Palm oil which is made from the palm fruit is the most consumed vegetable oil in the world.  The food industry is responsible for over 70% of palm oil usage globally and relies on the ingredient as a fat in breads, baked goods, snacks, fast foods, etc.  Palm oil is used in large quantities by the cosmetics industry as a foaming agent or a moisturizer and to enhance product thickness.  It is also found in many cleaning products and is also a biofuel additive.  The ingredient is known by many names including palm kernel, vegetable oil and palmitic acid.  Oil palms are easy to grow and require little in the way of pesticides or other crop treatments.

Palm oil production is a major contributor to deforestation in countries like Malaysia and Indonesia with new plantations growing in Latin America and Africa.  Issues of child labor and poor working conditions are also prevalent with this crop.  Palm oil prices have risen tremendously due post-pandemic supply issues and tax increases levied by the Indonesian and Malaysian governments.

Environmental concerns around the harvest of palm oil are driving new legislation in many regions.  Deforestation is now illegal in most of Brazil, and tighter legislation around the palm oil industry is being discussed in Malaysia.  Under the European Union’s renewable energy directive, palm oil-based fuels are due to be phased out by 2030 with many member states taking action ahead of the deadline. The US is considering a new bill to restrict market access for certain commodities that originate from illegally deforested land so that commodity buyers can purchase palm oil and other products that were legally sourced.  The bill also allows for federal incentives to support legally sourced products.

Currently, over 30 non-profit organizations around the world have been vocal about concerns related to palm oil harvest and usage. This is another example of the ongoing global attempt at supply chain transparency and responsible sourcing.

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Posted on 4 June 2021