Diesel Shortages and Price Hikes Disrupt Southeast Asian Palm Oil

Rising diesel prices and fuel supply shortages are disrupting palm oil harvests across Borneo and Sumatra, threatening global yields of the edible oil. In the Malaysian states of Sabah and Sarawak, unsubsidized diesel prices have surged nearly 120%, while farmers in Indonesia's Sumatra have faced tight fuel supplies since mid-July.

Napolean R Ningkos, president of the Sarawak Dayak Oil Palm Planters Association, reports that smallholders are reducing harvesting frequency due to high transport and machinery costs. In Sarawak, these delays could reduce yields by 15% to 20%. Ningkos argues that current diesel subsidy quotas provided by the Malaysia Office of the Chief Government Security Officer are inadequate for the rugged interior of Borneo compared to the flatter lands of West Malaysia.

Similar disruptions are occurring in Indonesia, where Gulat Manurung, chairman of the smallholders’ farm group APKASINDO, reports curtailed operations in Sumatra. These regional crises coincide with rising global fuel prices following the outbreak of the U.S.-Israel war on Iran in February. Experts warn that an expected El Nino weather pattern may further reduce rainfall and output across both nations.