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Indonesia, the world's largest palm oil producer, raised the tax on crude palm oil (CPO) exports from 7.5% to 10% on 17 May.
The policy change is aimed at funding biofuel initiatives and oil palm replanting programmes within the country.
Nigeria, the world's fifth-largest palm oil producer, still imports nearly half of the roughly two million tonnes it consumes domestically each year.
Palm oil is no longer considered the world's cheapest vegetable oil, owing to supply shortages, including from Malaysia, the second-largest global producer.
Indonesia's Ministry of Finance has also raised taxes on other palm oil products to support smallholder farmer programmes and replanting efforts, as well as palm oil and biodiesel production.
The government recently raised the mandatory palm oil blending rate in biodiesel from 35% to 40%, with plans to lift it to 50% by 2026. A 3% palm oil blend in jet fuel is also under consideration starting next year.
By the end of April, Indonesia had consumed 4.44 million kilolitres of biodiesel, and plans to distribute 15.6 million kilolitres in 2025, compared with roughly 13 million in 2024.
Indonesia supplies around 60% of the world's palm oil, a staple ingredient used in about 50% of packaged goods on store shelves. According to United Nations Development Programme (UNDP) data, the country produces more than 30 million tonnes of palm oil annually, contributing 4.5% of gross domestic product and providing jobs for nearly three million people.
The sector has become central to the country's economy, consistently posting double-digit growth rates.
At the same time, Indonesia is turning to small insects from Africa to boost palm oil output, which has suffered from declining yields — a trend that could keep prices elevated and add to food inflation.
The country plans to release around one million beetles (weevils) on some plantations this year to improve pollination and fruit development.
Three species of the beetles were collected from Tanzania and will arrive at a facility in North Sumatra next month for testing before being released onto plantations.
These African beetles are expected to help reinvigorate production growth, which has stagnated due to ageing trees. Many farmers have been reluctant to replant because of the long time new trees take to reach productive maturity.
Meanwhile, Indonesian President Prabowo Subianto recently argued that oil palms should be considered "trees," and that palm plantations should therefore not be regarded as a cause of deforestation. Critics say this contradicts extensive research linking palm cultivation to carbon emissions, biodiversity loss and deforestation.
Experts have recommended that the sector focus on improving yields on existing plantations rather than expanding into forests and ecologically sensitive areas.
Nigeria Takes An Aggressive Approach To Boosting Palm Oil Output
Edo State, known as Nigeria's "palm oil capital," is home to some of the country's most important agricultural supply chains, including Nigerian Stock Exchange-listed firms Presco and Okomu Oil.
Both companies posted their highest-ever net profits in 2024, despite the challenges facing the country's business climate.
The Oil Palm Growers Association of Nigeria (OPGAN) aims to revive the sector by replanting 1.5 million hectares of oil palm over the next five years.
The initiative forms part of the "Nigeria Oil Palm Development Strategy (2024–2029)," drawn up by OPGAN with the goal of lifting Nigeria's global ranking from fifth to third place in palm oil production.
The strategy also seeks to restore and strengthen the sector's standing through better planning, increased investment, adoption of sustainable environmental practices, deployment of modern technology, and inclusive growth models.
It is the first comprehensive national palm oil development plan drawn up by a professional association in Nigeria to directly address the needs of this vital sector.