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Palm Oil Action Australia | May 21, 2022

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Frequently Asked Questions (FAQs)

Frequently Asked Questions (FAQs)

What is palm oil and where does it come from?

Palm oil is a vegetable oil produced from the fruit of an oil palm tree.

The oil palm is a tropical palm tree that originates from the coastal regions of West and Central Africa and Central and South America. The tree was exported to countries in Southeast Asia in the 18th Century.

Oil palms require a constant wet tropical climate with an annual temperature range of between 24 to 32C, generally limiting its suitability to latitudes of approximately ten degrees north and south of the equator, at altitudes below 700 meters. Unfortunately, this is approximately the region in which the bulk of the world’s tropical rainforests are located.

It is a perennial crop, which reaches maturity in three to four years, when it is about 2 meters high. Its economic life continues until it reaches the age of 20 to 30 years during which it can reach a height of more than 10 meters. Although, the oil palm is productive throughout its entire life, it is most productive in its sixth and tenth year.

The oil palm tree produces a fruit that grows in large bunches (fresh fruit bunches). These bunches can weigh between 10 to 40 kilograms each. Crude Palm Oil (CPO) is extracted from flesh (or the mesocarp) and palm kernel oil (PKO) is derived from the kernel. A third (by) product is the Palm Kernel Meal (PKM). Each of these products have separate and distinct uses.


What is palm oil used for?

Crude Palm Oil (CPO) is used mainly as an ingredient for food production (i.e. margarine, ice cream, biscuits, cooking oil etc). It also has a number of other non-food uses including greasing and softening agent in leather production and as an ingredient in the production of plasticisers, paint and surface coatings. CPO is also being increasingly used as a biofuel.

Palm Kernel Oil (PKO) is generally used for other non-food purposes such as soap making, detergents, cosmetics, ingredient for insecticides and fungicides, hydraulic brake fluids and other substances used in the electronics industry. Palm Kernel Meal (PKM) is mainly used as an animal feed.

The key advantage of the oil palm is that it has a higher yield per hectare and thus requires less land to produce more oil than other vegetable oils such as Rapeseed, Coconut, Soybean and Sunflower. This also means it is the most cost effective of all these oil crops.

Other advantages include its stability, its ability to blend well with other oils, and its resistance to oxidisation. Furthermore, the high content of lauric acid in PKO gives it excellent melting properties (it can maintain hardness at room temperature with a low melting point just above room temperature).


Why has the demand for palm oil grown?

The production of palm oil has more than doubled since the year 2000. This increased global production volume has been mainly driven by the increase in palm oil under acreage rather than through an increase in technology and yield per hectare (average yield per hectare has remained relatively constant throughout this period). Whilst the mature area of oil palm plantation has grown by more than 7%, the growth in yields has remained constant at approximately 1%.

Graph Palm Oil Demand

Graph Palm Oil Demand

Oil palm is now the world’s most widely produced and consumed edible oil. In the 2006/2007 year, it held approximately 32% of the market share of all edible oils by production in comparison to soybean oil, which held approximately 29% of the world market for oils.

Malaysia and Indonesia produce the majority the world’s palm oil, accounting for approximately 86% of the total production.

As China and India’s economies have grown, so too has their demand for palm oil. Vegetable oil is a major source of fat in the developing world where consumption of nutritional staples is limited.

In addition to being cheaper than the other oils, many food manufacturers in the western world have turned to palm oil as an alternative to hydrogenated oils (or transfats), which contribute to heart disease. As palm oil is perceived to be a healthier alternative, demand has increased. However, recent research has indicated that palm oil, which is high in saturated fat and unsaturated fat, actually contributes to heart disease as well.

The growing global expectation for countries to decrease their use of fossil fuels, due to their contribution to climate change, has led to an increase in demand for biofuels, such as palm oil. This has led to an increase in palm oil production, which in turn has accelerated the rate of forest conversion, ironically increasing the level of carbon emissions (through forest fires, loss of stored carbon in forests, the release of carbon in peat swamps etc).


Have palm oil plantations contributed to deforestation in South East Asia?


The total area under plantation in Indonesia and Malaysia has tripled since 1990 with an additional 7 million hectares of forest converted to plantations. During this exact period, the Food and Agriculture Organization of the United Nations estimated that Indonesia lost approximately 28 million hectares of forest (approximately 24% of its forest area) and Malaysia lost 1.5 million hectares of forest (6.6% of its total forested area).

The following table summarises the growth in the area subject to palm oil cultivation.

