A breath of fresh air has hit plantation entrepreneurs who are still struggling with the challenge of increasing productivity. Driven by strong global demand, the price of crude palm oil has strengthened recently.
It was noted that the price of crude palm oil (CPO) on the Malaysian exchange has shown an upward trend since last May. As of August 15, 2025, the CPO price closed at MYR 4,472 per ton on August 15, 2025. This upward trend in prices was driven by strong demand, both from domestic and global markets.
In line with that, the reference price of CPO in Indonesia also rose by 3.76% to USD $910.91 per metric ton in August 2025.
The main driver behind this demand is a surge in imports by the world's largest consumers, India and China. They cut import taxes on their vegetable oil in half.
In addition, the successful implementation of the mandatory B40 biodiesel program in Indonesia has also had an impact on domestic supply. This upward trend in CPO prices due to strong market demand is good news for palm oil entrepreneurs.
Despite a shift in the world vegetable oil market share due to US foreign trade policy, palm oil still takes the largest market share. Soybean oil follows in second place. According to the Mordor Intelligence report, palm oil's market share will remain strong in 2024 with Indonesia and Malaysia as the main producers.
However, despite the promising price increases, the palm oil industry in the country is still facing challenges related to productivity. Data from the Central Statistics Agency (BPS) shows that oil palm productivity per hectare has tended to decline in recent years. By 2024, palm oil productivity will be less than 3,000 tons per hectare.
This decline is mainly due to the low productivity of smallholder oil palm plantations, which cover about 42% of the total land area. Many smallholders use inferior seedlings, do not apply proper cultural techniques, replant late, and face problems with fertilizer management and pest control.
As a step to boost productivity and maintain supply sustainability, a comprehensive solution is needed. One of the strategic efforts is the People's Palm Oil Replanting (PSR) program run by the government through the Palm Oil Plantation Fund Management Agency (BPDPKS).
Although the realization of this program is still far from the set target, PSR is key to replacing old plants with more productive superior seedlings. In addition, increased investment in downstream capacity, especially to support the B40 and B50 biodiesel programs, will secure domestic demand and create added value for palm products.
