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Indonesian Demand for Palm Oil to Grow by 70 Percent by 2020

As the price gap with conventional diesel fuel narrows and new subsidies come into play, demand for crude palm oil for the production of biodiesel in Indonesia is expected to climb by 70 percent by 2020 according to the Indonesia Estate Crop Fund - a government agency tasked with collecting palm oil duties to finance biodiesel subsidies.

In July 2015 the country, which is the world’s top producer of palm oil, began collecting levies of $50 per tons on crude palm oil and $30 per ton on processed palm oil products to fund biodiesel subsidies. By 2017 the Indonesia Estate Crop Fund is projecting a 14 percent increase to the levies it collects.

Meanwhile, under its B20 program, Indonesia is requiring a minimum 20 percent bland of bio content into diesel this year – up from 15 percent in 2015, and by the beginning of the next decade, the country is expected to see an increase in palm oil demand of 10.6 million tons – up from a demand of 6.3 million tons this year.

The new subsidies are also giving rise to the hope that increased demand for biodiesel will also translate to price supports for edible oil as well.

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