OIL PALM (Elaeis guineensis)

Palm oil is the dominant edible oil in global trade and is used in a wide variety of products and industrial processes. The oil palm is by far the most productive source of edible oil in terms of production per hectare. Palm oil production is also well suited for small scale production through outgrower or contract farming arrangements between processing companies and small-scale producers. Palm oil could play an important role in providing a sustainable source of income to small scale farmers, such as those in colonist settlements. While palm oil is associated with social conflicts and large-scale deforestation in Southeast Asia, safeguards in place have largely enabled Brazil to avoid these problems. The challenge facing oil palm development in the Amazon is to overcome existing bottlenecks that have slowed the growth of oil palm production thus far.

PRODUCT

Palm Oil: The red, unrefined oil extracted from the mesocarp of the oil palm is the main product and in its unrefined form is called dendê in Brazil and is used widely in traditional cuisine in Northeast Brazil, Africa and SE Asia. Crude oil palm oil is refined, neutralized, bleached and deodorized, including removal of carotenoids, to produce RBDPO (Refined, bleached and deodorized palm oil). Palm oil has a high unsaturated fats content and is semi-solid at room temperature. RBDPO is widely used in food, personal care and cleaning products and is refined into a biofuel (Barufaldi, 2022).

SUBPRODUCTS

Kernel: Palm kernel oil is a second product. While palm oil from the mesocarp is 49% saturated, palm kernel oil is 81% saturated. (Barufaldi, 2022)

Products:

Food: Used widely in food requiring a solid fat, such as pastry dough and baked goods (Barufaldi, 2022).

Nonfood: Around 70% of personal care and cleaning products use palm oil (Barufaldi, 2022).

Biomass and biofuels: Palm oil is used to produce methyl ester and hydrogenated biodiesel. However, it generates far greater emissions than fossil fuels. Organic waste from processing oil palm can be compressed into pellets and used as a biofuel (Barufaldi, 2022).

CURRENT MARKET SIZE

Global

Global palm oil production was estimated to be 79.484 million metric tons (mt) in 2023 (USDA/IPAD 2023) with Indonesia (47.000 mt) and Malaysia (19.000 mt) accounting for 83% of the total. Colombia is the largest producer in South America with 2% (1.900 mt) of global production (USDA/IPAD, 2024).

The global palm oil market size accounted for USD 68.14 billion in 2023 (PRECEDENCE RESEARCH, 2023.

Brazil/National 

Brazil ranks 10th with 1% of global production or 585 mt. The states of Pará (84%) and Bahia (16%) lead national production (USDA/IPAD, 2024).

PROJECTED FUTURE MARKET SIZE

The Brazil palm oil market size reached a volume of 1,028.09 KT in 2023 and is expected to grow at a CAGR of 6% during the forecast period of 2024-2032. The market interest and demand are growing due to the awareness of the health benefits of palm oil (EMR, 2023).  It is projected that the revenue of Crude palm oil in Brazil will amount to approximately USD 76.33 million by 2025 (STATISTA, 2021). The global palm oil market was valued at US 63.54 billion dollars in 2021 (GLOBONEWSWIRE, 2022), and USD 68.14 billion in 2023. It is expected to touch around USD 107.53 billion by 2032, expanding at a CAGR of 5.2% from 2023 to 2032 (PRECEDENCE RESEARCH, 2023).

VOLUMES SOLD/CONSUMED

The global production of palm oil was around 78 million metric tons in the marketing year 2022/23, increasing from approximately 73 million metric tons in 2021/22 (STATISTA, 2024a). In 2022/23, palm oil consumption amounted to around 78 million metric tons worldwide (STATISTA, 2024b).

In 2023, the consumption of palm oil in Brazil was approximately 930.000 metric tons (mt), up from 915.000 mt in 2022 and 895.000 mt in 2021 (STATISTA, 2023). Of this total Brazilian production accounted for 585.000 mt in 2023 and 570.000 mt in 2022, approximately 62% of total consumption, indicating that there is considerable space for expansion of domestic production (STATISTA, 2024c).

