Indonesia Plans to Seize Up to 5 Million More Hectares of Palm Oil Plantations in 2026

Prabowo Sets a Larger Target for Plantation Seizures

Indonesia plans to seize another four to five million hectares of palm oil plantations in 2026, President Prabowo Subianto announced on January 7, expanding a campaign that he said brought 4.1 million hectares under state control during 2025. Speaking at a rice harvest ceremony in West Java, he said the plantations had operated illegally in areas classified as forest.

The proposed expansion would affect a large share of Indonesia's 16.8 million hectares of palm oil plantations. Adding the announced target to the 4.1 million hectares already seized gives 8.1 million to 9.1 million hectares, equivalent to about 48 to 54 percent of that total. The campaign could therefore bring roughly half of the country's plantation area under direct state scrutiny or control.

Prabowo addressed officials from the Attorney General's Office as he described the land already taken over and the next target.

We have controlled, have taken over four million hectares of palm oil plantations that have violated the laws. Isn't that right, state attorney?

In 2026, maybe we will seize four or five million more.

Indonesia produces approximately 57 percent of the world's palm oil and accounts for 60 percent of exports. Decisions affecting its plantations can reach consumers far beyond the country through the prices of cooking oil, processed foods and biofuels.

Prabowo has presented himself as a defender of national wealth against exploitation by elites and foreign interests. His campaign reaches both major companies and smallholder farmers, bringing concerns about food security, investment stability and global supply chains into a dispute over land ownership in Southeast Asia's largest economy.

A Task Force with Military, Police and Prosecutors

The Forest Area Control Task Force, established in January 2025, leads the campaign. It includes military personnel, police and state prosecutors, with Defense Minister Sjafrie Sjamsoeddin overseeing the operation. Its role reflects the military's expanding involvement in economic governance under Prabowo.

The task force has broad discretion to identify plantations operating in forest areas without proper permits, impose fines and transfer ownership to the state. Within nine months, the government had seized an area roughly the size of Switzerland, covering plantations, mine concessions and processing facilities.

The campaign gained momentum in March 2025 with the seizure of 221,000 hectares from Duta Palma Group. Its owner, Surya Darmadi, formerly one of Indonesia's richest men, became the subject of a money laundering and corruption probe.

The main events and policy milestones span the following dates:

• January 2025: The government established the Forest Area Control Task Force.
• February 2025: Indonesia raised its biodiesel blend target to 40 percent.
• March 2025: Authorities seized 221,000 hectares from Duta Palma Group.
• September 2025: Agrinas President Director Agus Sutomo told parliament that less than half of its land bank was planted with trees.
• December 2025: Attorney General Sanitiar Burhanuddin announced that fines linked to the palm oil seizures could reach approximately $6.5 billion.
• January 7, 2026: Prabowo announced a target of another four to five million hectares of seizures during 2026.

Agrinas Takes Over a Vast Land Bank

Much of the seized land has gone to Agrinas Palma Nusantara, a state company transformed from an infrastructure services business into the world's largest palm oil company by area. Approximately 1.7 million hectares of seized plantations have been transferred to it.

Agus Sutomo told parliament in September that much of the company's extensive land bank was not yet productive. Less than half had already been planted with trees, and the portfolio contained numerous small plots that individually lacked the scale needed for efficient cultivation. Restoration and productivity improvements would require substantial investment.

The government's land totals also cover different stages of the takeover process. Earlier figures used by Fastmarkets analysts put seized land at 3.3 million hectares, including 1.5 million hectares of planted oil palm transferred to Agrinas and another 1.8 million hectares undergoing verification. Prabowo's January announcement put the 2025 total at 4.1 million hectares.

Agrinas consequently faces two tasks at once: managing existing harvests and making a large, uneven collection of land productive. Its size by area comes with the practical challenge of maintaining plantations and investing in plots that need further work.

Farmers Resist Giving Up Their Independence

The task force has proposed allowing farmers to stay on seized land under arrangements that divide revenue with Agrinas. The state company would typically receive 40 to 45 percent of proceeds, leaving farmers with 55 to 60 percent.

Many smallholders have rejected those terms. They say the arrangements would cost them their independence and provide insufficient compensation for years of labor and investment.

Rubahan Hasibuan, a farmer aged 48 from northern Sumatra, said approximately 2,000 hectares farmed by his family and neighbors had been seized. He described why they rejected the proposed arrangement.

We planted the trees, and we worked hard to take care of them.

We turned it down to keep our independence.

Overlapping land allocations complicate the campaign. Some areas received permission for cultivation while remaining classified as forest. Plantation operators also argue that they are farming land bought or handed to them years earlier through government programs encouraging internal migration.

Achmad Sukarsono, of consultancy Control Risks, questioned how such extensive plantation development could have taken place without official involvement.

Prabowo claims that the state has reclaimed 4 million hectares because these plots were located within forest zones. But how did it come to this? Such a vast amount of land couldn't have been taken illegally by palm oil companies without approval from local governments and military officials.

