Indonesia Distributes $648 Million in Subsidies for Palm Oil Replanting Programme

Source: Reuters | Editor: Yudho Winarto

PALM OIL - JAKARTA, Feb 10. Indonesias Estate Crop Fund (BPDP) has so far distributed 10.89 trillion rupiah ($648.60 million) from a fund aimed at encouraging palm oil smallholders to replant and boost yields, an official said on Tuesday.

Indonesia, the worlds top palm oil producer, launched its smallholder replanting programme in late 2017, but take-up of the scheme has been slow because of the initial downturn in production and income for smallholders and complicated administration requirements at the early stage of the scheme.

The scheme is aimed at improving yields from small farmers, who contribute around 40% of Indonesias palm oil output.

The fund distributed so far covers an area of around 384,000 hectares (948,885 acres) of smallholder plantations, BPDP official Zaid Burhan Ibrahim told reporters.

Zaid said there is still around 2 million hectares of plantation area that could be funded by the replanting programme. In 2026, the agency expects to distribute funds for around 50,000 hectares of replanting.

BPDP collects levies from palm oil exporters and distributes the funds to support key programmes including replanting and to help meet the country's mandated requirements for biodiesel in energy production.

Zaid said around 31 trillion rupiah was collected in levies in 2025.

The government is aiming to help increase smallholder yields to around three tons per hectare per year from 2.5 tons per hectare in 2024.