Lang
Indonesia's palm oil industry is on high alert as forest and peatland fires escalate on the island of Sumatra, threatening key plantations and raising fears of production disruptions during the peak harvest season.
APRIL Group, one of the largest pulp and paper companies operating in Riau province, told The Business Times that it continues to operate at full capacity while heightening its vigilance.
Craig Tribolet, the group's deputy director of sustainability, said:
"Over the coming weeks, our fire response teams remain on maximum alert. We continue to coordinate closely with local communities and government authorities to prevent fires from breaking out and to protect our plantations, protected areas and surrounding villages."
Tribolet noted that the group has maintained a "zero burning" policy since 1993 and follows a fire management strategy focused on prevention, preparedness, suppression and recovery.
Riau province — one of Indonesia's largest palm oil producing regions — has declared a state of emergency as fires continue to spread across several districts.
Despite the worsening situation, the Indonesian Palm Oil Association (GAPKI) said its members' plantations in Riau have not yet been affected. GAPKI chairman Eddy Martono explained that companies have been on alert for months in preparation for the dry season.
Martono said:
"Ahead of every dry season, we send formal reminders to all members through official letters."
He added that the current fires are not occurring on company-managed land, but warned that risks remain elevated, particularly as weather conditions deteriorate.
On Tuesday, 22 July, Indonesia's National Disaster Mitigation Agency reported that the number of hotspots in Riau had risen from 392 to 583, resulting in around 50 hectares burnt in the Rokan Hulu and Rokan Hilir districts.
Thick haze continued to blanket several areas of Riau, although choking smoke had not yet reached the provincial capital, Pekanbaru, according to the regional police chief.
Dry conditions are expected to persist until the end of the week, before wetter weather arrives that could help ease the haze and smoke. The agency has deployed helicopters for aerial patrols and water-bombing operations until 25 July.
Meanwhile, Indonesia's Meteorology, Climatology and Geophysics Agency (BMKG) has warned that the region is entering a period of extreme heat, further raising the risk of fires breaking out in the coming weeks.
Analysts believe the situation, while still under control, could affect production in the short term if the fires spread into plantation areas or slow down operations.
Matthew Biggin, a commodities analyst at Fitch Solutions' BMI unit, said:
"The escalation of the alert to an emergency in Riau, combined with warnings of an intense heat season, poses a clear risk to Indonesia's palm oil sector."
He added:
"July is a critical month because it coincides with peak harvest, and any disruption during this period from fires or heat could have a significant impact on production and supply."
Biggin explained that the fires and haze could hamper harvesting and transport operations, leading to short-term supply tightness, though stable production in Malaysia could help offset the impact on the global market.
He continued:
"While these developments are supportive of palm oil prices, we don't expect a sharp price spike at this stage."
"For now, we are maintaining our price and production forecasts, but if the fires worsen, we may need to revise our production outlook downward."
BMI forecasts global palm oil production for the 2025/2026 season to reach 80.6 million tonnes, up 2.4% year-on-year, supported by a 0.5% increase in Malaysia and a 3.3% rise in Indonesia.
The effects of the fires have begun to spread beyond Indonesia's borders. While Singapore has not yet experienced cross-border haze, the National Environment Agency (NEA) confirmed it is monitoring the situation closely.
In Malacca, on Malaysia's west coast, restaurant owner Roger Song said haze had begun drifting into the area, noting:
"I can smell the burning outside. We've installed more air purifiers to cope. In previous years, the haze affected customer footfall, and that hasn't happened yet this year, but we're keeping a close eye on it."
In Singapore, Philip Jan, founder of the travel agency SingaTour, said no flight cancellations had been recorded so far, but warned that worsening haze could affect regional tourism if conditions deteriorate.
Land fires are a recurring phenomenon in Indonesia, particularly in Sumatra and Kalimantan, largely due to the continued use of burning as a method of land clearing, despite it being illegal and environmentally damaging.
According to Indonesia's law enforcement authorities, 35 forest and land fire cases have been recorded in Riau so far in 2025, with 44 people charged in connection with the incidents.