Palm Oil Coverage
Palm oil is the most widely used vegetable oil in the world. The versatile product is used in both crude and refined form in numerous edible and personal care products as well as feedstock for biofuels. Palm fruit oil, generally known as palm oil, is produced from fruit pulp from the oil palm tree, while palm kernel oil is produced from the oil palm tree fruit nut.
Palm oil is a key economic driver and important component of gross domestic product in producing countries, providing a livelihood for three million smallholder farmers and another 2.9 million downstream jobs worldwide.
Efficiency drives palm oil’s appeal, it is considered the most efficient oil crop in terms of land use, having the highest yield compared to other vegetable oil crops per hectare of land. Palm oil also requires less fertilizer, pesticides, and energy to produce than its other edible oil crop counterparts. These benefits, coupled with its long shelf-life, desirable health properties, and versatility, are expected to result in a compound annual growth rate of 5.7% from 2019 to 2024 for the palm oil sector.
Despite these advantages, the impact of oil palms growing in areas with high conservation values, peat land and former tropical forests is an issue that must be adequately addressed. Staring in 2014, voluntary sustainability standards (VSSs) became more popular in the sector to address deforestation, biodiversity loss, child labour, land grabbing, and smallholder exclusion. As global pressures mount for deforestation-free palm oil, VSSs will continue to have an important role in supporting its production along with broader sustainable development efforts of existing and prospective producing countries.
3 million jobs
The palm oil sector provides a livelihood for three million smallholder farmers while creating 2.9 million downstream jobs across the globe.
USD 65 billion
Palm oil is the most consumed edible oil in the world with a retail market value of at least USD 65 billion, providing USD 39 billion of global Gross Domestic Product and USD 4.3 billion in tax revenues.
VSS production up by 110%
From 2008 to 2016, production of VSS-compliant oil palm experienced a compound annual growth rate of about 110%, while conventional oil palm increased at 2%.
52 million metric tonnes
In 2016, at least 52 million metric tonnes of oil palm was VSS-compliant, valued at USD 7 billion. Approximately 90% comes from Asia (Indonesia, Malaysia, and Papua New Guinea) with some important volumes coming from Latin America (Brazil, Costa Rica, and Guatemala).
VSS-compliant palm oil accounted for at least 17.4% of total production in 2016.
In 2016, at least 17.4% of the market was made up of VSS-compliant oil palm fruit, while oil palm fruit that was potentially VSS-compliant represented 0.4% and conventional production accounted for 82.2% of the market.
Progress toward sourcing more sustainable palm oil
The leading buyers’ VSS-compliant sourcing commitments are driven by their interest in lowering reputational risks with end consumers, preventing deforestation, and mitigating biodiversity loss. The 10 main manufacturing companies of food and consumer goods purchased 3.6 million metric tonnes of palm oil in 2017, of which 2.205 million metric tonnes were VSS-compliant. Based on sourcing commitments, an additional 0.5 million metric tonnes of VSS-compliant palm oil could be sourced as early as 2022.
VSS-compliant palm oil production volumes in 2016
VSS-compliant palm oil experienced a compound annual growth rate of approximately 110% from 2008 to 2016, accounting for at least 17.4% of overall production. The RSPO, Rainforest Alliance and Organic are the main VSSs in the oil palm sector when ranked by production size.
Distribution of oil palm production in the top 15 producing countries in 2016
For a high-resolution version of the map visit https://www.iisd.org/library/global-market-report-palm-oil.