The dispute therefore reaches beyond who currently occupies the land. Farmers and companies point to earlier permissions and purchases, while the government is enforcing the land's classification as forest.

Palm Oil Prices Face Pressure from Supply Risks

The seizures have unsettled global palm oil markets. Analysts expect disruption to plantation management to put upward pressure on prices during 2026, affecting a commodity widely used in food and fuel.

Thomas Mielke, executive director of the forecasting firm Oil World in Hamburg, predicted at an industry conference in Bali that Malaysia's benchmark palm oil contract could reach RM5,000 per metric tonne, equivalent to US$1,183.71, within six months.

Dorab Mistry, director at India's Godrej International, suggested futures could reach RM5,500 per tonne between January and March if Indonesia continued seizing plantations and advanced its B50 biodiesel plan. A futures contract sets a price for delivery at a later date, making it one measure of market expectations.

Fastmarkets analysts estimated that uncertainty over land titles could put between two million and five million tonnes of crude palm oil, or CPO, production at risk. That concern centers on whether plantations continue receiving the investment and maintenance needed to sustain their harvests.

Industry groups warn that uncertainty can discourage spending on fertilization and cultivation. They say production may begin falling within two to three months when maintenance is disrupted.

Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental, said "it will definitely hurt supply" if the seizures materialize.

Mielke also warned at the Bali conference that the production risk could be greater than current expectations.

The risk that production will suffer more than we dare to say now is probably bigger than vice versa. This is a very critical and very sensitive situation.

Production Forecasts Point in Different Directions

Mielke expects Indonesian palm oil output to fall from 49.4 million tonnes in 2025 to 49 million tonnes in 2026, with the decline continuing into 2027. The projected decrease for 2026 is 400,000 tonnes, or about 0.8 percent of the 2025 figure.

Aging trees and slow replanting are already weighing on yields. Those pressures would operate alongside any disruption caused by changes in plantation control.

The Indonesia Palm Oil Association, known as Gapki, forecasts a more favorable result: production growth of 3 to 4 percent in 2026, supported by favorable weather and plantings newly reaching maturity.

Gapki spokesperson Fadhil Hasan nevertheless acknowledged concerns about the seizures. He stressed the need for balanced enforcement so that any effect on production would remain moderate and temporary.

The forecasts place different weight on plantation disruption, weather and the contribution from newly mature trees. Their consequences would extend to both Indonesia's domestic supply and the amount of palm oil available for export.

Biodiesel Expansion Adds to Demand

Indonesia's fuel policy adds another source of pressure on palm oil supplies. The country raised its biodiesel blend target to 40 percent starting in February 2025 and had targeted a 50 percent blend, known as B50, for the second half of 2026.

The government has since scaled back immediate implementation to B45 for 2026, citing the need for further consideration. A B45 blend contains 45 percent biodiesel, while B50 contains 50 percent. Increasing that share directs more palm oil into domestic fuel production rather than export markets.

Mielke estimated that meeting the B50 mandate would require an additional 2.2 million tonnes of palm oil for biodiesel. The quantity matters because fuel demand would rise while plantations face uncertainty over ownership and maintenance.

Julian McGill, an analyst at Glenauk Economics, said higher biodiesel content could require levy increases of up to 7.5 percent because of the widening price gap between palm oil feedstock and diesel fuel. Feedstock is the raw material used to make the fuel.

The price forecasts therefore combine two pressures: possible losses in plantation output and greater domestic consumption for biodiesel. Both would reduce the volume available to buyers abroad.

Forest Protection Meets Investment Concerns

The government presents the seizures as environmental restoration and a reform of land management. Prabowo says the operations aim to recover state resources lost through illegal activity in a country that has lost millions of hectares of forest in recent decades.

Floods and landslides that killed more than 1,000 people in Sumatra in late 2025 added momentum to the campaign, with deforestation's role in worsening those disasters receiving attention. Environmental activists have long criticized palm oil expansion for destroying peatlands rich in carbon and habitats for endangered orangutans, tigers and rhinos.

Prabowo has described the campaign as "the right and noble path of defending the interests of millions of Indonesians." He says vast forest areas remain under illegal business control and that leaving the problem unresolved could cost the state hundreds of trillions of rupiah.

Investors face uncertainty about ownership and penalties reaching back to earlier years. Those concerns have already begun affecting investment decisions in the plantation sector.

Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies in Jakarta, described the approach as increasingly showing "the character of a Prabowo-style command economy." In a command economy, the state takes a central role in directing economic activity.

Bhima said the methods could discourage investment in both plantations and conservation.

Methods like this reduce interest from investors, both in the plantation sector and in conservation.

The immediate challenge is to recover illegally controlled land while maintaining productive farms and supporting restoration. Farmers' incomes, plantation upkeep and investment decisions all depend on how the transfers are carried out.

Fines Could Reach Billions of Dollars

Attorney General Sanitiar Burhanuddin said in December that the government could collect approximately $6.5 billion in fines from palm oil companies implicated in the 2025 seizures.

