Wetlands International

Facts & figures on palm oil


Courtesy of Courtesy of Wetlands International


Palm oil is a vegetable oil that is a common ingredient in a wide variety of products, ranging from biscuits, bread and noodles to shampoo, candles and deter-gents. It has been estimated that around half of all packaged items found in supermarkets contain it. Palm oil is also used as biofuel. The use of palm oil is expected to continue growing, with an esti-mated doubling of use by 2020.

The popularity of palm oil can be attributed to the fact that it is a highly productive commodity, with oil palms being capable of yielding more oil per hectare than any other vegetable oil, with relatively small inputs.

Malaysia and Indonesia are by far the largest producers of palm oil worldwide, together account-ing for more than 80% of total global production. In Malaysia palm oil production comprised an estimated 8% of the national GDP in 2011. In Indonesia, this was 4,5 % of national GDP in 2010. The oil palm sector, partic-ularly crude palm oil production, is an important source of govern-ment revenue. The main source of this revenue is export tax; this ranges from 0% (if the export reference price is less than $500 per tonne) to 25% (when the do-mestic reference price exceeds $1,300 per tonne), according to the World Bank.

Basic facts

Palm oil production area and volume

Palm oil is currently the most produced vegetable oil in the world. The produced volume has increased from 15.2 million tons

in 1995 to 54 million tons in 2011. The area used for the pro-duction of palm oil worldwide has quadrupled from the beginning of the 1980s to 2014, growing from 4 million ha to 17 million ha. This increase was concentrated in Malaysia (from 3.25 million ha in 2000 tot 5.1 million ha in 2013) and Indonesia (from 4 million ha in 2000, to 9 million ha in 2013, with a projected 26 million ha by 2025). The top five palm oil pro-ducing countries further include Nigeria, Thailand and Colombia.

Major consuming and im-porting countries/regions

The main consumers of palm oil are Indonesia, India, China, and the EU, from which only Indone-sia domestically produces palm oil; most of the palm oil con-sumed by the others is imported. In 2012, India (8.75 China (6.6 million tons) and the EU (6.3 mil-lion tons) accounted for 52% of global imports. To illustrate the enormous increase in palm oil consumption: in 1990 the EU imported 1.2 million tons of palm oil. The Netherlands currently imports about 2 million tons tons (equivalent to 4% of world production).

Largest producing, trad-ing and consuming com-panies

The largest palm oil producers include Wilmar, Sime Darby, IOI and Sinar Mas. Major palm oil traders include Wilmar, Cargill, Archer Daniels Midland (ADM).

The largest consuming compa-nies include Unilever, Nestlé, Procter & Gamble, and Kenkel. Unilever alone consumes 1.6 million tons of palm oil a year.

However, it is important to note that up to 40% of the production comes from small holder produc-ers. Many of them operate being ‘enclaved’ by larger estates (so called ‘nucleus estates’). The specific needs of the crop re-quire the palm kernels to be pro-cessed within 24 hours of being harvested. This leads to a high level of dependency of the indi-vidual small holders on the larg-er estate and processing mill.

Certified palm oil area and volume

In 2003, due to concerns arising from negative effects related to palm oil production, environmen-tal and social groups, palm oil producers, and palm oil buyers joined to establish the Roundtable on Sustainable Palm Oil. The RSPO aims to trans-form the way that palm oil is pro-duced, traded and consumed globally. RSPO membership today includes nearly 1,500 companies and organizations including palm oil growers and traders, processors, consumer goods manufacturers, retailers, banks, social and environmental NGOs.

Certified palm oil should be grown on a plantation that has been managed and certified ac-cording to the principles and cri-teria of the Roundtable on Sus-tainable Palm Oil (RSPO). The-se include restrictions related to lands that contain significant biodiversity and wildlife habitat, as well as other environmental, social and economic standards. In 2013, 18% of the world’s palm oil had been certified (CSPO), up from 10% in 2011. More than 8 million tonnes was grown on certified plantations, covering 2.4 million ha. However, uptake of CSPO has fallen behind, with approximately only 50% of pro-duced CSPO consumed by the market.

Main issues and challenges

Unfortunately, palm oil produc-tion has been associated with a number of adverse impacts in both the social and environmen-tal spheres.


In the growing global debate surrounding land grab as the result of transnational deals for agriculture, palm oil production plays a significant role. With global consumption being so high, and still increasing, more and more land is needed to fulfil the demand. Companies buy or lease large tracks of land, often without consulting local popula-tions. The lack of formal land titles among these communities makes them an easy target for land grabbing and consequent forcible displacement. In Indone-sia alone, around 3,000 land and human rights conflicts have been connected to palm oil produc-tion.

