National Food Security and the Palm Industry: Assessing the Strategic Contributions

The contribution of the palm oil industry to national food security is evidenced by its capacity to supply stable, affordable, nutritious, and ecologically efficient vegetable fats to more than 288 million Indonesian citizens.

Key Takeaways:

• Year-Round Supply Availability: A domestic production volume of 56.5 million tons of CPO and CPKO in 2025 provides an uninterrupted, non-seasonal supply of essential culinary oils across 28 provinces.
• Price Affordability and Purchasing Power: Palm oil maintains the lowest global production cost among major edible oils, generating a rural economic multiplier effect that improves smallholder incomes and household nutritional intake.
• Nutritional Quality and Import Substitution: Abundant natural carotene (500 to 700 ppm) and tocotrienols (600 to 1,000 ppm) create opportunities to substitute synthetic vitamin imports while delivering red edible oil for community nutrition initiatives.
• Superior Environmental Efficiency: Oil palm records the lowest land footprint, lowest carbon intensity, lowest biodiversity loss footprint, and lowest water usage per ton of oil compared to soybean, rapeseed, and sunflower crops.
• Domestic Market Resilience: Government market mechanisms including DMO-DPO and export levies ensure adequate domestic supplies and affordable cooking oil for households and millions of culinary MSMEs.

INTRODUCTION

Food security has become a strategic issue at both the national and global levels. In the modern era, food security is determined not only by the availability of land, water, or agricultural technology, but is also influenced by geopolitical stability, trade policies between countries, and global climate change. The risk of disruptions to food security and the potential for a global food crisis are increasing in 2026–2027 due to extreme El Niño (FAO, 2026b) and geopolitical conflicts (FAO, 2026a). The blockade of the Strait of Hormuz over the past six months has caused disruptions in fertilizer and energy supply chains, increasing the risk of food security disruptions (Gunawan and Faeni, 2026; Arita et al., 2026; Zamani and Farzanegan, 2026).

Indonesia also faces the same challenges in ensuring national food security. Food security concerns the ability to provide adequate quantities of food (availability), ensure affordability in terms of price (affordability), maintain food quality and safety (quality), and ensure sustainability. Therefore, strategic efforts are needed to build national food security.

In this context, the discussion of Indonesian food security needs to be placed within a broader perspective. Food security is not limited to rice, corn, or food commodities consumed in the form of primary food products. Oils and fats are also an important part of the food system because they are used directly by households as well as raw materials for various food industries and the food service industry. Therefore, the availability of sufficient, affordable, and sustainable sources of vegetable oil is also part of food security.

In this regard, palm oil, as a source of food and fat, also plays an important role in the national food system. One palm-based food product that is very important for the food needs of the population and the Indonesian economy is palm cooking oil. Given this strategic role, the government has intervened to maintain the stability of domestic cooking oil supply through policies such as export duty, export levy, Domestic Market Obligation (DMO), and Domestic Price Obligation (DPO). This shows that the palm industry is not merely a commodity-producing industry, but has transformed into a part of food security.

 Therefore, this article will discuss the potential of palm-based food products in the national food system. The discussion will then proceed to examine the contribution of the palm industry to strengthening national food security.

PALM-BASED FOOD PRODUCT POTENTIAL

African communities have consumed palm oil both as a food ingredient and as traditional medicine since before the colonial era in the 18th century. Not only was its oil extracted, but ripe palm fruit was also fermented to produce wine (Carrere, 2013). To date, approximately 70–90 percent of the world’s palm oil is used for food products (Sheil et al., 2009; Shimizu and Descrochers, 2012; Gaskell, 2012; Kojima et al., 2016; Parcell et al., 2018;).

Palm oil has characteristics that make it stable at high temperatures, both against oxidation and other degradation processes; it contains natural preservatives that give it a relatively long shelf life; it has a soft and creamy texture; it has no odor or taste; and it tends to crystallize (Hariyadi, 2010; Pande et al., 2012; Mba et al., 2015). Palm oil has a unique, balanced, and flexible composition of saturated and unsaturated fatty acids, making it a versatile raw material for derivative products or offering versatile functionality (MPOC, 2016). With these various advantages, palm oil can be applied to a wide range of products, including food products.

