(Bloomberg) -- Indonesia, the world’s biggest producer of palm oil, plans to balance keeping up production of the commodity to meet demand while fulfilling its pledge to end deforestation by focusing on replanting old trees.
The industry will step up efforts to help smallholder farms -- which cover 6.7 million hectares, or 75% of total oil palm plantations in the country -- to replace old plants with new crops that are more productive and profitable, according to Sahat Sinaga, acting chairman of the Indonesian Palm Oil Board.
This will help increase production of fresh fruit bunches from smallholder plantations to 22 tons per hectare a year from about 9.2 tons a hectare currently, he said. Overall crude palm oil output may rise to 64 million tons a year as a result, from 48 million tons currently.
The Southeast Asian nation was one of 100 countries that pledged to end and reverse deforestation by 2030 at the COP26 conference in Glasgow, Scotland. The countries together make up 85% of the world’s forests.
Replanting aging oil palm trees is a priority in Indonesia. Old trees are less productive, and replanting is necessary in order to maintain or raise yields without increasing land use. For smallholders, that can be challenging because of a potential loss of income during the replanting process. Some are also ill-equipped to replant properly, which requires using certified seeds, as well as fertilization and land-clearing practices that don’t involve burning.
About 2.78 million hectares of plantations belonging to smallholders are over 25 years old and need to be replanted, according to the Indonesian agriculture ministry. The country allocated 5.4 trillion rupiah ($377 million) in export levies collected by the Oil Palm Plantations Fund Management Agency to support the replanting program this year.
PT Astra Agro Lestari, Indonesia’s biggest listed oil palm grower, said it aims to replant about 2.5% of its 280,000 hectares of plantations each year across Sumatra, Kalimantan and Sulawesi.
Since 2015, the company has implemented a sustainable production policy and vows that no deforestation is involved in its supply chains, said Fenny Sofyan, communication and investor relations manager. “We commited to deforestation even before the commitment at the COP26 in Glasgow,” she added.
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