Indonesia’s palm oil industry faces billion-dollar climate crisis

Droughts and rising temperatures threaten yields, prompting scientists to develop drought-resistant palm oil varieties

DENPASAR, Indonesia (MNTV) – Indonesia’s palm oil industry, one of the world’s largest, is facing a mounting crisis due to climate change.

Prolonged droughts and rising temperatures are causing severe production declines, with experts warning that these environmental challenges could lead to losses of up to $4.6 billion per year.

According to the SMART Research Institute, major palm oil-producing regions, including Lampung, South Kalimantan, and South Sumatra, have been experiencing severe water deficits in recent years.

This has led to a steady decline in yields, with annual reductions of up to 10 percent. The prolonged drought conditions have disrupted palm oil growth cycles, limiting the ability of trees to produce fruit and reducing the overall oil extraction rate.

In response to the crisis, scientists at SMART Research Institute have been working on a long-term solution by developing drought-tolerant palm oil varieties through advanced genetic selection methods.

Over the past decade, researchers have screened and tested multiple genetic strains, ultimately identifying 14 promising candidates. Among them, two top-performing varieties, SD14 and SD63, have shown exceptional resilience under extreme drought conditions.

“Climate change is becoming increasingly unpredictable, and its impact on plantations is significant. That’s why we are developing genetically enhanced seedlings to improve drought tolerance,” said Reni Subawati, a researcher at SMART Research Institute.

“These new varieties have demonstrated the ability to survive and yield fruit even in prolonged dry spells, which could be a game-changer for the industry.”

However, drought is not the only challenge threatening palm oil production. Rising temperatures also pose a major risk to pollination. Elaeidobius kamerunicus, the primary beetle responsible for pollinating oil palm trees, is struggling to survive in extreme heat, raising concerns about potential declines in natural pollination rates.

A study presented at the International Conference on Oil Palm & Environment (ICOPE) 2025 in Bali highlights the growing risks posed by climate change.

Researchers found that higher temperatures and prolonged heat waves could significantly impact the life cycle of Elaeidobius kamerunicus, reducing its ability to pollinate oil palm flowers efficiently.

Mohammad Naim, head of the Plant Protection Department at SMART Research Institute, emphasized the importance of the beetle in ensuring high productivity in oil palm plantations.

“Elaeidobius kamerunicus has incredible potential to improve pollination efficiency, but climate change could undermine it all,” he said. “If heat stress continues to affect these beetles, farmers may have to rely on artificial pollination, which is far more expensive and less effective.”

With pollination costs already at Rp 1.8 billion ($110,000) per hectare, a shift away from natural pollination due to climate-related beetle decline could place additional financial strain on palm oil producers.

Experts say that without effective adaptation measures, the industry could suffer serious productivity losses, higher costs, and declining profitability in the coming years.

Indonesia, which accounts for over 50 percent of global palm oil exports, plays a crucial role in the international vegetable oil market. Any significant drop in production could have far-reaching consequences, affecting food and cosmetic industries worldwide.

Industry leaders are calling for urgent investments in climate adaptation strategies, including water conservation, sustainable farming practices, and further genetic research to develop more resilient oil palm varieties.

As climate risks escalate, Indonesian palm oil producers face an urgent challenge: either adapt to the changing environment or risk billions in lost revenue and reduced global market influence.