The outlook for palm oil exports from Malaysia and Indonesia—two countries that together supply roughly 85 percent of the world’s palm oil—has darkened following new warnings that ageing trees and elderly smallholder farmers are significantly curbing future output. Reuters reported that without a sharp turn towards replanting and younger producers entering the field, exports could drop by as much as 20 percent by 2030, tumbling from 46 million tonnes in 2024 to approximately 37 million tonnes.
Palm oil is a staple in cooking oil, food manufacturing, cosmetics, and biodiesel. Yet behind decades of output growth now lies an unfolding demographic and agronomic decline.
Smallholder farmers—who account for an estimated 40 percent of plantation area—appear particularly vulnerable. Reuters found that more than half of smallholder plantations in Malaysia have oil palms past peak productivity, far greater than the official figure of around 36 percent.
Many of these farmers are elderly and reluctant to incur debt or forego income for several unproductive years while new trees mature—even subsidy schemes offering 50 percent grant and loan support remain insufficient to overcome the decline.
Indonesia, too, is lagging badly in plantation renewal. As of late 2024, just 10 percent of a government target to replant 2.5 million hectares by 2025 had been achieved, leaving over one-third of trees at or past peak age in both worker- and company-managed estates.
Ageing palms are much more noticeable in Malaysia, where government sources indicate that trees 25 years of age or more make up about 12% of the planted area. Estimates suggest this could rise to more than a third by 2027, with replacement costs estimated at RM 20,000 per hectare (nearly US$3 billion) to rejuvenate outdated stock.
This ageing plantation profile is dragging down yields and suppressing export potential. Oil World, a Germany-based market analyst, forecasts annual production growth for the next decade to slow to 1.8 million tonnes or less—compared to 2.9 million tonnes per year in the previous decade.
Labour challenges are compounding the problem as well. Both countries rely heavily on foreign workers—Malaysia, especially—with labour shortages causing fruit to remain unharvested, reducing yields and income across estates.
Additionally, Indonesia’s shift to biodiesel is reducing the amount of biodiesel that can be exported. It is anticipated that exportable excess would decrease dramatically as more palm oil is redirected into domestic fuel mixtures, which will further contribute to the 20 percent reduction by 2030.
Demographic shifts are adding further risk. Elderly plantation owners are left to manage their estates alone while rural Malaysia’s and Indonesia’s younger generations seek increasingly for jobs within urban regions. Despite reduced production, most prefer to continue harvesting mature trees, as they lack the energy and financial resources to support replanting schemes.
Policy reactions are still somewhat limited. Critics argue that smallholders, in particular, require full-cost support, while Malaysian authorities continue to offer partially subsidised replanting packages. Indonesia has doubled its replanting budget for smallholder farmers, yet barriers remain: complicated land legalities and limited access to funding restrain uptake.
Taken together, the ageing trees and stagnation of the farming population paint a worrying picture. Without acceleration of replanting programmes, planting of higher-yielding younger varieties, and greater support for smallholders, global supplies of palm oil may struggle to keep pace with surging demand. The International Renewable Growers Association (IRGA) and other analysts forecast that by mid‑century, rising demand could exceed supply constraints by as much as 50 million tonnes, creating tension between affordability and availability.
In short, palm oil’s golden era of unfettered expansion may be drawing to a close. Ageing trees and ageing farmers are entwined barriers, creating a perfect storm for declining yields, higher prices, and constrained exports. Unless decisive reform comes—both in farm practice and in policy—the world may begin to feel the pinch of diminishing palm oil more sharply in the years ahead.
