Indonesia, the world’s leading palm oil producer, has increased its export tax on crude palm oil (CPO) from 7.5% to 10% as of May 17, 2025. The move, aimed at financing its ambitious biofuel program and revitalizing replanting efforts, comes as palm oil prices remain elevated globally due to tightening supplies and growing demand. The decision marks a significant policy shift as the country doubles down on domestic energy sustainability while attempting to balance smallholder support and climate pressures.

At the same time, Nigeria — Africa’s largest economy and the fifth-largest palm oil producer globally — continues to import nearly half of the two million metric tons of palm oil it consumes annually. Amid soaring costs and global shortages, Nigeria has launched an aggressive strategy to reposition itself as a leading player in the sector. Both countries’ contrasting paths highlight the complex intersection of food security, energy policy, and agricultural economics in today’s volatile global commodity landscape.

Indonesia Doubles Down on Biofuel and Domestic Sustainability

The Indonesian government’s latest move includes not just an increase in CPO export duties but also broader taxes on processed palm oil products. These levies will fund crucial initiatives such as replanting aging trees, supporting smallholder farmers, and expanding biodiesel production. According to the Ministry of Finance, the proceeds will help build a more resilient and environmentally friendly palm oil industry that can weather global disruptions.

The country recently mandated an increase in the minimum palm oil content in biodiesel from 35% to 40%, with a further rise to 50% planned by 2026. In addition, a 3% blend of palm oil in jet fuel is under consideration for implementation in 2026. This ambitious energy transition aligns with Indonesia’s commitment to reduce its reliance on fossil fuels and promote cleaner alternatives.

By the end of April 2025, Indonesia had already consumed 4.44 million kiloliters of biodiesel, with plans to distribute 15.6 million kiloliters by 2025 — a significant jump from the estimated 13 million kiloliters used the previous year. The country supplies nearly 60% of global palm oil demand and produces over 30 million tons annually. The sector contributes 4.5% to Indonesia’s GDP and supports the livelihoods of approximately 3 million people, making it one of the country’s economic cornerstones.

However, the industry faces challenges. Productivity has stagnated due to aging plantations, prompting the government to explore alternative solutions, including the introduction of African pollinator weevils.

Turning to Africa for Agricultural Innovation

In a novel approach to improving palm yields, Indonesia plans to release about one million African weevils into select plantations to enhance natural pollination and boost fruit development. Three weevil species sourced from Tanzania are scheduled to arrive in North Sumatra for laboratory tests before being deployed in the field.

Experts believe this biological intervention could help offset production slowdowns, especially as many plantations delay replanting due to the long gestation period for new trees to mature. While such measures offer promise, critics argue that deeper structural reforms are necessary to ensure long-term sustainability.

Environmental groups have voiced concerns about President Prabowo Subianto’s recent claim that oil palm plantations should not be categorized as deforestation drivers because oil palms are technically trees. This stance directly contradicts widespread scientific evidence linking palm oil expansion to deforestation, biodiversity loss, and elevated carbon emissions. Many environmental experts have urged Indonesia to prioritize yield improvements on existing plantations rather than further encroachment into forested or ecologically sensitive areas.

Nigeria Seeks Palm Oil Renaissance Through Strategic Overhaul

Meanwhile, Nigeria is adopting an aggressive strategy to rejuvenate its once-thriving palm oil sector. Despite its historical significance — Nigeria was once the world’s top palm oil exporter — the country’s domestic industry has significantly underperformed due to decades of neglect, underinvestment, and policy inconsistencies.

Edo State, known as Nigeria’s palm oil capital, plays a vital role in the revival plan. It hosts key agribusiness giants like Presco and Okomu Oil, both publicly traded companies that reported record profits in 2024 despite economic headwinds and a challenging operating environment. These companies have become case studies in how strategic investment, vertical integration, and efficient operations can yield impressive results even in tough climates.

The Oil Palm Growers Association of Nigeria (OPGAN) has developed a comprehensive roadmap — the Oil Palm Development Strategy for Nigeria (2024–2029) — aimed at repositioning the country as a global palm oil powerhouse. The five-year plan includes replanting 1.5 million hectares of oil palm and aims to elevate Nigeria’s global standing from the fifth-largest to the third-largest producer of palm oil.

Key Features of Nigeria’s Palm Oil Strategy

OPGAN’s development blueprint emphasizes the following pillars:

• Replanting and Expansion: Massive replanting efforts using improved seedlings to boost yields and reduce dependence on imports.

• Modern Agricultural Technology: Integration of mechanization, research, and smart farming techniques to improve productivity.

• Sustainable Practices: Commitment to ecologically responsible cultivation, minimizing deforestation and carbon footprint.

• Inclusive Growth: Efforts to empower smallholder farmers through capacity-building programs, grants, and market access.

• Attracting Investments: Encouragement of local and foreign investment in palm oil processing, logistics, and infrastructure.

This strategy, the first of its kind by an industry association in Nigeria, underscores the urgency of restoring the country’s capacity to meet domestic demand, reduce import bills, and reclaim lost market share in global trade. It also reflects a growing realization among stakeholders that Nigeria’s long-term food security and export competitiveness depend on revitalizing key agricultural subsectors.

The Global Palm Oil Outlook

Palm oil remains one of the most widely used vegetable oils in the world, found in nearly 50% of packaged consumer goods — from food and cosmetics to cleaning products. But in recent years, the global supply chain has faced mounting pressure due to climate change, land-use concerns, and volatile geopolitics. With Indonesia tightening export channels and Malaysia facing labor shortages and stagnant production, palm oil has lost its reputation as the world’s most affordable edible oil.

This shift has driven up prices, adding pressure to global food inflation. For countries like Nigeria, which rely heavily on imports, the stakes are high. The dual challenge of balancing economic growth with environmental sustainability has never been more pressing.

Conclusion: Two Countries, One Goal — Agricultural Transformation

Indonesia and Nigeria, though geographically and economically distinct, share a common goal — leveraging palm oil to drive inclusive, sustainable growth. Indonesia’s approach centers on maximizing value through biofuel and agro-innovation, while Nigeria is focused on rebuilding a broken value chain and reclaiming its place on the global stage.

As global demand for palm oil continues to rise amid mounting environmental scrutiny, both countries will need to balance commercial ambition with ecological responsibility. The steps they take today — from tax policies to weevil-based pollination to replanting initiatives — will shape not only their agricultural futures but also the broader narrative of food security and climate resilience in the Global South.