One of the downstreaming pathways for processing palm into food products is the oleofood complex (Sipayung, 2018; PASPI, 2023; PASPI Monitor, 2024^a;  PASPI’s Research Team, 2026^b). In this pathway (Figure 1), palm oil, both Crude Palm Oil (CPO) and Crude Palm Kernel Oil (CPKO), is processed into intermediate products. These intermediate products are then further processed to produce food products that can be consumed directly by households or used as production inputs by the food industry or food service industry.

The processing of palm oil produces two fractions, namely olein and stearin. Olein is the liquid fraction used in palm cooking oil (culinary oils). Meanwhile, stearin is the solid fraction at room temperature and is therefore widely used as a hard-fat component for bakery oils/fats such as margarine and shortening for cakes, bread, pastries, biscuits, instant noodles, and others.

Palm oil also contains specialty fats that can serve as alternatives to replace vegetable/animal fats. One use of palm-oil-based specialty fats is to replace cocoa fat in chocolate-based products (such as cocoa butter replacer/substitute), and to replace animal fats in creamer products (non-dairy creamer), cheese, ice cream, and others. Palm-oil-based specialty fats can also be used to provide specific functionality (Functional Oils/Fats), such as health functionality, for example as a human milk fat substitute found in infant formula.

Palm-based food products can also be produced through the processing of palm biomass such as oil palm trunks. The trunks contain sap that can be processed into palm brown sugar (Agustira et al., 2019; PASPI Monitor, 2019, 2024^b). Palm brown sugar is considered healthier because its composition contains fructose, which is suitable for diabetic patients.

In addition to food for human consumption (oleofood), the processing of palm biomass, namely Palm Kernel Meal, also has the potential to be used as a raw material for animal feed (PASPI Monitor, 2021^a). The use of PKM for livestock feed has been carried out by the global industry to meet continuously increasing feed demand.

The description above demonstrates the role of the palm industry in providing food ingredients for Indonesian society. As palm downstreaming through the oleofood complex pathway deepens and expands, the potential to provide food ingredients will also become greater and more diverse, thereby strengthening the capacity to supply food from domestic resources. This further reinforces the position of the palm industry in building and realizing national food security.

IMPORT-SUBSTITUTION PRODUCT POTENTIAL

The potential of the palm industry to support national food security can also be seen from the development of import-substitution products. Through palm downstreaming via the oleofood complex pathway, the palm industry is capable of producing food/pharmaceutical products that have so far still been supplied through imports.

One potential import-substitution product produced through the oleofood complex downstreaming pathway is vitamins A and E from palm oil (PASPI Monitor, 2025^b; PASPI’s Research Team, 2026^b). As domestic demand has increased, Indonesia has imported synthetic vitamins A and E, with an increasing trend in both volume and value during the 2000–2025 period (Figure 2).

Indonesia imported 227 tons of synthetic vitamin A in 2001, increasing to 569 tons in 2025, or 2.5 times higher over the period (Figure 2a). The increase in import volume was also accompanied by an increase in import value, from USD 4.38 million to USD 20 million over the same period.

In addition to synthetic vitamin A, Indonesia also imports synthetic vitamin E, with volume increasing from 352 tons to 2,727 tons, or nearly eightfold during the 2001–2025 period (Figure 2b). The increase in import volume was also accompanied by an increase in import value, from USD 4.32 million to USD 35.2 million over the same period.

The upward trend in import volume and value indicates that Indonesia has a high dependence on imports of synthetic vitamins A and E. The large import value also indicates the amount of Indonesia’s foreign exchange spent to meet national vitamin needs. In addition, the use of imported synthetic vitamins often requires chemical additives in the production process, which is not aligned with the global trend toward natural and sustainable sources of nutrients.

