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Palm oil is known to be one of the world's most consumed vegetable oil. Palm oil is edible and is used in processed foods such as chocolate, biscuits, margarine, frozen desserts, frying fats, and others. It contains saturated & unsaturated fats and possesses antioxidant effects. The key benefit of the oil is its inexpensiveness and applications in a wide range of industries such as food & beverage, cosmetics, pharmaceuticals, and other sectors. Furthermore, increasing awareness of palm oil's health benefits surges the demand for the product in the market.
Palm oil production also helps enhance employment opportunities in rural areas as several workers, smallholders, and many more households are involved in palm oil production worldwide. Moreover, palm oil production can lead to numerous social and environmental impacts, including clearing large expanses of forests, endangering species habitats, soil erosion, and other problems. To address such issues, several NGOs and environmental specialists raise awareness of the social and environmental problems related to unsustainable palm oil production and promote sustainable palm oil production. For instance, in January 2023, World Wildlife Fund for Nature (WWF), a Swiss-based international non-governmental organization, partnered with Beiersdorf AG, a German multinational company, to support the nature conservation organization's project in West Kalimantan, the Indonesian part of the island. The partnership aimed to prevent the conversion of natural forests by promoting sustainable palm oil cultivation.
The COVID-19 pandemic posed a major impact on vegetable oil demand, including palm oil. The new norms changed the eating habits of consumers to household consumption, owing to the closure of restaurants and cafes. Malaysia, one of the major producers of palm oil, also faced a significant impact on the productivity of palm oil. Travel and trade restrictions caused labor shortages at the country's oil palm plantations. This had led to a reduction in palm oil production in the country. According to the Malaysian Palm Oil Council report, palm oil production in the country went down 3.8% to 19.14 million MT in 2020 compared to 19.85 million MT in 2019. The country also reported a decrease in export activities, recording a total export of 17.37 million MT in 2020 compared to 18.47 million MT in 2019.
The report will cover the following key insights:
The conventional segment is expected to hold a significant share of the global palm oil market owing to its easy availability and low price. Conventional palm oil provides a good source of income for small & medium size cultivators as it helps increase production with the help of synthetic chemicals. Furthermore, several government bodies across the globe have developed initiatives to increase conventional palm oil production and provide employment to countries with high population. For instance, in August 2021, the Prime Minister of India announced a new national initiative on palm oil production called National Edible Oil Mission-Oil Palm (NMEO-OP). The new initiative helps increase farm incomes and reduces dependence on imports in the country.
The fractionated palm oil segment is expected to hold a prominent share of the global palm oil market owing to its economically feasible prices and ease of product availability. Fractionated palm oil is used in edible oils, such as margarine/shortening, and bakery items, such as bread and cake-like pastry production.
The crude palm oil segment is expected to grow at a high CAGR over the forecast period due to its high cooking usage. There is also an extensive demand for crude palm oil in the pharmaceutical, personal care, and cosmetics industries.
The food & beverage segment is expected to hold a major global palm oil market share, owing to the increasing usage of palm oil in end-use applications and growing product portfolios that demand palm oil as a raw material. Palm oil has good stability at high temperatures and thus can be used in frying. Furthermore, increasing product development and innovation activities attract consumers to opt for functional foods, which propel the demand for palm oil-based products in the market.
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Asia Pacific is expected to hold a major palm oil market share. The region's rising population and high demand from end-use application industries such as food & beverage propel the demand for the product. Furthermore, changing demographic trends, diverse food applications, and growing edible oil industrial developments account for the region's high palm oil consumption. Malaysia and Indonesia are the major producers of palm oil in the region, helping small and medium players to be solely dependent on the revenue from this oil for their livelihood. According to the Malaysian Palm Oil Board statistics, crude palm oil production increased by 1.9% to 18.45 million tonnes in 2022, compared to 18.12 million tonnes in 2021. Therefore, the growing popularity of palm oil across the Asia Pacific due to an increase in the availability of the product fuels the market growth.
North America is expected to grow at a high CAGR over the forecast period. The changing preferences in eating habits, growing consumption of packaged foods, and escalating demand for palm to produce ice creams, non-dairy creamer, margarine, salads, and other products largely drive the palm oil market growth in the region.
Key players include Archer Daniels Midland, Wilmar International Ltd., Sime Darby Plantation Berhad, PT Sampoerna Agro, Tbk, Univanich Palm Oil Public Company Ltd., United Plantations Berhad, Kuala Lumpur Kepong Berhad, London Sumatra, Asian Agri, and others.
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