History of palm oil
Palm oil is one of the oldest edible oils in the world, with evidence of its use dating back over 5,000 years. It is native to West Africa, where it was used for cooking, lighting, and medicine. Palm oil was introduced to Southeast Asia in the 19th century, and production has grown rapidly in recent decades. Palm oil is now the most widely used vegetable oil in the world.
Global supply vs demand of palm oil
The global supply of palm oil is about 75 million tonnes per year. The global demand for palm oil is about 70 million tonnes per year. This means that there is a small surplus of palm oil on the world market.
The top five palm oil producing countries are:
- Indonesia
- Malaysia
- Thailand
- Colombia
- Nigeria
The top five palm oil importing countries are:
- India
- China
- Pakistan
- Bangladesh
- Indonesia
Palm oil vs other vegetable oil – supply v demand
The supply of palm oil is much higher than the supply of other vegetable oils, such as soybean oil and rapeseed oil. This is because palm oil is more efficient to produce than other vegetable oils. Palm oil takes up just 0.38% of global agricultural land but contributes over 56% of global edible oils and fats exports.
Palm oil vs other vegetable oil – what’s more feasible
Palm oil is more feasible to produce than other vegetable oils because it requires less land and water to produce. Palm oil is also a more productive crop than other vegetable oils. Globally, palm oil supplies between 35% and 40% of the world’s vegetable oil demand on just under 6% of the land used to produce all vegetable oils. To get the same amount from alternative oils like soybean, coconut, or sunflower oil you would need anything between 4-and-10 times more land, which would just shift the problem to other parts of the world and threaten other habitats, species and communities.
The current scanerio – restrictions on palm oil import/usage
A number of countries have imposed restrictions on the import or use of palm oil. These restrictions have been imposed due to concerns about the environmental and social impacts of palm oil production.
While it is possible to live without palm oil, it would be difficult. Palm oil is used in a wide variety of products, including food, cosmetics, and biofuels. If palm oil were banned, it would be necessary to find alternative products to replace it.
University of Bath scientists recently showed in Nature Sustainability that banning palm oil could drive greater rates of deforestation, by switching demand to less efficient edible oils like sunflower or rapeseed which use more land, water and fertiliser.
Around 93% of the palm oil imported into Europe (including the UK) is certified sustainable and does not cause deforestation.
To get the same amount from alternative oils like soybean, coconut, or sunflower oil you would need anything between 4-and-10 times more land, which would just shift the problem to other parts of the world and threaten other habitats, species and communities. Palm oil takes up just 0.38% of global agricultural land but contributes over 56% of global edible oils and fats exports.
There would be drawbacks to a world without palm oil. These drawbacks include:
- Higher prices for consumer goods: Palm oil is a relatively inexpensive vegetable oil. If palm oil were banned, the prices of consumer goods that contain palm oil would likely increase.
- Reduced economic development: Palm oil is a major export crop for a number of countries. If palm oil were banned, it would have a negative impact on the economies of these countries. Farmers are crucial to the socio-economic development of their communities: in Malaysia, palm oil has been a key contributor to reducing poverty from 50 per cent in the 1960s to just 5 per cent today, with smallholder production accounting for 40 per cent of total palm oil plantation areas.
- Increased hunger: Palm oil is a major source of edible oil. If palm oil were banned, it could lead to an increase in hunger.
Historically, palm oil has had a bad reputation for causing deforestation, producing greenhouse gas emissions and damaging biodiversity and human rights. However, recent moves towards sustainability by the industry are ensuring that it these challenges are dealt with effectively.
But deforestation from palm oil has fallen to a four-year low: Deforestation in Indonesia, Malaysia, and Papua New Guinea attributed to the development of oil palm plantations has fallen to its lowest level since 2017, according to satellite analysis published from risk analysis group Chain Reaction Research (CRR).
More recently, an important piece of research was recently published by Global Forest Watch in June 2023, which noted a sharp reduction in forest loss in Malaysia.
And according to Forest 500 analysis by non-profit research group Global Canopy, palm oil supply chains were singled out as doing a better job than others in providing deforestation commitments. Among all the commodities that are linked to deforestation, commitments are more common in palm oil supply chains (72% of companies have made a deforestation commitment) than other commodities including pulp and paper (49%), soy (40%), beef (30%) and leather (28%).
Recent moves towards sustainability by the industry are ensuring that challenges are dealt with effectively. For example:
- Deforestation: The Roundtable on Sustainable Palm Oil (RSPO) is a certification scheme that promotes sustainable palm oil production. The RSPO requires member companies to protect forests and avoid deforestation.
- Greenhouse gas emissions: The RSPO also requires member companies to reduce their greenhouse gas emissions. This can be done by using more efficient production methods and planting trees to offset emissions.
- Biodiversity loss: The RSPO also requires member companies to protect biodiversity. This can be done by planting native trees and shrubs on palm oil plantations and creating wildlife corridors.
- Human rights abuses: The RSPO also requires member companies to respect human rights. This includes paying workers a fair wage and ensuring that workers are not forced to work.
In addition to the RSPO, there are a number of other initiatives that are working to promote sustainable palm oil production. These initiatives include:
- Most notably, the Malaysia Sustainable Palm Oil (MSPO) Board which was formed in 2015 to certify sustainable grown palm oil and, in 2017, the government of Malaysia mandated MSPO certification starting in 2020.
- MSPO is similar to the RSPO but compulsory and enforceable by law. As such, around 96% of Malaysian palm oil plantations—many of them run by 300,000 smallholder farmers—are now MSPO-certified under the Malaysia Sustainable Palm Oil scheme. This was a new nationally mandated sustainability standard enforceable by the law, and the first of its kind around the world.
- Oil palm corporations in Malaysia appear to be taking action with some 83% of palm oil refining capacity now operating under a ‘No Deforestation, Peat and Exploitation (NDPE)’ commitment.
- Positive government action has continued in more recent years, with a plantation area cap established in 2019 through 2023, and new forestry laws enacted in 2022 to stiffen penalties for illegal logging.
- The GreenPalm certification scheme: This scheme allows companies to offset their palm oil consumption by supporting sustainable palm oil projects.
- The Palm Oil Innovation Group (POIG): This group is working to develop new technologies and practices to reduce the environmental and social impacts of palm oil production.
These moves towards sustainability are having a positive impact. For example, a study by the WWF found that certified palm oil production has reduced deforestation by 35%.
However, there is still more work to be done. Not all palm oil is produced sustainably, and there are still some companies that are not taking steps to reduce their environmental and social impacts.
Consumers can play a role in promoting sustainable palm oil production by buying products that contain certified sustainable palm oil. Consumers can also put pressure on companies to source their palm oil from sustainable sources.
By working together, consumers, companies, and governments can make a difference and ensure that palm oil is produced in a sustainable way.