Palm Oil
Palm oil is the world's most-produced vegetable oil — ~80 million tonnes per year. Indonesia produces ~58% of global output; Malaysia ~26%. Together they hold 85%+ of supply. Palm oil's high yield per hectare (5-10× higher than alternatives) makes it economically dominant. But its expansion drove much of Southeast Asian tropical deforestation between 1980 and 2015 — and indirect land-use concerns persist.
Key insights
Palm oil's economic dominance comes from yield
Oil palm yields 3.5-7 tonnes of oil per hectare per year — far above soybean (~0.4 t/ha), rapeseed (~0.7 t/ha), sunflower (~0.7 t/ha), olive (~0.4 t/ha). For the same total oil output, palm requires 1/5 to 1/10 the land of alternatives. This makes palm economically dominant and means alternatives would require far more total land — the land-use argument cuts both ways in the deforestation debate.
Deforestation legacy
Indonesia lost ~6 million hectares of primary forest to oil palm between 1995 and 2015. Malaysia ~2 million hectares. Peat swamp drainage for plantations released 1+ GtCO₂eq cumulatively. The pace of new palm-driven deforestation has slowed substantially since 2018 — Indonesian deforestation rates fell to multi-decade lows in 2021-23. Replanting of existing plantations rather than greenfield expansion now dominates.
RSPO and EUDR are reshaping the market
Roundtable on Sustainable Palm Oil certification (RSPO, since 2004) covers ~20% of global palm oil. Standards include no-deforestation, no-peat-conversion, no-violence to communities. EU Deforestation Regulation (EUDR, effective end-2025) requires importers to verify palm oil products came from non-deforested land. Compliance costs are non-trivial; smallholders without GPS-mapped plots face exclusion risks. Producer countries have pushed back politically against EUDR but compliance preparation continues.
Palm oil production by country (2024)
Million tonnes
Key Finding: Indonesia and Malaysia produce 85% of world palm oil; Thailand, Colombia and Nigeria are distant followers.
Vegetable oil yields per hectare
Tonnes per hectare per year
Key Finding: Palm yields 5-10× higher than alternatives — the central economic driver.
Methodology & caveats
CPO vs CPKO
Crude palm oil (CPO) is extracted from the mesocarp (flesh) of the palm fruit. Crude palm kernel oil (CPKO) is extracted from the seed inside the fruit. CPO is ~85% of total volume; CPKO has different fatty acid composition and is used differently in industry. Headline figures usually combine both as 'palm oil'.
Uses
Palm oil is used in: cooking oil (~70%, largely in Asia), processed foods (snacks, margarine, ice cream — ~10%), cosmetics and soaps (~5%), biofuel (~15% and growing under biodiesel mandates). EU and US biodiesel mandates created significant new palm demand 2010-2020; recent EU palm-biodiesel phase-out and EUDR have reversed some of this.
Deforestation accounting
Estimating palm-driven deforestation requires linking specific plantations to forest loss. Multiple methodologies exist (Hansen et al. global forest data, Trase commodity-trade mapping, plantation-by-plantation satellite analysis). Direct vs indirect land-use change debate continues — some apparent palm 'expansion' replaced rubber or other tree crops, not natural forest. The aggregate scale of palm-driven deforestation is firmly established; specific plantation-level attribution is more uncertain.