West Kalimantan palm sector cuts output as El Niño drought disrupts river transport

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West Kalimantan palm oil drought

Highlights

Kapuas River's sharp recession disrupts transport for 40% of West Kalimantan's palm oil output, causing mills like Multi Prima Entakai to slash fresh fruit bunch purchases from 30,000 tons in July to 10,000 tons in September.
Thirteen out of fifty mills, equating to roughly half of West Kalimantan's palm processing capacity, face production limits due to bottlenecks, cutting September province-wide supply by approximately 11% versus August.
Analysts forecast Indonesian Borneo's fourth-quarter palm oil output to fall 12%–15% on El Niño disruptions, prompting GAPKI to lower its 2026 national production outlook by 2.9%.

River bottlenecks choke mill operations

As reported by BusinessWorld Online, citing Reuters, the Kapuas River, the main transport route for about 40% of West Kalimantan's palm oil output, is receding sharply as dry weather persists, exposing sandbanks and leaving barges and tugboats stranded. That is backing up crude palm oil at mills, filling storage tanks and leading processors to curb purchases of fresh fruit bunches from farmers.

Supendi, a 33-year-old farmer, says he spent four days earlier this month trying to unload 7 metric tons of fruit bunches at the Multi Prima Entakai mill in Sanggau before being turned away because the site was full. Across the province, thousands of smallholders are facing similar problems as fruit spoils and road transport remains only a limited substitute for river shipping.

Mill operators say trucks move far less cargo than barges and are in short supply. Dian Kurniawan, a manager at Multi Prima Entakai, says the mill's fruit bunch purchases fall to 10,000 tons in September from 30,000 tons processed in July, while its crude palm oil stock reaches 8,200 tons as of Oct. 1, close to its 8,500-ton storage capacity.

Production losses spread across the province

Thirteen of West Kalimantan's 50 palm oil mills are affected by the transport disruption, representing roughly half of the province's processing capacity, according to Aris Supratman, head of the local office of the Indonesian Palm Oil Association, GAPKI. He estimates palm oil supply from the province falls about 11% in September from August as delayed shipments force mills to limit production.

Analysts estimate fourth-quarter output across Indonesian Borneo could drop by 12% to 15% because of the El Niño-related disruption, while GAPKI has revised down its 2026 national palm oil production forecast by 2.9% as dry weather slows fruit maturity. Indonesia's weather agency expects the rainy season to begin in November instead of the usual October, extending pressure on logistics and delaying relief from wildfires in the country's worst haze episode in 11 years.

For farmers, the damage is spreading beyond immediate sales losses. Indra Rustandi, who heads the West Kalimantan branch of smallholder group APKASINDO, says some growers are cutting fertilizer use by up to 70% to save money, while others are seeking side income. Another smallholder in Sanggau, Rahmat Wiyono, says he has spent the past two months driving longer distances to buyers offering lower prices, as regular mills reduce intake.

Our earlier article on the Strait of Hormuz shipping disruption explained that prolonged transport uncertainty is starting to hit agriculture through higher fuel and freight costs, constrained fertilizer flows, and knock-on effects on harvesting and planting decisions. We also noted that these pressures were expected to keep pushing agricultural commodity prices higher and raise food-security risks for import-dependent regions.

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