In the majority of cases, local inhabitants are small-scale sub-sistence farmers. When they lose their land, they also loose the ability to provide for them-selves and their families, leading to food insecurity in the region. Furthermore, the emphasis on palm oil production has led to conversion of existing agricultur-al land under cultivation of other crops, including conversion of rice fields and orchards, which further decreases food security. Even communities that have not lost any of their land may face the impact of the sector through pollution of soils and water from the spread of agrochemicals used on oil palm plantations, leading to impacts on food pro-duction.

While it is often stated that palm oil has significant benefits in rev-enues for small holder producers and is responsible for a reduc

tion in rural poverty, the econom-ic benefits appear far from equally spread. Some recent studies even indicate that areas of intensive palm oil cultivation have actually led to a rise in overall and sustained poverty as people become depended on precarious work in the palm oil sector.

Palm oil production is further-more tainted by poor working conditions, low wages, issues of bonded labour and abuse includ-ing migrant workers and even some reports of child labourer, and lack of health and safety regulations, especially concern-ing pesticide use.


Oil palms need a rainforest cli-mate with constant high humidity and temperatures. As a result, the production of palm oil has led to loss and deterioration of lowland rainforests, including extensive areas of former tropi-cal peat swamp forests. Palm oil plantations are one of the main drivers of rainforest and peatland destruction in both Indonesia and Malaysia. Some scientists and NGOs indicate that in the coming decades much of the rainforests in Indonesia and Ma-laysia will be gone unless drastic action is taken to find ways of producing sustainable palm oil.

As a result of the destruction of forests with high conservation value, the rich biodiversity in these ecosystems has become threatened. Many species are facing extinction due to loss of habitat, including some endemic species such as the orangutan, Sumatran tiger and Sumatran

rhino, and the recently discov-ered Borneo dwarf elephant. In addition, key ecosystem services provided by rainforests such as water provision and – regulation, and climate regulation are de-grading.

The clearing and burning of land and vegetation to prepare the ground for the production of oil palm enables the emissions of vast quantities of CO2. Tropical deforestation is responsible for 18% of greenhouse gas emis-sions, and as such a significant contributor to climate change. Peat soils contain even more carbon than the forests (10 to 30 times more). Peat forests are increasingly destroyed in order to make way for oil palm planta-tions. In fact, deforestation and peatland degradation together cause 80% of Indonesia’s CO2 emissions, making the trop-ical nation one of the world’s largest emitters of greenhouse gases.

Besides being a leading cause for world wide deforestation, the use of fire in land clearing meth-ods of many palm oil growers have in recent years contributed to large scale forest and peat-land fires which in turn have caused haze, smog and air pol-lution far across the borders of its countries, severely impacting on important economic sectors and public health.

Policy and legislation

Several policy and legislative measures have enabled the rap-id expansion of palm oil produc-tion. For example, many coun-tries, including Indonesia, have taken steps to expand trade and attract investments, by liberaliz-ing the economy and deregulat-ing policies. Absence of sound regional planning has only fur-ther enabled the rapid expansion of oil palm plantations.

The Government of Indonesia has taken some steps to protect its forests and peatlands. It has placed a temporary moratorium on granting new concessions in primary forests and peatlands. However, as the land banks of companies do not fall under this moratorium, and it has been claimed that up to 50% of plan-tation developments take place without proper licenses, many more peatlands and forests are threatened with conversion. Ma-laysia has so far ignored peat-land issues and has not taken any steps to reduce or stop their conversion. On the contrary, the Malaysian state of Sarawak has been deforesting and converting its peatlands at a rate of 8% per year per the last decade (SarVision 2011).


The RSPO has received much criticism over the years. Its envi-ronmental protection measures have been called to lax, as the RSPO does not rule out clearing of rainforest. Only primary and High Conservation Value (HCV) forests are considered off-limits for palm oil producers who are a member, and extensive planta-tion developments are not al-lowed on peatlands. However, there is a lack of internationally recognized definitions and crite-ria for HCV and primary rainfor-ests, making the categorization blurry. New and more stringent criteria have been developed to require minimization of GHG emissions, but many stakehold-ers believe these measures are not yet sufficient. The RSPO also continues to be criticised that compliance with criteria is frequently not monitored ade-quately and that punishment for violations is rare. On the other hand much work has been done such as adopting more stringent criteria, including FPIC (Free Prior and Informed Consent) and safeguarding customary land rights and biodiversity as well as the setting up of a new Dispute Settlement Facility. The RSPO also remains the only global cer-tification system aiming to drive sustainability into the main-stream of the sector and the only standard to offer a robust assur-ance mechanism. The RSPO now faces the challenge to ad-dress deforestation, GHG and land right issues and the ‘implementation gap’.

Customer comments

No comments were found for Facts & figures on palm oil. Be the first to comment!