Palm oil is found in around 10% of products on European supermarket shelves, from soap and toothpaste, to chocolate, bread, butter and cereal. Its success as a global commodity lies in its tremendous versatility, but also in its high yields – around seven times those of rapeseed, for instance – and low production costs. South East Asia dominates global production; plantations grown on deforested land, and particularly on carbon-rich peatlands drained for agriculture, make palm oil production a major regional source of carbon emissions.


The scale of the palm oil industry is vast. Global palm oil output was 42 million tonnes in 2007, more than 80% of which was from Indonesia and Malaysia and has helped to transform the economies of these countries.
Other large producer countries include Thailand, Nigeria and Colombia. Brazil, Democratic Republic of Congo and Liberia are all set to expand their production.
Yields per hectare in the industry are higher than for other crops but could still be significantly improved. According to the Malaysian Palm Oil Association, best-in-class plantations can generate 7 to 8 tonnes per hectare, compared to an actual average yield of 4 to 5 tonnes. Historically, however, the industry has brought more land into production rather than working to improve yields on existing estates.
Prior to the global financial crisis, palm oil production was increasing by 9% every year. More than half the oil palm expansion in Indonesia and Malaysia between 1990 and 2005 occurred in converted native forests and peatlands.
If grown sustainably, however, palm oil has many advantages. It is highly productive compared to other major oilseed crops and its cultivation and processing require less fertilisers, pesticides, and fuel energy per tonne of oil. Simple substitution with alternative crops could therefore have negative environmental and climate change impacts overall.
Palm oil also represents an economic opportunity for hundreds of thousands of small farmers who represent a significant part of the supply chain, and offers some governments a means to combat poverty.
For these reasons penalising palm oil expansion per se, is not feasible or economically responsible. Urgent effort must instead be focused on ensuring it comes from sustainable sources and minimising deforestation risk.


China is the largest consumer of palm oil, importing 18% of global supply. About 16% goes to the EU, and the UK alone imported 490,000 tonnes in 2007. A recent survey by The Independent estimated that palm oil is contained or suspected in 43 of the 100 leading UK brands. Most UK companies involved in the palm oil trade do not have specific policies in place to address the negative social and environmental impacts, and many do not know the origin of the palm oil they use.
In 1985, plantations covered less than one million hectares; today they stretch over 11 million hectares and predicted demand for edible palm oil – excluding use as biofuels – is set to double by 2050. This could require conversion of an additional 250,000 hectares of land per year to create new plantations.
Growth in demand is also prompted by expanding biofuel markets in the European Union and by demand for food in Indonesia, India and China .
Market demand for palm oil and its derivatives in Europe and the US has increased rapidly as food manufacturers seek alternatives to hydrogenated materials for health reasons. Palm oil is also used widely in processed foods, demand for which is growing steadily in increasingly affluent emerging markets. It is also used in other consumer products such as soaps, cosmetics and beauty items as a carrier for vitamins and for its texture and moisturizing properties, and derivatives of palm oil can be added to other ingredients to make them stable and extend their shelf life.

Land Conversion Impacts

Cutting down or burning tropical rainforests to plant oil palm releases large quantities of stored carbon. The conversion of lowland tropical rainforest to oil palm plantations for bio-diesel creates a ‘carbon debt’ that would take over 86 years (or up to 4 times longer in a peatland forest) to recoup from the emissions saved by using the biofuel. Simply put, the process releases far more carbon than it saves.
Forest conversion has a major impact on biodiversity. Palm oil plantations have replaced the habitat of many endangered species including primates such as the orang-utan. According to WWF, Indonesian lowland forest, which is at risk of replacement by palm oil and timber plantations, harbours amongst the richest biodiversity on the planet and is home to rare Asian elephants and tigers.
Malaysia and Indonesia have excellent forest conservation laws and vast areas of forest under protection, far in excess of those in Europe for example, but institutional weaknesses mean that even protected areas are vulnerable to land clearance. Nearly all of Indonesia’s national parks have suffered deforestation for illegal logging and palm oil plantations.
Many oil-palm plantations provide not only employment, but also housing, water, electricity and infrastructure including roads, medical care and schools. However, in the process of setting up the plantations, land inhabited by local populations is sometimes seized and livelihoods jeopardised by incomers. About 100 million of Indonesia’s population of 216 million people depend on forest and forest products for their livelihood. Palm oil, whilst an undoubted wealth creator and valuable foreign-exchange earner, replaces diverse farming systems with export-oriented monocultures and incomes dependent on the fluctuations of the international market. It also requires imports of food and fuel.

Extent of 3rd Party Certification

In 2003, the industry and concerned stakeholders established a roadmap for the development of independent third party certification through the Roundtable on Sustainable Palm Oil (RSPO). A set of standards has been established and the RSPO is now finalising its chain of custody certification system to link certified growers to consumers. The RSPO is the only major palm oil initiative of its kind, although there have been external concerns about the conduct of some members and the extent of control over new plantings and development on peatlands.
Very little certified palm oil has entered the marketplace since the RSPO was founded. Just 4% of the world’s palm oil is currently certified sustainable.
Unilever, the biggest single consumer of palm from Asia has committed itself to sourcing all its palm oil sustainably by 2013.

(c) Masakazu Kashio

(c) Masakazu Kashio