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he Indonesian Palm Oil Producers Association (Gapki) expects production and exports of the commodity to achieve double-digit growth this year, despite surging challenges in international as well as domestic markets.

The domestic palm oil industry may face bigger pressure as the European Union, its major foreign market, has issued draft measures to reduce the use of biodiesel in its renewable energy program.

Domestically, it is also grappling with uncertainties stemming from a regulation on plantation cultivation rights.

The group expected palm oil production to climb by 10 percent year-on-year (yoy) this year, from the 42 million tons they yielded last year.

Last year, the output surged 18 percent from the 35.6 million tons seen in 2016.

Gapki secretary-general Togar Sitanggang said on Tuesday the production goal would be supported by favorable weather throughout this year.

“Our production will grow normally this year on the back of wet weather, proven to have boosted our productivity last year,” he said, referring to La Niña.

Meanwhile, the group also projected that exports of palm oil and its derivatives would climb by 10 percent yoy this year, from 31 million tons in the past year.

In 2017, outbound shipments of palm oil and its derivatives, excluding biodiesel and oleochemicals, rose by 23 percent yoy to a record high from 2016. The value stood at US$22.9 million.

Gapki attributed the strong export performance to palm oil sales in key markets — India, Africa and the EU.

Overseas shipments to India and Africa, for instance, climbed significantly by 32 percent and 50 percent yoy, respectively.

“We even saw a 15-percent increase in exports to [the EU] from 4.37 million tons in 2016 to 5.03 million tons in 2017,” Togar said.

He added that Indonesia’s palm oil exports might get a boost with the ruling of the WTO over a biodiesel trade dispute with the EU, which could result in the reduction of the bloc’s punitive duties.

“However, we must recalculate the prices to stay competitive with the biodiesel price in the EU,” Togar said.

Since 2013, the EU has imposed antidumping duties ranging between 8.8 percent and 23.3 percent, equal to €76.94 to €178.85 ($223) per ton, on Indonesia’s biodiesel products. These duties have pushed Indonesia’s biodiesel fuel down by 42.84 percent on average annually to only $150 million in 2016, according to data from the Trade Ministry.

Togar emphasized the need for producers to look to other prospective markets in the Middle East and Africa to set up oil palm plantations with a tougher regulatory environment in Indonesia.

“With the plans of a palm plantation moratorium in Indonesia, our members think it’s better to look to other countries such as those on the African continent,” he said.

He also pointed out the government planned to extend Presidential Instruction (Inpres) No. 8/2015 on a moratorium of new permits for primary forests and peatland areas, which expired in mid-2017.

Gapki’s chairman, Joko Supriyono, called for producers to begin diversifying palm oil markets because production would climb in years to come. However, he also said it was not wise to cut ties with the EU in terms of exports.

“It’s not easy to build up a market. We have to nurture it for a long time,” Joko said, expecting that Indonesian producers could solve all challenges in Europe because the bloc remained a vast market for the industry. (srs)