palm oil

Because our company’s mission is so entwined with the palm oil industry and I have been around the Malaysian palm oil industry for over eight years, I sometimes get questions here in North America about the palm oil industry as a whole and its sustainability.

Here in North America, while we are generally aware of the controversies surrounding the palm oil production, we are largely unfamiliar with the bright orange and red clusters of palm fruit that grow on giant husks – the fruits that are the source for the oil that ends up as an ingredient in a wide range of food and beauty products all over the world. More than 70 percent of palm oil is derived from plantations in Malaysia and Indonesia, with Malaysia being the largest exporter of palm oil, feeding three billion people in over 150 countries.

The palm oil industry as a whole is a substantial part of the global economy, providing vital employment for over 6 million people. Palm oil is also highly efficient—it is eight times more productive per acre than soybean oil, and accounts for roughly a third of the world demand for vegetable oils. Palm oil is trans-fat free and provides many nutritional health benefits including antioxidants and vitamins. As such, it is a main source of calories and nutrition for people in developing nations.

In Malaysia, palm oil plantations make up two-thirds of Malaysia’s agricultural land which is 20 percent of the total land. Rainforests make up 60 percent of the total land. As such, 80 percent of Malaysia is green tree covered which makes it one of the largest carbon sinks in the world. According to the American Palm Oil Council, over the past twenty years, the areas converted for palm cultivation came from pre-existing farms such as rubber, cocoa, and coconut or from agricultural zoned land.

In recent years, the price for palm oil has jumped by 70 percent due to increasing demand from traditional food sources and from new demand for palm oil in the form of biodiesel, which in many cases is being subsidized by western governments. This hunger for palm oil has not only had a major impact on household expenditures in the developing world, but has also threatened the lush, diverse rainforests of Borneo and Sumatra that are home to numerous endangered species, such as orang-utans.

Enter the Roundtable for Sustainable Palm Oil (RSPO). We became one of the early members of this organization. The RSPO is unique in that it brings together groups that would normally be on opposite sides of the table, to define and certify sustainability in the palm oil industry. Members of the RSPO include social and environmental NGO’s (including WWF), grassroots organizations and members along the entire supply chain—plantation owners, millers, traders, retailers and financiers. The RSPO agreed on a set of Principles and Criteria for the Production of Sustainable Palm Oil in 2005, launching the certification system in 2007. It was definitely high time for such an initiative.

Have a look at the CNBC 2008 Story on the palm oil industry challenges and RSPO’s efforts to address them – it’s a worthwhile clip

In addition, here are further sources of interest:

American Palm Oil Council
Wikipedia – Palm Oil
Quick Info on Palm Oil
A healthful Diet can include Palm Oil
Roundtable For Sustainable Palm Oil

RSPO on Sustainable Palm Oil Industry