The Indonesian Oil Palm Farmers Association (Apkasindo) has predicted that the development of biodiesel in Indonesia will halt at B50, a 50 percent blend of palm oil, due to declining palm oil production coupled with unsupportive regulations.

B50 refers to biodiesel containing 50 percent fatty acid methyl ester (FAME) derived from palm oil in the composition of diesel fuel.

Gulat ME Manurung, Chairman of Apkasindo, welcomed the government's plan to implement the 40 percent mandatory biodiesel (B40) program this year.

He predicts that the availability of crude palm oil (CPO) for B40 will be sufficient. However, he cautioned that Indonesia's CPO supply will be depleted for domestic needs if the government raises the biodiesel mandate to B50. Indonesia's CPO production reached 48 million tons in 2023, according to Apkasindo data.

“Pushing beyond B40 to B50 will lead to a deficit of 1.24 million tons of CPO, based on the export target of 2.04 million tons in 2023,” Gulat said in a statement on Wednesday, March 13, 2024.

Consequently, he added, Indonesia would cease exports, resulting in a loss of foreign exchange earnings from palm oil.

He warned of the potential ramifications, stating that if implemented, the B50 mandate would lead to a shortfall in CPO supply, adversely affecting both domestic and international demands.

Moreover, he attributed the decline in oil palm production to aging trees, unproductive smallholder plantations, and regulatory obstacles hindering replanting initiatives.

Gulat expressed concerns over regulations such as the Job Creation Law, which, through Government Regulation No. 24/2021 and Minister of Environment and Forestry Regulation No. 7/2021, restrict replanting opportunities for farmers within forest areas, potentially affecting up to 2.8 million hectares.

To address these challenges, Gulat urged the government to facilitate replanting programs for oil palm farmers, particularly independent farmers who represent 93 percent of the total area of smallholder plantations.

He highlighted the importance of enhancing productivity through replanting, which could significantly boost CPO production.

While the government continues to evaluate the implementation of B40, stakeholders like the Indonesian Biofuel Producers Association (Aprobi) await further guidance.

The possibility of implementing B40 this year remains uncertain, pending government directives and discussions regarding the specifications of biofuels.