Sustainable Palm Oil Malaysia
Tree top
Palm oil is big business. And, as demand for the product has increased, the industry has become vital to palm-growing nations. But production has had a huge social and environmental impact. In a special report from Malaysia, Tom Idle searches out much needed sustainablity in the sector
T
he demand for palm oil is growing at a phenomenal rate. Global manufacturers such as Unilever, Nestlé and Kellogg’s appreciate the product of the palm tree: palm oil (which is mainly used in food products like cooking oil and margarine) and palm kernel oil (which is mostly used as the raw material for non-food products like soaps, detergents, cosmetics and candles).
And the emergence of developing econo- mies, where people living in places like China and India are growing wealthier, is further fuelling this buoyant market. Today, palm oil accounts for 57% of world vegetable oil exports and according to ISTA Meilke, a
German forecasting service for the oilseeds market, palm oil consumption is expected to grow from 45.5M tonnes last year, to 63M tonnes in 2015 and 77M tonnes in 2020. Last year, the economy of Malaysia – one of the world’s biggest palm-growing nations, behind Indonesia and in front of Colombia, Kenya and Ghana, among others – grew 7.2% as it awoke from the global economic crisis thanks largely to its palm oil industry. Today, the sector employs more than half a million people, producing around 18M tonnes of palm oil a year, most of which is shipped to Europe and the US. But this surge in production has come with a huge social and environmental
2 | Sustainable Business | Sustainable Palm Oil | June 2011
price tag, which has been well documented over the past few decades. In the drive to find suitable land in which to grow more and more palm tree crops, forests have been cleared on a massive scale, habitat has been lost (to the detriment of endangered species such as the Orang-utan and Sumatran Tiger) and green- house gases have risen, exacerbated by the fact that many Malaysian and Indonesian rainfor- ests lie atop peat bogs, so effective at carbon storage, which have been drained to make way for new plantations.
The historical social impacts of the sector do not look much better. Yes, palm oil pro- duction has employed thousands of people.
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