On the other hand, this condition creates an opportunity to develop vitamins from domestic resources so that national needs do not fully depend on imports. This opportunity can be utilized through the production of palm-oil-based vitamins A and E.

With an oil palm plantation area of 16.8 million hectares, Indonesia is the world’s largest “factory” of natural vitamins A and E. Palm oil contains 500–700 ppm of caroten and 600-1,000 ppm of vitamin E (Mukherjee and Mitra, 2009; Longanathan et al., 2010; 2017; Hariyadi, 2020; PPKS, 2022; PASPI, 2023). This means that each ton of palm oil (CPO) contains approximately 0.5–0.7 kg of carotene and 0.6–1 kg of vitamin E. Based on these estimates, processing 1 million tons of CPO has the potential to produce approximately 500–700 tons of carotene and 600–1,000 tons of vitamin E

Research support and processing technology for recovering vitamins A and E from palm oil are actually already available. For example, the Palm Oil Research Grant (Grant Riset Sawit) program managed by Plantation Fund Management Agency (Badan Pengelola Dana Perkebunan/BPDP) has produced various innovations needed to develop technologies for extracting vitamins A and E from palm oil and their application in various food products and supplements. The next stage requires national policy support to accelerate the transformation of research results into industrialization and commercialization for the production of palm-oil-based vitamins A and E.

With the establishment of an ecosystem for palm-oil-based vitamin A and E production, Indonesia can reduce its dependence on imported vitamins while meeting the needs of domestic end-user industries that use vitamins A and E as production raw materials, such as the pharmaceutical, cosmetics/toiletries, food, and feed industries.

The development of palm-based food products and food ingredients as import-substitution products has strategic significance in strengthening national food security. Utilizing domestic palm raw materials to produce products that have so far depended on imported supplies can reduce the vulnerability of the national food industry to trade disruptions, logistical delays, and price volatility in global markets. This is highly relevant to current conditions, in which geopolitical pressures can disrupt supply chains and interfere with the smooth flow of food raw materials between countries. Palm downstreaming not only creates added value and reduces import dependence, but also builds resilience in the national food system so that Indonesia has stronger sources of supply in facing various external shocks.

FOOD SECURITY INDICATORS

The development of palm-based food products (including pharmaceutical products), as described in the previous section, contributes to strengthening national food security. In this context, food security is not merely understood as a country’s ability to increase domestic production of food commodities. Food security also concerns the ability to provide adequate quantities of food (availability), ensure affordability for the public, maintain food quality and safety, and meet sustainability aspects. The following describes the contribution of the palm oil industry in meeting food security indicators.

First, availability. The volume of palm oil production is quite large and is even the largest in the world. In 2025, global palm oil production volume (CPO+CPKO) reached 89.3 million tons (USDA, 2026). Meanwhile, during the same period, Indonesia’s palm oil production volume amounted to 56.5 million tons, and 17 percent of this production volume was consumed by the domestic oleofood complex industry (GAPKI, 2026). The large production volume provides an opportunity to utilize palm oil as a food product.

In addition to producing large volumes, palm oil is also available throughout the year with a stable supply. Unlike other vegetable oils, palm oil production is not seasonal, and production is relatively evenly distributed from month to month throughout the year for 20–25 years. This advantage also benefits the downstream oleofood complex industry because of the certainty of raw material availability. This means that palm-based food products can also be produced throughout the year to meet public needs.

Palm oil and palm-oil food products are also available in various regions, given that the palm oil industry (upstream and downstream) has spread across almost all regions. Oil palm plantations are located in 28 provinces and 236 districts/cities in Indonesia (Ditjenbun, 2025). Meanwhile, the oleofood complex industry, including its trading network through retailers, is present for and reaches almost all Indonesian residents. Such distribution of raw material production and downstream industries can ensure (through market mechanisms) that food products based on palm oil are available and easily accessible to every resident throughout Indonesia

With its large production volume and supply available throughout the year and relatively stable, palm oil has fulfilled the availability indicator. This achievement has been demonstrated by the success of the palm industry (upstream and downstream) to date in providing food products (details in Figure 1) for 288 million people spread throughout Indonesia. The national palm industry has even long supplied food to the world, or “feeding the world” (PASPI Monitor, 2021^a).

