Oil Palm Industry Economic Journal Vol. 3 (1) March 2003 p. 8 - 15

The Indonesian Palm Industry

Colin Barlow; Zahari Zen and Ria Gondowarsito
Received:    Accepted:    Available Online:


This paper reviews the past development and prospects in the 2000s of Indonesian oil palm production, noting the rapid expansion of the sector up to the late 1990s and fast growth of private estates and smallholdings. It examines the organization, performance and constraints of chief sub-sectors, indicating relatively low costs of production on estates and even lower costs on smallholdings. It considers the nucleus estate and plasma smallholding development as unexpectedly successful, despite needs for further improvement. The paper views the main current constraints as scarce development capital, inefficient deployment of labour and other resources, poor technological levels, and problems over land acquisition and security. It nonetheless sees a slow improvement occurring, where this could be accelerated by government support with credit and extension, especially for smallholdings. Given such help, the industry should renew its expansion and become the world leading oil palm producer.

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