The global sway of Indonesian palm oil: An export analysis
The export share of Indonesia's crude palm oil (CPO) has significantly decreased from 37.5 % in 2003 to 8.5 % in 2021, primarily due to inconsistent sustainability standards and increased competition from Malaysia. This study utilises the Constant Market Share (CMS) method and the Global Trade...
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| Main Authors: | , , , , , , , , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-08-01
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| Series: | Journal of Agriculture and Food Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2666154325004351 |
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| Summary: | The export share of Indonesia's crude palm oil (CPO) has significantly decreased from 37.5 % in 2003 to 8.5 % in 2021, primarily due to inconsistent sustainability standards and increased competition from Malaysia. This study utilises the Constant Market Share (CMS) method and the Global Trade Analysis Project (GTAP) model to analyze Indonesia's export competitiveness and evaluate the impacts of trade policies, production technologies, and sustainability initiatives on export performance. The findings indicate substantial fluctuations in export trends, with palm oil product values rising from USD 371.7 million in 2002 to USD 4.7 billion in 2021, despite a competitive effect decline of −19.6 % post-2019. Key challenges include low productivity among smallholder plantations and stringent international regulations, particularly from the European Union regarding sustainability. Additionally, GTAP model simulations suggest that technological adoption and increased investment could improve the trade balance by up to USD 3.2 billion under optimistic conditions. To enhance Indonesia's competitiveness in the palm oil export sector, it is essential to improve smallholder productivity, promote technological advancements, and facilitate greater access to financing. The results underscore the need for strategic enhancements in sustainability certification and the integration of smallholders into the supply chain. Addressing climate change impacts, compliance with certification standards, and fostering innovation are vital for expanding export opportunities and ensuring sustainable growth. This paper concludes with strategic policy recommendations aimed at improving production efficiency and strengthening Indonesia's position in the global palm oil market. |
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| ISSN: | 2666-1543 |