"Rampant looting in plantation areas, unstable political conditions and soaring prices of fertilisers will cut the annual growth rate in Indonesia's CPO output in 2002 and several years after," Derom Bangun, chairman of the Indonesian Palm Oil Producers Association (GAPKI), told Reuters on Monday.

He said in an interview that Indonesia had enjoyed annual CPO production growth of between 10 and 12 per cent since 1990 because of rapid expansion of plantation areas.

"But since 1997, the economic crisis has hit the country, followed by rampant looting and social unrest across the nation. These have made it unthinkable to expand plantation areas," Bangun said.

"Production will still increase next year because many trees which were planted in 1997 will become mature. But in 2002 we will start seeing a decline in growth rate because most companies have refrained from expanding," he added.

Oil palm trees need three or four years to start fruiting.The national economic crisis, sparked by the rupiah's tumble against the dollar, has tripled prices of fertilisers.

Looting takes toll on output

Looters are known to steal fresh fruit bunches from plantations in the evening and then sell them later to cooking oil producers.

"Looting of both ripe and unripe fruit has reduced overall production by 10 per cent every year in the last two years," Bangun said.

In the era of reform which has followed the donwfall of former President Suharto in 1998, plantation companies have also had to deal with land disputes with local people who claim they are not being properly compensated for their land.

Social unrest and religious clashes are continuing in several parts of the country, further discouraging investors."In the last two years, plantation companies have been busy improving the security of their areas and handling land disputes... They do not have time to think about expansion," Bangun said.

Indonesia's CPO production is expected to rise to 6.5 million tonnes in 2000 from 5.9 million tonnes in 1999 because many trees planted in 1996 have matured, the industry leader said.

"Our CPO output is expected to reach 10 million tonnes in 2005. It was earlier predicted that this amount could be reached in 2003 but unfortunately we have several problems overshadowing the industry," he added. "We will still be far behind Malaysia."

Malaysia, the world's number one producer, is expected to produce 10.95 million tonnes of CPO this year.To encourage new investment in oil palm plantations, Bangun said, the government had to provide better security conditions.

"Law enforcement is the key. Investors will not want to invest if looting is still rampant," he said. "We cannot allow any anarchy. This will worsen the condition."

-- (Reuters)