Second, affordability. One of the main variables of food-product affordability is price. Palm oil is a cheaper vegetable oil and is therefore more affordable than vegetable oils with higher prices. The average global price of palm oil is below the prices of soybean oil, rapeseed oil, and sunflower oil (Figure 3).

As a raw material, the lower price of palm oil will result in lower production costs, so palm-based food products are also relatively cheaper and more affordable. At this price level, palm-based food products can be enjoyed by all consumers, both high- and low-income consumers.

The contribution of the palm oil industry to meeting the affordability indicator can also be seen from the demand side, namely increased purchasing power (PASPI, 2023). Oil palm plantations are a source of income for farmers and plantation company employees. Various empirical studies (Rist et al., 2010; Budidarsono et al., 2012; Euler et al., 2017; Qaim et al., 2020; Chrisendo et al., 2019) have revealed that increased incomes of oil palm farmers contribute to meeting nutritional/caloric intake in oil palm farmer households. This means that meeting nutritional needs can contribute to food security at the level of oil palm farmer households.

 Increased income is also enjoyed by communities around oil palm villages due to the multiplier effect created by oil palm plantations, which drives the development of MSMEs and other economic sectors in rural areas (Edwards, 2019; PASPI, 2014, 2023). This increased income is also subsequently enjoyed by people more broadly along the palm oil supply chain from upstream to downstream, including supporting sectors. Increased income will increase people’s purchasing power to meet food needs. This shows that through increased affordability of food among the public.

Third, quality. Palm oil contains relatively high levels of bioactive compounds that are beneficial to health (PASPI, 2023). Various national and global studies have revealed that palm oil (CPO) is “the richest source of natural carotenoid (vitamin A) and tocotrienols (vitamin E)” because of its high vitamin content compared with other food ingredients. Palm oil is also rich in bioactive compounds such as squalene, ubiquinone, essential fatty acids, and other antioxidant compounds, and has a relatively balanced composition of saturated and unsaturated fatty acids. These contents make palm oil not only a source of high-energy (fat), but also a nutritious food (food-farmacy), and it can be applied in various food-industry processes.

The quality indicator is also related to food safety. Palm oil refining, fractionation, and modification technologies enable the industry to produce food ingredients with characteristics suitable for various applications, while controlling contaminant compounds that may form during processing. Furthermore, through modifications involving reconfiguration of refining technology, palm oil (CPO) can be processed into functional food products (such as Red Edible Oil) that retain the vitamin and bioactive compound content of carotene (vitamin A), vitamin E, and squalene (PASPI Monitor, 2023^b).

Fourth, sustainability. Food security is also related to the provision of food sources that can be produced sustainably. In providing vegetable oils as a food source, palm oil is relatively more environmentally sustainable than the world’s major vegetable oils (PASPI, 2023; PASPI Monitor, 2020; 2021^c; 2022^a;  PASPI’s Research Team, 2026^a).

The area and productivity of the world’s vegetable oil crops can implicitly indicate the deforestation intensity of the world’s major vegetable oils. Based on the land requirement to produce each ton of vegetable oil (the inverse of productivity), a deforestation index can be developed for each type of vegetable oil (Figure 4). Relatively, deforestation per ton of vegetable oil is lowest for palm oil. It is followed by rapeseed and sunflower. Meanwhile, the vegetable oil crop most demanding in terms of deforestation is soybean.

Another sustainability issue that is also frequently discussed, particularly in food provision, is carbon emissions. Based on studies by Beyer et al. (2020) and Beyer and Rademacher (2021), the global ecosystem level, the world’s oil palm plantations produce the lowest emissions compared with other vegetable oil crops in producing vegetable oil (Figure 5). The study by Alcock et al. (2022) also revealed the same finding, namely that emissions (excluding land-use change emissions) from palm oil production are lower than those from the world’s major vegetable oil crops.

