Palm Oil Production Faces Double Whammy from Fuel Price Spike and El Nino

Palm oil harvesting activities in Indonesia and Malaysia are being disrupted due to rising fuel prices and supply shortages. The main production areas, Kalimantan and Sumatra, are experiencing the brunt of this disruption.

The price of unsubsidized diesel in the region has surged by almost 120%, making it difficult for farmers to harvest their crops. Palm oil farmers in Sumatra face limited fuel supplies, while those in Sabah and Sarawak have to rely on subsidized diesel, but even that is not enough.

Napolean R Ningkos from the Sarawak Dayak Oil Palm Planters Association said that financial pressure makes small farmers unable to harvest, putting land at risk of being abandoned and decreasing palm oil productivity. He estimates that harvest delays could cut Sarawak's palm oil production by 15% to 20%.