For 2026, he identified potential administrative fines of IDR109.6 trillion, equivalent to $6.54 billion, for palm oil operations and IDR32.63 trillion, or $1.95 billion, for mining in forest areas. Together, those figures amount to IDR142.23 trillion, or approximately $8.5 billion.

The task force has already collected more than IDR2.34 trillion, equivalent to $139.70 million, from 20 palm oil companies and one nickel miner.

The government's plantation penalty formula charges companies $1,497 per hectare for every year since clearing began, with an exemption of five years to account for the time oil palms take to become productive. Repeated annual charges could leave some companies facing penalties greater than the value of their land.

Figures from the Attorney General's Office show that approximately four dozen palm oil companies have been ordered to pay a total of around $560 million. Another 22 mining companies have been ordered to pay more than $1.7 billion as a way to return illegal gains to the state.

These amounts represent different stages of enforcement: money already collected, payments ordered and potential revenue from further fines. The size of the potential bill makes the campaign a major financial issue for both the government and affected businesses.

Companies Assess Exposure and Payment Delays

Wilmar International Ltd., the crop trader based in Singapore, says it expects a few thousand hectares of its plantations to be affected and is discussing the matter with authorities.

IOI Corporation Bhd., listed in Malaysia, operates palm plantations and mills in Kalimantan. Chief Executive Officer Lee Yeow Chor said the company would undertake more risk assessments before making investments in Indonesia.

Gapki has also heard complaints from members about payments after plantation transfers. According to a presentation made to parliament behind closed doors, proceeds from harvests on seized plantations are directed entirely to Agrinas's account, with payments to partners arriving more than 30 days later.

Those delays create cash flow problems for farmers and companies trying to maintain operations. Cash flow is the money available to meet immediate expenses, including the work needed to keep plantations producing.

The nickel sector faces similarly substantial penalties. The government is demanding around three trillion rupiah, equivalent to $179 million, from PT Weda Bay Nickel for violations involving 148 hectares of its site covering 45,000 hectares. The company's largest shareholder is China's Tsingshan Holding Group.

For nickel miners, the penalty rate has been set at $389,000 per hectare, an amount large enough to bankrupt many of the small companies that still dominate output.

The Campaign Extends into Tin and Other Minerals

The palm oil seizures form part of a broader consolidation of Indonesia's commodity sectors. Authorities are also targeting illegal tin smelters, nickel mines and coal operations.

In Bangka and Belitung, a task force backed by the military has targeted offshore dredging vessels and illegal smelters, and uncovered heavy machinery buried underground. The operation followed the convictions of executives at PT Timah, the state company that dominates the tin sector, over a corruption scheme lasting several years that laundered illegally mined tin into its supply chain.

The government nevertheless handed seized tin assets to PT Timah for management. It appointed Restu Widiyantoro, a retired army colonel, as president director. Observers see that decision as part of a pattern of state consolidation rather than genuine reform.

Made Supriatma, a visiting fellow at the ISEAS-Yusof Ishak Institute whose research focuses on Indonesia's military, described the political character of the campaign.

Many observers say this amounts to nationalization by another name. But the risk is that this is not acknowledged as nationalization; Prabowo frames it instead as a law-enforcement issue. All of this is driven by political factors; it has nothing to do with economic reasoning.

Mining communities have responded differently. Some residents welcome environmental improvements from reduced illegal mining, while others have lost their livelihoods without alternatives.

Ari, a miner from Gantung in East Belitung, described the consequences of closures for people dependent on tin mining.

There are no jobs left. Life is getting harder for us; the pit cave that I used to mine is also closed. They crack down without thinking about small people who depend on tin mining.

Across plantations and mines, the campaign is transferring control of land and assets to state businesses while imposing large financial penalties. Prabowo's announcement sets a larger target for 2026, but no timetable for the additional plantation seizures was given. The consequences will depend on the continued management of harvests, the treatment of farmers and the resolution of competing land claims.

At a Glance

• Prabowo announced on January 7 that Indonesia may seize another four to five million hectares of palm oil plantations in 2026, after 4.1 million hectares in 2025.
• The combined area would equal about 48 to 54 percent of Indonesia's 16.8 million hectares of palm oil plantations.
• A task force involving the military, police and prosecutors leads the campaign, with approximately 1.7 million hectares transferred to Agrinas Palma Nusantara.
• Farmers have resisted arrangements giving Agrinas 40 to 45 percent of proceeds and leaving them 55 to 60 percent.
• Analysts forecast possible palm oil prices of RM5,000 to RM5,500 per tonne, while production forecasts range from a decline to growth of 3 to 4 percent.
• Indonesia has scaled back immediate biodiesel expansion to B45 for 2026 after targeting B50 for the second half of the year.
• Potential palm oil and mining fines for 2026 total approximately $8.5 billion.
• The campaign also covers tin, nickel and coal, bringing environmental goals alongside concerns about investment, plantation maintenance and livelihoods.