Biodiversity loss is also associated with the provision of vegetable oil as a food source. Referring to studies by Beyer et al. (2020) and Beyer and Rademacher (2021), which use the Species Richness Loss (SRL) footprint per liter of oil produced as a measure of biodiversity loss, the studies show that palm oil has the lowest SRL (Figure 6). This means that palm oil production has the potential to cause relatively lower biodiversity loss than the production of soybean, rapeseed, and sunflower oil.

Water use in vegetable oil production is also frequently criticized by the public, where greater water consumption is considered environmentally unfriendly. Mekonnen and Hoekstra (2010) used the concept of “water footprint” to measure the total volume of freshwater used in agricultural commodities to produce a product.

Among the four major vegetable oil crops in the world (Figure 7), palm oil has the lowest water footprint. In addition to showing that palm oil is relatively water-efficient, the study also shows that the main source of water meeting the needs of oil palm plantations is green water, or rainwater (Mekonnen and Hoekstra, 2010; Safitri et al., 2018). These data also counter allegations that oil palm plantations exploit groundwater and cause drought.

Another sustainability issue in providing food sources is soil and water pollution caused by vegetable oil production. This has attracted public attention, particularly from environmental NGOs, because it affects terrestrial and aquatic ecosystems.

The use of fertilizer and pesticide technology in cultivation produces fertilizer and pesticide residues in both soil and water. A study by Meijaard et al. (2024) revealed that, for every ton of vegetable oil produced, palm oil requires the least fertilizer compared with rapeseed and soybean. This means that the risk of soil pollution from fertilizer use in palm oil production is lower than that of other vegetable oil production.

Using FAO data (1996, 2013), for every ton of vegetable oil produced, palm oil generates lower nitrogen pollutants, phosphorus pollutants, and pesticide pollutants than the production of rapeseed oil and soybean oil (Figure 8).

Based on the above data, palm oil is relatively land-efficient (in terms of deforestation), emission-efficient, relatively low in biodiversity loss, water-efficient, and generates less soil/water pollution. This also means that palm oil is the most sustainable edible oil food source compared with other vegetable oils. This degree of sustainability will also continue to increase along with improvements in governance, reductions in emissions, reductions in pollutants, and increased productivity through replanting and the adoption of improved cultivation practices.

GOVERNMENT INTERVENTION

The contribution of the palm oil industry to national food security can be seen clearly from the role of palm cooking oil in meeting the food needs of the Indonesian population. Palm cooking oil is included among the nine basic necessities (sembako) that are widely used, both for household consumption and as an industrial raw material. Data from the Ministry of Industry (2022) show that total Indonesian palm cooking oil consumption in 2021 amounted to 5.78 million kiloliters, consisting of household consumption of 3.93 million kiloliters and industrial consumption of 1.85 million kiloliters.

Palm cooking oil also plays an important role in the Indonesian economy. This is indicated by the number of palm cooking oil industries in Indonesia in 2021, which totaled 104 factories and 137 repacking plants spread across 20 provinces (Ministry of Industry, 2022). Palm cooking oil is also a production input for millions of micro, small, and medium enterprises (MSMEs) in the culinary sector, the food service industry, and food-processing industries spread throughout Indonesia. The large number of economic actors/sectors involved in the palm cooking oil supply chain demonstrates its strategic role in the national economy.

Given the significant role of palm cooking oil in Indonesia’s food security and economy, the stability of palm cooking oil supply in terms of volume/quantity, time, location, and timing is important to maintain. If a crisis and shortage of palm cooking oil occurs, as happened in the first half of 2022 (PASPI Monitor, 2023^a), the impact can quickly disrupt economic, social, and political stability. Therefore, the government has intervened through various policies to ensure the stability of domestic cooking oil supply.

