Published in the Formosa Journal of Science and Technology (FJST), the research arrives at a time when Indonesia continues to dominate the global palm oil industry while facing increasing uncertainty from volatile commodity markets, changing trade conditions, and global inflation. The study highlights that maintaining export competitiveness requires more than expanding production—it also depends on sound macroeconomic management.
Indonesia remains the world's largest producer and exporter of crude palm oil. Palm oil contributes significantly to national foreign exchange earnings and supports millions of livelihoods across plantations, processing industries, transportation, and international trade. In 2024, Indonesia produced more than 47 million tons of CPO, accounting for over 82 percent of the country's plantation commodity output.
Despite its production strength, Indonesia’s CPO export volume has fluctuated in recent years. These fluctuations have raised questions about the role of broader economic conditions in determining export performance. Rather than focusing solely on production statistics, the research examines how several macroeconomic indicators jointly influence export volume.
The researchers analyzed monthly economic data collected between January 2018 and December 2024, resulting in 84 observations. Information was obtained from official institutions, including Statistics Indonesia (BPS), Bank Indonesia, the Directorate General of Plantations, the World Bank, and other reliable economic databases.
Instead of relying on a single economic indicator, the researchers examined four major variables simultaneously:
- Exchange rate of the Indonesian rupiah
- Gross Domestic Product (GDP)
- International CPO prices
- Inflation
The analytical model also explored whether inflation strengthened or weakened the relationships between these variables and Indonesia’s CPO export volume.
Exchange Rate Emerges as the Strongest Positive Driver
One of the study’s most important findings is that the rupiah exchange rate has a positive and statistically significant effect on Indonesia’s CPO exports.
When the rupiah weakens against foreign currencies, Indonesian palm oil becomes relatively less expensive for overseas buyers. This improves international price competitiveness and encourages higher export demand.
The researchers found this relationship to be one of the strongest determinants of export performance during the study period.
Economic Growth Does Not Always Increase Exports
Another noteworthy finding challenges a common economic assumption.
Although stronger economic growth is often expected to support exports, the study found that Indonesia’s Gross Domestic Product (GDP) has a significant negative relationship with CPO export volume.
According to the researchers, higher domestic economic activity may increase local demand for palm oil products. As domestic consumption rises, a larger share of production remains within Indonesia, leaving less supply available for export.
This result demonstrates that economic growth does not automatically translate into higher export volumes, particularly for commodities with strong domestic demand.
Higher Global Prices Can Reduce Export Volume
The research also shows that international CPO prices negatively affect Indonesia’s export volume.
While higher commodity prices may appear beneficial for exporters, they can also discourage purchases from importing countries. As prices rise, international buyers may reduce consumption or substitute palm oil with alternative vegetable oils such as soybean oil, sunflower oil, or rapeseed oil.
The findings suggest that maintaining competitive pricing remains important even for globally dominant producers such as Indonesia.
Inflation Plays an Indirect Role
Unlike exchange rates, GDP, and commodity prices, inflation did not directly influence Indonesia’s CPO export volume during the observation period.
However, inflation performed an important moderating function.
The analysis indicates that higher inflation strengthens the impact of exchange rate movements on export performance. In periods of rising inflation, changes in the rupiah exchange rate have an even greater effect on export volume.
By contrast, inflation did not significantly alter the relationship between GDP and exports or between international CPO prices and exports.
Key Findings at a Glance
The study reports several important conclusions:
- Exchange rates have a positive and significant effect on Indonesia’s CPO export volume.
- GDP has a negative and significant effect on export volume.
- International CPO prices also have a negative and significant effect on exports.
- Inflation has no direct significant influence on export performance.
- Inflation strengthens the relationship between exchange rates and exports but does not significantly moderate the effects of GDP or international CPO prices.
Overall, the statistical model explained approximately 51.5 percent of the variation in Indonesia’s CPO export volume, indicating that additional factors including global demand, trade policies, export taxes, production costs, and geopolitical developments also contribute to export performance.
Implications for Government and Industry
The findings offer practical insights for policymakers, exporters, and agribusiness companies.
Maintaining exchange rate stability remains essential for preserving Indonesia’s export competitiveness. Policymakers should also monitor international commodity prices carefully because higher global prices do not necessarily generate larger export volumes.
For palm oil producers and exporters, the research highlights the importance of diversifying export destinations, strengthening downstream industries, and increasing value-added products rather than relying solely on raw commodity exports.
The study also supports continued investment in export resilience through better macroeconomic management, improved trade strategies, and expanded market access.
As Wawan Sumarno and his co-authors from Universitas Ekasakti explain, Indonesia’s export performance reflects the interaction of multiple macroeconomic forces rather than production capacity alone. Their findings suggest that exchange rate management and international market dynamics deserve greater attention alongside efforts to expand palm oil production.
Author Profiles
Mahmud - Universitas Ekasakti, Padang
Wawan Sumarno - Universitas Ekasakti, Padang
Nessa Amelia - Universitas Ekasakti, Padang
Gusriati - Universitas Ekasakti, Padang
Wanda Ramadhana - Universitas Ekasakti, Padang
Source
Article Title: Analysis of Indonesia's Palm Oil (CPO) Export Volume Moderated by Inflation
Journal: Formosa Journal of Science and Technology (FJST)
Publication: Vol. 5, No. 6, 2026, pp. 1655–1666
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