* Indonesia now unlikely to hit palm output target of 40 mln
* Expansion not the only way to boost production,
agriculture ministry says
By Yayat Supriatna
JAKARTA, Oct 18 An Indonesian rule limiting
plantation areas to just 100,000 hectares for new palm oil firms
threatens an ambitious output goal of 40 million tonnes by 2020
set by the world's top producer of the edible oil, an industry
group said on Friday.
Analysts say the new rule aims to protect small plantation
firms from bigger predators, and will close a loophole allowing
major players to set up firms in different provinces.
The new law exempts state-owned firms, co-operatives and
listed firms in which small individual investors make up a
majority stake, and will not affect companies that already have
"This new regulation is purely to curb oil palm plantation
development in Indonesia," said Timbas Prasad Ginting, an
official of industry body the Indonesian Palm Oil Association
(GAPKI). "Perhaps this government step is merely to satisfy
Indonesia is a key player in the battle against climate
change and faces international pressure to halt rampant
deforestation and destruction of carbon-rich peatlands.
Forests in the archipelago are being cut for an expanding
swathe of palm oil, mining and pulp and paper industries, which
green groups blame for hastening climate change and destroying
"The palm oil plantation restriction will slow annual
production growth so that we will not achieve our target of 40
million tonnes in 2020," Ginting told Reuters.
Indonesia, home to the world's third-largest expanse of
tropical forests, should not rely solely on expansion to boost
yields, said Deputy Agriculture Minister Rusman Heriawan, adding
that better farming techniques could also push up output.
The new law will require new palm plantation firms to offer
a fifth of their land for development by local farmers where
possible, and gradually divest 30 percent of new palm oil mills
to co-operatives within 15 years of operation, Heriawan said.
He gave no details of whether the new rule would affect
plantations with land licenses about to expire or be renewed,
and how the law would affect existing firms seeking to expand.
There are doubts as to whether domestic farmers have the
funds or access to finance, to buy stakes in new palm oil
ventures and plantations, industry officials added.
Output of palm oil, used as an ingredient in food items such
as biscuits and ice cream, as well as biofuel, is expected to
rise 5 percent this year in the Southeast Asian nation, to range
between 27 million and 28 million tonnes.
Palm oil estates sprawl across more than 8 million hectares
of Indonesian land, industry officials estimate.
(Reporting by Yayat Supriatna; Writing by Michael Taylor;
Editing by Clarence Fernandez)