,” he said. While B40 is already underway, discussions regarding the necessary increases in CPO production to support the B50 initiative are still in the planning stages.

The government is hopeful that CPO production will surpass last year’s output, which will be crucial in supporting these biodiesel initiatives. However, there are no specific production targets yet set for the upcoming B50 program. The Ministry remains committed to enhancing the domestic CPO supply, but the timeline and capacity for this increase are still under review.

The Indonesian Palm Oil Producers Association (Gapki) has expressed concern regarding the potential impact of the B50 program on both inflation and the global supply of CPO. Eddy Martono, the chairman of Gapki, pointed out that a shift to B50 could lead to reduced CPO exports, which would subsequently lower global CPO supplies and could increase domestic inflation, especially concerning the price of cooking oil.

Eddy emphasized that Indonesia plays a significant role in the global palm oil market, supplying nearly 56% of the world’s CPO and contributing to about 20% of global vegetable oil exports. A shift to B50 could result in a loss of approximately six million tons of CPO exports per year. While Gapki does not oppose the B50 program in principle, the association has urged the government to weigh the broader economic implications of such a shift, considering both national benefits and potential challenges.

The biodiesel program, which blends palm oil-derived Fatty Acid Methyl Ester (FAME) with diesel, is also heavily reliant on funds generated through the CPO export levy. According to the Palm Oil Plantation Fund Management Agency (BPDPKS), the fund raised through this levy reached approximately IDR 17.03 trillion between January and September 2024. During the same period, Indonesia’s total CPO exports amounted to 21.55 million tons, while the national biodiesel production stood at 8.35 million tons.

Despite these financial resources, Gapki has cautioned that the capacity of Indonesia’s domestic biodiesel industry must be considered when transitioning to higher biodiesel blends. Eddy emphasized that the readiness of the biodiesel processing industry is just as critical as the availability of raw materials. To effectively scale up biodiesel production, there must be a corresponding increase in the capacity to produce FAME.

The government’s cautious approach to the B50 program aligns with its broader efforts to balance environmental and economic considerations. As the B40 program continues to unfold, Indonesian officials will monitor its progress closely, making adjustments as necessary before moving toward the more ambitious B50 target. The industry and stakeholders are keeping a watchful eye on how these developments could affect both domestic and international markets in the coming years. (Uki Ruknuddin)

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