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What is palm oil and why is it so useful?

In this article, Andrew Ainslie introduces palm oil, what it is and what makes it so useful in the food and consumable products industry.
A forest of oil palm trees with fresh oil palm bunches on the floor
© EIT Food

Palm oil is extracted from the palm fruit, which grows on the African oil palm tree (Elaeis guineensis). Two distinct types of oil are extracted – palm oil and palm kernel oil – both of which play an important role in global trade. To keep things simple and clear, we’ll generally call both types “Palm Oil”, unless we specify otherwise.

Palm oil (and palm kernel oil) is mostly used in processed foods. In fact, according to Rainforest Action Network, palm oil is found in about half of packaged products in our grocery stores. About 68% of all the palm oil produced goes into food products such as chocolate, biscuits and potato crisps (for example, Doritos which were the focus of a boycott a few years back because of their use of palm oil), margarine, bread, pizza dough and instant noodles. The remaining 27% is used in shampoo, soaps and lipstick, and, literally, hundreds of other domestic and packaged products. Additionally, the residual byproduct from crushing the kernel, known as palm meal, serves as a valuable raw material in animal feed production.

More controversially, 5% of palm oil is used as bioenergy for transport and electricity.1 In the EU, more than 50% of palm oil imports is destined for biodiesel production. Initially encouraged by the EU’s 2009 Renewable Energy Directive (RED), which set a 10% biofuel target for transport fuels by 2020. This target was later reviewed to 32% by 2030. Energy companies were encouraged to switch in order to reduce the impacts on the climate system of burning pure fossil fuels.2

In 2013, the Roundtable on Sustainable Palm Oil (RSPO) introduced its RSPO-RED scheme, a voluntary addition to its existing sustainability certification designed to comply with the EU-RED regulations. Nevertheless, the uptake of this specific certification has been unsuccessful; no producers have reported achieving RSPO-RED certification, and the scheme was not renewed after it expired on June 30, 2021. By 2022, concerns about unsustainable palm oil sources led the EU to limit its use in calculating Greenhouse Gas Emissions Savings (GGES). Talks are now underway to potentially phase out palm oil of the RED, much to the irritation of palm oil exporters from South East Asia, who fear a drop in the price of palm oil as a result of this move.3

For a more comprehensive understanding of palm oil development from the EU perspective, you can access Fern’s open-access report. So, it is clear from this wide variety of applications, that palm oil is an incredibly versatile product. In fact, it has become the most widely consumed vegetable oil on the planet. But what’s so great about palm oil?

Palm oil production

Firstly, let’s look at its production – the way it’s farmed. It’s perennial and evergreen, producing fruit all year round. It can grow in relatively poor quality soils and is less demanding with respect to soil preparation than other crops. Palm oil has an extremely high yield compared to comparable oil crops. It easily surpasses the yields of other vegetable oils such as soya, canola, olive, sunflower and rapeseed several times over. Average yields of palm oil are 3.6 – 3.8 tonnes per hectare (a hectare is roughly the size of an international level sports pitch), against 0.3 – 0.5 tonnes per hectare for soya and 0.8 tonnes of oil per hectare for oil seed rape. With 18.7 million hectares of planted industrial-scale oil palm in 2017, it is the 3rd largest oil crop in terms of planted area behind soy and rapeseed. Because of its high yields, oil palm produces about 36% of all vegetable oil on less than 8% of the land allocated to oil crops.

Above graph – elaboration based on FAO data (FAOSTAT, 2021)

Bar chart to show top end of average yield in tonnes per hectare, palm oil 3.7, soybean 0.4, rapeseed 0.8, sunflower 0.7

As well as being much higher yielding than its closest competitor crops, palm oil also has lower production costs, relative to these potential substitutes. It consumes considerably less energy in production and uses less land than its competitors – with sunflower requiring 4 times more land to produce the same amount of oil. This makes it even more attractive to farmers. It is also more efficient in terms of inputs: palm oil requires an average of 47kg of fertiliser and 2kg of pesticide per tonne of oil produced, whereas soya requires 315kg of fertiliser and 29kg of pesticide, and oil seed rape requires an average of 99kg of fertiliser and 11kg of pesticide per tonne of oil produced.

Bar chart to show amount of fertiliser per tonne of oil produced in kg. Palm oil 47, Soybean 315, Oil Seed Rape 99

Bar chart to show amount of pesticide per tonne of oil produced in kg. Palm oil 2, Soybean 29, Oil Seed Rape 11

It is something of a wonder crop, a fact that led Inger Andersen, IUCN (International Union for Conservation of Nature) Director General, to comment,

When you consider the disastrous impacts of palm oil on biodiversity from a global perspective, there are no simple solutions… [i]f we ban or boycott it, other, more land-hungry oils will likely take its place.

You can read more in ‘Palm oil ‘disastrous’ for wildlife but here to stay, experts warn’ and ‘How the world got hooked on palm oil’, both on the UK Guardian news website. The IUCN report referred to in the first news article is: Meijaard E, Garcia-Ulloa J, Sheil D, Carlson KM, Wich SA, Juffe-Bignoli D, et al., editors. Oil palm and biodiversity: a situation analysis by the IUCN Oil Palm Task Force. 2018 Jun 26. ‌

References

1) Ritchie H, Roser M. Palm Oil [Internet]. Our World in Data. 2021. Available from: https://ourworldindata.org/palm-oil [acessed 12 Dec 2023].

2) RSPO-RED SCHEME NOT TO BE RENEWED [Internet]. Roundtable on Sustainable Palm Oil (RSPO). 2020. Available from: https://rspo.org/rspored-scheme-not-to-be-renewed/ [accessed 12 Dec 2023].

‌3) EU labels palm oil in diesel as unsustainable [Internet]. Transport & Environment. 2019. Available from: https://www.transportenvironment.org/discover/eu-labels-palm-oil-diesel-unsustainable/ [accessed 12 Dec. 2023].

© EIT Food
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