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Why Palm Oil Is Here To Stay


Palm oil is the most widely used vegetable oil in the world with production having skyrocketed over the past 50 years. Originating in West Africa, farmers discovered in the 19 the century that oil palms would thrive in the hot and humid South-East Asian climate.
Indonesia and Malaysia are now the world’s top growing regions, accounting for around 83% of global production. While it is often seen as a 20 th century phenomenon, its use can be traced back over 5,000 years.

An Irreplaceable Commodity
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 not only far more versatile than other vegetable oils but is also far more efficient to produce: 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.

University of Bath scientists 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.

Banning palm oil would also drive more people into poverty. It is a major export crop for a number of countries and if 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.

But What About The Forests?
Historically, palm oil was responsible for environmental damage but over the past several decades organisations like the Roundtable on Sustainable Palm Oil (RSPO) and the Malaysian Sustainable Palm Oil (MSPO) and Indonesian Sustainable Palm Oil (ISPO) certification schemes have begun turning this around.

Even Hannah Ritchie, the star number cruncher at the University of Oxford University’s Our World in Data research unit, says in her book ‘Not The End of the World’ that palm oil is no longer the villain it’s portrayed to be. Dr Ritchie argues that cutting out palm oil would simply lead to it being replaced it with other oils – and the alternatives are no better.
She points out that if companies and consumers boycotted palm oil to replace it with vegetable oil alternatives, we would need 4 to 10 times as much land devoted to crops such as soybean, coconut, or sunflower. This number was confirmed by Chester Zoo. The World Wildlife Fund (WWF) also said that certified palm oil production reduced deforestation. 

Banning it would just shift the problem to other parts of the world and threaten other vulnerable habitats, species and communities.

To illustrate the impact of banning palm oil, Dr Ritchie came up with a thought experiment: we currently use 322 million hectares (an area the size of India) to grow oil crops. If we were to get all of it from palm oil we’d need just 77 million hectares – four times less, freeing up a lot of land. But if we got it all from live oil then we’d need 660 million hectares – or the equivalent of two Indias by landmass.

Palm oil’s journey to sustainability is irreversible. Sustainable oil palm plantations in Malaysia have committed themselves to a No Deforestation, No Peat, No Exploitation (NDPE) promise, and adhere to stringent guidelines on deforestation, protecting high carbon stock forests, and preventing the conversion of peatlands.

This has reduced the rates of deforestation, which has now dropped 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).

Global Forest Watch confirmed in June 2023 that there had been 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 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%). 

In 2022, global certified sustainable palm oil (CSPO) production reached a milestone by exceeding 15 million metric tons, representing 20% of total global crude palm oil (CPO) production. This was a significant increase from 2018 when CSPO production first hit 10 million metric tons.

Around 93% of the palm oil imported into Europe (including the UK) is certified sustainable and does not cause deforestation. 

Major Producers and Consumers
The global palm oil trade was valued at around $14.8 billion in 2022, up 24% from 2020.

According to the USDA, global palm oil production in 2023 was estimated at around 79.46 million metric tons, with the top two producers being Indonesia (59% share) with 47 million tons, and Malaysia (24% share) with around 19 million tons. Other major producers include Thailand, Colombia, Nigeria, and Papua New Guinea.

Even though Malaysia is not the largest producer, it was the largest exporter in 2022 shipping $5 billion in value while Indonesia exported $3.8 billion. Other exporters include Papua New Guinea, Guatemala, and Thailand.

The leading importers were India ($7.9 billion), followed by China, the European Union and the US.