Officials from the palm oil industry say that rising biodiesel mandate will dent Indonesian palm oil exports in 2025.

A senior industry official stated on Wednesday that Indonesian palm oil exports in 2025 are likely to fall 7.3% from the previous year to 27,35 million metric tonnes despite increased production. The world's largest producer of edible oil is increasing biodiesel production.

Fadhil Hazan, the head of the Trade and Promotion Division at the Indonesian Palm Oil Association said that the country's crude oil production will likely rise to 50,000,000 metric tons by 2025, from 48,16,000,000 metric tons one year earlier.

He said that the trend of export surpluses will continue to decrease as biodiesel mandates increase.

Indonesia is expecting its B40 Biodiesel Programme, which aims to reduce its dependence on diesel fuel imported from abroad, to be fully implemented next month, after initial delays.

The mandatory B40 blend, which contains 40% palm oil, was launched on January 1, but there were some delays because of regulatory issues. As a transitional period, fuel distributors had until the end February.

The blend previously contained 35% Palm Oil.

Palm oil, which is the most widely consumed edible oil in the World, is now more expensive due to tighter supplies.

Fadhil stated that Indonesian palm oil usage for biodiesel in 2025 is expected to increase from 11,44 million metric tons last year.

The world's largest palm oil producer, this country funds its biodiesel program by imposing a levy on exports, which is then used to subsidise the price of biodiesel.

The government decided to subvention about half the biodiesel allotted for 2025. Fadhil stated that Indonesia does not have to change the levy it charges on exports in order to fund B40.

Eniya Listiani Dewi, an official from the energy ministry, told members of parliament that it is expected that its plantation fund will distribute 35.47 trillion Rupiah (US$2.2 billion) as subsidy for the mandatory biodiesel program in Indonesia. (Reporting and writing by Ashley Tang, Rajendra Jadhav, Naveen Thural; editing by Himani Sarkar).

(source: Reuters)