Palm Oil Areas of Growth

Palm Oil Areas of Growth

Claire CarterWilla FinleyJames FryDavid JacksonLynn Willis, “Palm oil markets and future supply”,  European Journal of Lipid Science and Technology, Vol. 109, No. 4. (2007), pp. 307-314.

Although it is difficult to draw a direct relationship between the growth of palm oil plantations and the conversion of forest, approximately 66% of Indonesia’s palm oil plantations and 87% of Malaysia’s palm oil plantations have involved forest conversion.

Not even Indonesia’s national parks and protected estate’s are safe from the threat of deforestation. A recent study undertaken using satellite data has shown that Indonesia’s protected lowland forests in Kalimantan have declined by more than 56% through logging, with these protected forests being increasingly isolated through the degradation of buffer zones.


What are the critical issues surrounding deforestation/conversion for palm oil?

Some of the critical issues surrounding deforestation / conversion for oil palm include:

  1. The rainforests in Borneo are one of the oldest rainforests on Earth, dating back to the Pleistocene Epoch 70 million years ago. It has a biological richness and diversity unequaled by that of the Amazon or African rainforests. These forests are home to a multitude of different species (not to mention those that remain undiscovered!) including the Orangutan, Sun bear, Clouded leopard, Borneo elephant, and Borneo rhinoceros. The loss of biodiversity in these forests is often irreplaceable as many species are endemic to Borneo. Palm oil plantations established on converted forested areas can only support a minute percentage of species.
  2. Forests, especially peat lands, are the world’s most critical carbon stores. Covering 3% of the earth’s land surface, it is estimated that they store approximately between a fifth and a third of the total carbon contained in the terrestrial biosphere, including all soils and vegetation. The drying and burning of Indonesia’s peat land forests alone accounts for 4% of the total global greenhouse gasses.
  3. Trade in flora and fauna is exacerbated in areas developed for plantations, as poaching and trade is common in areas where plantations are being developed. An estimated 1,000 Bornean Orangutans are supplied to markets in Bali and Java each year.
  4. In the establishment and expansion of palm oil plantations, local indigenous people’s land rights are often not respected or considered. This can cause serious social conflict over land and resources, which are often violent and involve human rights violations. The conversion of native forest to plantations accounts for approximately 1/3rd of the forest and land conflicts in Indonesia.


“How are palm oil plantations contributing to the extinction of the Orangutan?”

The single greatest threat to the Orangutan is the loss of habitat. Orangutans generally inhabit lowland forests (dipterocarp, freshwater and peat swamp). Indonesia has the highest rate of deforestation in the world. An estimated 64 million hectares of forest has been cleared over the last 50 years. It has been estimated that Borneo has lost 50% of its original forest cover and Sumatra more than 70%. The United Nations Environment Programme has estimated that, if current trends of forest conversion continue unabated, up to 98% of the forest cover could be lost by 2032. The lowland forests, the primary habitat for the Orangutan may be lost much sooner.

It is generally accepted that the biggest cause of forest loss is the conversion of primary forests for oil palm plantations. A recent report by the United Nations Environment Project states that the “rapid increase in plantation acreage is one of the greatest threats to orang-utans and the forests on which they depend.”


“How do we stop the production of palm oil?”

Stopping the production of palm oil is not the answer, as palm oil and soy oil can be directly substituted. Soy beans are a crop mainly grown on large plantation in South America (in respect of which there are equally similar and compelling environmental concerns). Substituting unsustainable palm oil with unsustainable soy oil will simply replace one environmental disaster for another.

A more promising yet difficult path to reducing the demand for palm oil is to:

  1. Reduce our consumption patterns for this product such that the world demand for edible oils is less than supply;
  2. Ensure that biofuels cannot be generated from monoculture plants such as soy, palm oil etc (or at least ensure that we are not subsidising biofuel generated from these sources);
  3. Ensure that palm oil imported into Australia is sustainable;
  4. Place significant pressure on Indonesian, Malaysian and Papua New Guinea Governments to enforce the law with regards to the protection of the natural environment; and
  5. Lobby for a strong international body with tough enforcement power to regulate this industry (i.e. regulate the production and supply in both western and developing countries).
  6. Place pressure on Australian food manufacturers to source sustainable Palm Oil
  7. Lobby the government to label palm oil in Australia and New Zealand.


“What happens to the Orangutans who live in the forests that get destroyed?”

Generally, Orangutans living in areas that have been cleared (that have not been killed in the clearing process such as fires used to prepare and clear the land) will continue to seek food in their former habitat. Orangutans (and other wildlife such as Sumatran Elephant) often cause damage to new palm oil plantations, which often leads to conflict between plantation workers and the animals. Often the Orangutans are seen as pests and killed to stop the damage to the crops.