Indonesia's crude palm oil output is expected to grow by about 12 percent in 2007 to 16.4 million tonnes from 14.7 million this year, a senior industry official said on Friday.
Indonesia, the world's second largest palm oil producer and exporter after Malaysia, has been boosting its output on the commodity partly to meet the increasing demand for biofuel as an alternative source of energy.
"More trees are going to mature next year. We are also expecting a rise in yields," Derom Bangui, executive chairman of the Indonesian Palm Oil Association, told a conference in Bali.
The government is planning to develop three million hectares of palm oil plantations in the next five years to cater for higher demand from biofuels. The government said last year it will develop a new palm oil plantation in Kalimantan near the border with Malaysia. Covering an area of 1.8 million hectares and with the potential to be the world's biggest palm oil plantation.
Biofuels are taking on renewed global importance as countries seek to substitute the soaring price of conventional oil and also cut hazardous emissions. Palm oil's emergence in the market comes decades after the introduction of ethanol, made from sugarcane, and other additives.
Analysts say the biofuel push could be the biggest driver of growth in demand for vegetable oils, especially as palm oil is the cheapest vegetable oil and the easiest to convert into fuel.