Indonesia is the largest palm oil producer in the world followed by Malaysia as the world’s second largest palm
oil producer. The two countries produce 85 % of world's oil palm total production. Oil palm demand is projected to
increase from 51 million tonnes today to 75 million tonnes by 2050. Indonesia has contributed 62 % of world’s palm
oil demand, followed by Malaysia with 30 % and other country 8%. Malaysia’s oil palm production predicted
growing slow because of its limited land plantation. While Indonesia predicted to growing rapidly, strengthen its
position as the world leading oil palm producer [15].
The palm oil industry has the important contribution to economic and social development in Indonesia. The
growth of oil palm industry in Indonesia is beneficial in reducing poverty, particularly in rural areas. Palm oil
industry provides employment opportunity through farm cultivation and downstream processing. Palm oil
production provides a reliable form of income for a large number of Indonesia’s rural poor that reach over 6 million
lives and become a significant source of poverty alleviation [5].
Palm oil production in Indonesia tends to rise year by year. In 2008, palm oil production approximately 17.54
million tonnes and increase to 23.52 million tonnes in 2012 (see Table 1). The increasing palm oil production
because of land expansion and increasing of mature plant so that produce high yield in less land [16]
Fig. 1.a shows the development of palm oil plantation areas. The plantation areas are increasing rapidly for last
two decades. The plantation areas projected to be approximately 13 million hectares in 2020. High demand for palm
oil products, both domestically and abroad (especially from emerging markets such as China and India) has
encouraged the Indonesian government to support oil palm plantation expansion in various parts of Indonesia [17].