At present the edible oil market in Brazil is dominated by soy oil. However, the far higher productivity of oil palm compared to soy and other oil seeds means that palm oil is highly competitive with soy in a significant portion of the domestic market for soy oil (STILO, 2021).

PRICE TRENDS

Between 2014 and 2020 the average annual price of palm varied between USD 837 and USD 752 dollars per metric ton. The price per ton increased to USD 1.276 dollars in 2022 (STATISTA, 2024d), and in 2023 it ranged from USD 804 to USD 1,005, with an annual average value of USD 890.62. In January 2024 the price per ton was USD 844.9 (STATISTA, 2024e).  

HISTORY

Oil palm is native to west Africa where cultivation began some 5,000 years ago and continues to be both a staple of West African diets and one of the region’s major export crops (HELLERMANN, 2021).

Oil palm was introduced into Bahia, Brazil in the 17th century as the trade supplying enslaved African labor to Brazilian sugar plantations intensified. It has become a central element of Bahian cuisine. Commercial oil palm production in the Brazilian Amazon began in the mid 1970s with the establishment of Denpasa in 1974 in an area near Belém. In the eighties and nineties oil palm production grew with increasing company investment stimulated by SUDAM incentives. By 1995, 52,058 hectares of oil palm were being produced in NE Pará.

During the 2000s government interest in palm oil as a biofuel and the increase in the price of palm oil in global markets, stimulated additional investment. In 2010 the government created the Sustainable Palm Oil Production Programme (SPOPP) to stimulate outgrower/contract farming arrangements similar to those in SE Asia where smallholders produce for local processing mills. A 2010 agroecological study by EMBRAPA identified 29 million ha in 10 Amazon states appropriate for oil palm production currently, although only a small fraction of this area is under production today (EMBRAPA, 2010).

PRODUCTION SYSTEMS & ENVIRONMENT: AGROFORESTRY, WILD HARVEST, PLANTATION

In Brazil oil palms are cultivated primarily as monocultures, much of it in large scale plantations (BRANDÃO, 2015). However, a small but significant percent of Brazilian production comes from smallholder farms often through contract farming arrangements with local processing companies.

Agroforestry

There are a number of initiatives seeking to develop sustainable and profitable agroforestry systems integrating oil palms, results thus far indicate that these agroforestry systems can be economically viable, but thus far there are few examples of commercial agroforestry systems integrating oil palms.

TIME TO MATURITY

Oil palm begins producing around 3yrs of age and continues producing for 25 years.

PRODUCER PROFILE & SOCIAL IMPACTS

In Brazil, large scale plantations dominate total palm oil production. However, small scale producers are responsible for only a small percent of total area/total production through various kinds of outgrower arrangements. While there are challenges to developing and implementing contract farming arrangements between companies and smallholders, studies have found that long term contracts can provide smallholders with good incomes and considerable economic stability for the duration of their contracts (BRANDÃO, 2021). This production model could be especially beneficial for smallholders in colonist settlements that have appropriate agronomic conditions.

PRODUCTION AND SUPPLY CHAIN ISSUES

Disease: The oil palm is vulnerable to several diseases in the Amazon and research is underway to reduce threats through development of more disease resistant varieties better adapted to Amazon conditions. While deforestation is not a significant issue for the palm oil supply chain in Brazil, there are concerns related to land tenure issues and pollution of local waterways from the application of chemicals.

CARBON CREDIT/SEQUESTRATION POTENTIAL

The oi palm has significant potential for carbon sequestration and carbon credits as monocultures and in agroforestry systems.

CERTIFICATION PROGRAMS 

Roundtable for Sustainable Palm Oil. RSPO was created to promote best practices in oil palm cultivation and processing to increase the sustainability of oil palm production and processing of oil palm products. Best practices are also applied in out-grower programs to ensure equitable contracts with producers and adoption of sustainable production practices.

RELEVANT INDUSTRIES

REGULATORY INFORMATION

INCI Name: Hydrogenated Palm Oil, Elaeis Guineensis (Palm) Kernel Oil, Elaeis Guineensis (Palm) Oil.

Harmonized System Code:  HS Code 15119099 - Palm, oil, liquid - Tariff Number

EINECS No:

CAS Number:  Palm oil | CAS 8002-75-3