NUSA DUA, Indonesia, Nov 29
(Reuters) - Palm oil output in the world's biggest producer Indonesia is
expected to climb 7 percent next year to 27 million tonnes, a top industry
association official said on Thursday, as three years of acreage expansion
efforts bear fruit.
Output of the edible oil is also
forecast to end 2012 at 25.2 million tonnes, up from 23.5 million tonnes in
2011, Fadhil Hasan, executive director at the Indonesian Palm Oil Association
(GAPKI), told Reuters.
"If 2013 is going to be like
2012 in terms of weather and climate, and there are no shocks in the supply,
maybe output will be about 27 million tonnes," said Hasan, speaking on the
sidelines at the 8th Annual Indonesian Palm Oil Conference on the island of Bali .
"A lot of expansion has
happened in the last three years or so, so now the trees are mature."
Palm estates sprawl across 8.2
million hectares in Indonesia ,
and that number is expected to rise by about 200,000 hectares a year for the
next decade.
DEMAND WOES
Palm oil is used mainly as an
ingredient in food such as biscuits and ice cream, or as a biofuel. Indonesia and Malaysia account for about 90
percent of global production.
Demand for the edible oil has fallen
this year due to the global economic slowdown, which has led to record-high
inventories. Benchmark palm oil futures have also lost a
quarter of their value so far this year.
Indonesian palm oil stocks are
currently between 2.5 million and 2.8 million tonnes, said Hasan. "We used
to have one month of production as stock but maybe more than that now," he
added
Palm producers are seeking new ways
to generate demand, but their efforts may be hampered by renewed attacks by
Western governments on the oil's green credentials.
Environmental groups have been
critical of the expansion in the palm sector, which they blame for
deforestation, speeding up climate change, ruining watersheds and destroying
wildlife.
"The perception, especially
from European countries, towards palm oil is worse than two or three years
because of the intensity and scale of campaigns by NGOs," Hasan said.
The U.S. Environmental Protection
Agency recently visited Indonesia
to review the environmental aspects of its palm oil industry, while France has
proposed a hike in duties on foods using palm oil, which has been dubbed the
"Nutella tax".
To improve its green credentials, Indonesia
signed a two-year forest moratorium in May last year, although critics say
breaches still occur.
Hasan urged the government not to
extend the ban, which is due to end in 2013, saying it would damage the
economy. The palm oil industry is one of the biggest in Indonesia .
"We don't know exactly what is going
to happen, but in the interests of the Indonesian economy we hope that the
moratorium is not going to be extended," Hasan said.