The Indonesian Palm Oil Association (Gapki) has warned that the government’s plan to implement the 50 percent biodiesel blending mandate (B50) could lead to a sharp rise in cooking oil prices, echoing price spikes seen in early 2022.
At that time, premium packaged cooking oil sold for Rp25,700 (US$1.57) per liter, while bulk cooking oil reached Rp16,400 (US$1) per liter.
Gapki Chairman Eddy Martono said that domestic crude palm oil (CPO) prices are strongly influenced by global market trends, particularly in the Netherlands and Malaysia.
“If the B50 mandate is implemented while production levels remain the same, global CPO prices are likely to rise due to reduced exports from Indonesia. Automatically, prices of cooking oil and other CPO-based products will also increase,” Eddy told Katadata on Friday, October 10, 2025.
Eddy cited that CPO accounts for about one-third of the world’s vegetable oil supply, with Indonesia contributing roughly one-fifth of the global total. However, he assured that domestic supply will remain stable next year due to the Domestic Market Obligation (DMO) policy, which companies must comply with to obtain export permits.
Even so, Eddy emphasized that stakeholders need to boost CPO production to prevent domestic shortages and stabilize prices.
“Production must be increased through the Smallholder Palm Oil Replanting Program (PSR), as replanting among smallholder farmers remains the main bottleneck to improving national output,” he said.
Earlier, Agriculture Minister Andi Amran Sulaiman announced plans to cut CPO exports by 5.3 million tons to support the upcoming B50 biodiesel mandate, which is set to take effect in 2026.
According to Amran, the reduction aims to ensure sufficient domestic supply of fatty acid methyl ester (FAME) − the key component in biodiesel. Indonesia currently exports 26 million tons of CPO per year out of a total 46 million tons produced, with the remaining 20 million tons processed domestically.
“The B50 program will require 5.3 million tons of CPO. We’ll divert that export volume to be processed into biofuel as a substitute for diesel,” Amran said during a press conference at the Presidential Palace on Thursday, October 9, 2025.
He added that the government will keep the export adjustment flexible, depending on global price movements.
“If global CPO prices rise, we might reduce the blend back to B40. But if prices fall, we’ll ramp it up again to B50,” Amran said.