The policy regime governing palm cooking oil has been implemented since the 1970s to the present and has continued to change in accordance with market conditions and the challenges faced. At least three policies for stabilizing domestic palm cooking oil have been implemented by the Government of Indonesia (Sipayung, 2018; PASPI Monitor, 2022^b, 2023^b; 2025^a) namely: (1) Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO), implemented during the periods 1973–1990 and from May 2022 to the present; (2) Export Tax (export duty) and Buffer Stock Management, implemented during the period 1992–2015; and (3) Export Duty and Export Levy, implemented since 2015 to the present. Basically, these three policies serve as government instruments to maintain a balance between the interests of the export market and the fulfillment of domestic needs.

The current policies for stabilizing domestic palm cooking oil, namely export duty, export levy, and DMO-DPO, not only function to maintain the availability of palm oil for domestic needs but also affect raw material prices for downstream industries. The combination of these policies has put downward pressure on domestic palm oil (CPO) prices (PASPI’s Research Team, 2026^c). The domestic palm oil price (CPO KPBN) is lower than the export price (CPO f.o.b. Belawan) and the world price (CPO c.i.f. Rotterdam) (Figure 9).

In this context, lower domestic palm oil (CPO) prices provide an incentive for domestic downstream industries to process and produce palm cooking oil (as well as other palm-oil food products). This demonstrates that government policy on the raw-material side is directly linked to the ability of downstream industries to provide food products (palm cooking oil) in adequate quantities (availability) and at affordable prices.

On the other hand, the implementation of this combination of policies is also relevant to conditions of excess demand in the global market resulting from geopolitical pressures and supply-chain disruptions. Under such conditions, rising global market prices can increase pressure on the price and availability of raw materials in the domestic market and potentially disrupt national food security. The combination of export duty, export levy, and DMO-DPO can balance the export and domestic markets, whereby domestic raw material supply remains secured despite incentives for increased exports. With raw material supply maintained, domestic downstream industries can continue to produce cooking oil and various palm-oil-based food products to meet public needs.

Thus, palm cooking oil provides a concrete illustration of the relationship between the palm oil industry, government policy, and national food security. The palm oil industry supplies the raw materials, downstream industries process them into food products needed by the public, while government policy maintains a balance between domestic needs and the export market. Within this framework, export duty, export levy, and DMO-DPO policies contribute to maintaining the availability and affordability of palm-oil-based food products while strengthening resilience when external shocks occur.

CONCLUSION

The palm oil industry has become an important part of the national food system through the provision of vegetable oil as food ingredients as well as palm-based food products. Through downstreaming via the oleofood complex pathway, palm oil is processed into various food products such as cooking oil, margarine, chocolate, noodles, ice cream, biscuits, and milk for infants and toddlers. These palm-based food products are consumed by households and used by the food industry and food service industry. Palm oil downstreaming through the oleofood complex pathway also has significant potential to produce food products that have so far still been supplied through imports (import substitution).

Not only has it become an important part of the food system, the palm oil industry has also contributed to national food security. This contribution can be seen from four food security indicators. The palm oil industry is able to provide sources of vegetable oil and complex food products throughout the year with relatively stable supply (availability), support public affordability of food products through more competitive prices and higher purchasing power (affordability), produce high-quality food products in terms of nutritional content as well as food safety through processing technology (quality), and has a production base that can be developed through more efficient and sustainable approaches (sustainability).

To safeguard and strengthen national food security, the Indonesian government also intervenes through policies such as export duty, export levy, and DMO-DPO. The combination of these policies aims to maintain the availability of domestic raw materials and provide room for downstream industries to produce palm-oil-based food products at more affordable prices. Thus, strengthening the palm oil industry (including the downstream oleofood complex industry) needs to be supported by policies that maintain a balance between the domestic and export markets in order to further strengthen national food security.

Acknowledgment

“Tim penulis mengucapkan terima kasih atas dukungan dana dari Badan Pengelola Dana Perkebunan (BPDP) dalam penyusunan artikel ilmiah populer sebagai bagian advokasi dalam rangka meng-counter kampanye negatif sawit.”

REFERENCES