Globaltraded.com — Indonesia and Malaysia are the world’s largest producers of crude palm oil (CPO), accounting for over 80% of global production. The strategic role of these two countries in the global palm oil market cannot be overstated.
Now Indonesia still as the world’s largest producer of CPO, accounting for over 40% of global production. The country’s palm oil industry is a significant contributor to its economy, with the sector generating over $10 billion in revenue annually. Indonesia’s strategic location, favorable climate, and large land area make it an ideal location for palm oil production.
The Indonesia production of crude palm oil (CPO) in 2023 reached 50.07 million tons or an increase of 7.15% compared to that of 2022 at 46.73 million tons. The production of palm kernel oil (PKO) reached 4.77 million tons or an increase of 5.66% compared to that of 2022 at 4.52 million tons.
The production increase in 2023 was caused by a number of factors, which include the price of palm oil ahead of the end of 2021 and 2022 was relatively high that had encouraged growers to improve their cultivation, including the use of fertilizer, and the increase of producing areas in 2023.
While Malaysia is the second-largest producer of CPO, accounting for around 30% of global production. The Malaysia’s palm oil industry is also a significant contributor to its economy, with the sector generating over $5 billion in revenue annually. Malaysia’s strategic location, favorable climate, and large land area make it an ideal location for palm oil production.
Of course, the dominance of Indonesia and Malaysia in the CPO industry has a significant impact on the global market as both countries asthe largest suppliers of CPO to the global market, and their production levels have a direct impact on global prices. Any disruptions to their production levels can lead to fluctuations in global prices, affecting the entire supply chain.
Despite their dominance, Indonesia and Malaysia face competition from other palm oil-producing countries such as Thailand, Colombia, and Nigeria. However, the two countries have also been working together to promote the palm oil industry and increase their market share. They have established the Palm Oil Council of Indonesia and Malaysia (POCIM) to promote the industry and address common challenges.
The palm oil industry has faced criticism over its environmental and social impacts. The clearing of forests for palm oil plantations has led to deforestation and habitat destruction, affecting local ecosystems and wildlife. Indonesia and Malaysia have been working seriously to address these concerns by implementing sustainable palm oil production practices and certification schemes.
The governments of Indonesia and Malaysia have been providing support to the palm oil industry through various initiatives. They have established programs to promote sustainable palm oil production, improve yields, and increase exports. The governments have also been working to address environmental and social concerns, such as deforestation and habitat destruction. Now both countries are working together to promote the industry and address common challenges, including environmental and social concerns. (GT).
