IPOSS Releases Outlook for Indonesian Palm Oil Industry 2026 — Transforming the Palm Oil Industry: Sustaining Economic Pulse, Addressing Sustainability Challenges

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Jakarta, December 30, 2025 — Indonesia Palm Oil Strategic Studies (IPOSS) released the research report Outlook for Indonesian Palm Oil 2026, which maps the direction of the national oil palm industry amid production dynamics, strengthening domestic consumption, and global policy and market pressures. This report is compiled as a data-based strategic reference for policymakers and industry players in facing the transition phase of the palm oil industry in 2026.

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IPOSS assesses that oil palm continues to play an important role in Indonesia's economy, both as a source of foreign exchange, a driver of regional economies, and a pillar of energy security through the biodiesel program. However, entering 2026, the palm oil industry faces structural challenges, where growth is no longer supported by land expansion but by increased productivity, governance certainty, and sustainability.

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In terms of production, IPOSS projects that Indonesia's palm oil production will grow moderately to around 49.8 million tons in 2026, in line with the recovery of the plant production phase and improved climate conditions. Globally, CPO supply remains concentrated in Indonesia and Malaysia, making the production performance of both countries a determining factor in the stability of world vegetable oil prices.

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The report also highlights the strategic role of palm-based energy policies. The implementation of the mandatory B40 biodiesel and the potential strengthening towards B50 are expected to significantly increase domestic CPO absorption, while also changing the structure of the national palm oil market. This strengthening of domestic consumption implies limited export space, but on the other hand, it plays a role in maintaining price stability and national energy security.

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In terms of price, IPOSS estimates that strengthening domestic demand will keep global CPO prices at relatively high levels throughout 2026, although they will still be influenced by global production dynamics and partner country trade policies.

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Chairman of IPOSS, Nanang Hendarsah, stated that the Outlook for Indonesian Palm Oil 2026 was prepared to provide alternative strategic directions in managing the palm oil industry amid changes in global policy, market, and governance.

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“IPOSS prepared the Outlook for Palm Oil 2026 to map the risks and policy choices that need to be taken so that Indonesia's palm oil industry remains competitive and sustainable. This report also serves as a basis for encouraging improvements in governance, increasing productivity, and balancing domestic needs with export interests,” said Nanang in his official statement in Jakarta.

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Through this report, IPOSS recommends several strategic steps, including accelerating the replanting of smallholder plantations to boost productivity, strengthening legal certainty and governance integration, and aligning energy and trade policies so that strengthening the domestic market does not erode export competitiveness. IPOSS also encourages the development of downstream industries and the sustainable utilization of palm oil to increase the added value of the national industry. “In the future, managing the palm oil industry can no longer proceed as business as usual. Transformation based on productivity, strong governance, and sustainability is key to ensuring that Indonesian palm oil remains a major player in the world vegetable oil market,” concluded Nanang.

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