Jakarta (ANTARA) - The Ministry of Agriculture has said that Indonesia needs to secure 20 million kiloliters of crude palm oil (CPO) production per year to implement the 50 percent biodiesel mix or B50 program.Chair of the international marketing working team of the ministry's Directorate General of Plantations, Muhammad Fauzan Ridha, said that to achieve the B50 target, the installed capacity of the biodiesel industry needs to reach around 25 million kiloliters.
"Meanwhile, the installed capacity of our biodiesel industry is currently still in the range of 17–18 million kiloliters," he informed during a discussion here on Wednesday.
The biodiesel mix still applicable in Indonesia is B35. The government has said that Indonesia is ready to increase the biodiesel mix from 35 percent (B35) to 40 percent (B40) in 2025 and is making preparations for the implementation of B50.
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Ridha informed that the CPO output needed for B35 is 13.4 million kiloliters, while for B40, it is 16.08 million kiloliters. He noted that the government is currently considering shifting export allocations for the European market to meet domestic CPO needs.
This could come in handy when the European Union implements the European Union Deforestation Regulation (EUDR), which will pose a challenge to Indonesia's palm oil product exports.
However, long-term contracts with buyers in the region could become a hindrance. To this end, he noted that the step must be studied thoroughly so that it does not have a negative impact on the country's foreign exchange and disrupt cooperation established with trade partners in Europe and other countries.
Baca juga: Indonesia butuh 20 juta kiloliter CPO untuk realisasikan B50
On the same occasion, a senior economist from the Institute for Development of Economics and Finance (Indef), Fadhil Hasan, said that the program to increase the biodiesel mix to 50 percent must be followed by a rise in domestic CPO production.
This is deemed necessary to maintain a balanced supply for the energy and food sectors. Hasan explained that increasing the biodiesel mix without increasing CPO production would cause a decline in exports.
He noted that such a fall in exports could trigger an increase in CPO prices in the international market, which could eventually push up the prices of cooking oil in the country.