Challenges & opportunities

Challenges

As the world population grows, demand for palm oil is also rising steadily. While 3.62 million hectares of land were used for palm oil production worldwide in 1961, the figure was almost 20 million in 2021, and today almost 30 million hectares (2026), with an upward trend. The associated land-use changes, and above all the resulting effects on the environment, are therefore much-discussed topics in politics, science and the public sphere. And there are indeed clear reasons to criticise palm oil production: whether rainforest clearance, CO2 emissions or human rights violations, the negative impacts of expanding palm oil plantations are almost as diverse as the positive properties of this booming agricultural commodity.

Rainforest destruction & slash-and-burn

Because oil palms grow only in a tropical climate, rainforest is often cleared on a large scale for their cultivation, and greenhouse gas emissions are released through slash-and-burn. Indonesia and Malaysia in particular have recorded major losses of primary forest due to oil palm cultivation. Primary forest clearance rose in both countries for decades. For some years, however, the area of forest cleared each year has been declining. For Indonesia this means an average decline in primary forest loss of 64 percent between 2017 and 2022, and 57 percent for Malaysia. These are notable advances, yet in 2022 more than 0.2 million hectares of primary forest were still cleared in Indonesia.

Palm oil production thus contributes significantly to species extinction. Besides the endangered orangutan, many other species are affected by rainforest destruction. Researchers at Queen Mary University of London were able to show, using bats as an example, that plantation cultivation has catastrophic consequences through the constant fragmentation and destruction of tropical old-growth forests. In particular, the diversity of animal species, but also the genetic diversity of a species, is lost. These findings were already published in 2011 in “Science Daily”.

Slash-and-burn for palm oil

One consequence of rainforest destruction is the increase of carbon dioxide in the atmosphere. To make agricultural land usable for oil palm cultivation, it is often cleared by fire. Peat soils in particular then release stored carbon dioxide in large quantities. In Indonesia this practice has been banned since 2019, but tracking such offences is especially difficult in remote areas.

Slash-and-burn and the associated air pollution often have a direct impact on the health of people living in the growing regions. In 2015, slash-and-burn of rainforests in Indonesia produced such dense smog that health warnings due to harmful air pollution had to be issued in Malaysia and Singapore. In the Thai city of Songkhla, for example, around 365 micrograms of particulate matter per cubic metre of air were measured as a result of the fires in November 2015 – the EU limit is 50 micrograms.

Human rights violations on plantations

Reports from growing regions, particularly in Indonesia, clearly show that oil palm cultivation is often accompanied by poor working conditions, social injustice, land conflicts and thus massive human rights violations. Plantation workers often live with their families on the oil palm plantations, frequently without contact with life outside the plantation. Indigenous peoples are also often affected, driven from their lands and deprived of their livelihoods.

National migrant workers are particularly disadvantaged, as they fall into economic or legal dependency. They often enter a relationship of debt bondage because they go into debt to cover costs from labour recruitment through to arrival on the plantation. Violations of women’s rights are also in focus. Oil palm plantations are very extensive, putting workers and residents of neighbouring villages at increased risk of sexual violence. In Malaysia, migrant women workers face deportation in the event of pregnancy. They must therefore undergo regular health checks. Should a birth nonetheless occur, the child receives neither Malaysian citizenship nor that of the parents. The child is additionally denied the right to public services and education (study “Human rights in the palm oil sector”). It is therefore all the more important to give children living there access to education, among other things, and to pay workers minimum wages.

Doing without palm oil – a solution?

Despite the challenges described, cultivation of the oil palm is not inherently bad. It brings both ecological and economic advantages.

In the producing countries themselves, palm oil production is a significant economic factor. International trade in palm oil is an important source of income that can make an enormous contribution to economic growth. In addition, the non-mechanised harvest of palm fruit, which is possible around 15 times a year, creates numerous important jobs. These are offered above all in rural, often structurally weak regions. It is also clear, however, that plantation workers must receive a minimum wage and that (inter)national labour law must be observed. Equally essential are the involvement and support of smallholders, who produce around 40% of the world’s palm oil, as well as a ban on child labour on the plantations.

The oil palm has the highest yield of all oil crops. Palm oil thus covers a large share of global demand for vegetable oil, yet with around 29 megahectares of cultivation area it occupies only about 5.3 percent of global cultivation area for vegetable oils. In addition, the oil palm is the only crop that produces two different oils of interest to industry: palm oil and palm kernel oil. The oil palm occupies the smallest share of the total cultivation area for global oil and fat production, while at the same time accounting for about 40 percent of total production of vegetable fats. Sunflower, coconut or soya – their yield per area is on average three times lower than that of palm oil. Replacing it with other vegetable oils would therefore not achieve the desired goals, but would merely shift the problem and in some cases even worsen it. If the alternatives are native to similarly sensitive regions as the oil palm, more rainforest is cleared for cultivation. This creates a risk of increased greenhouse gas emissions and a greater impact on biodiversity. Even Europe’s most important vegetable oil, rapeseed oil, could not meet rising global demand for vegetable oils. Given a growing world population and economic growth in consumer countries, this strong land-use efficiency is an important prerequisite for meeting rising demand for vegetable oils.

More environmentally and socially responsible oil palm cultivation

For resilient palm oil production it is above all important that the land used to grow oil palm is not converted at the expense of the environment. Compliance with Good Agricultural Practice is one of the pillars of this cultivation. Oil palm should be grown only on fallow land and agriculturally usable land, in order to minimise the risk of carbon release. The challenge of such cultivation is to achieve the highest possible yield while affecting nature as little as possible.

The governments of producing countries play an important role here. They must formulate and enforce laws that regulate land use. In addition, however, producers and consumers along the entire supply chain also bear responsibility. It is their duty to comply with applicable laws, and thus with minimum standards, and beyond that to promote responsible production and fair trade. Certification can play an important role here.

In June 2023 the EU regulation to prevent deforestation (EU Deforestation Regulation, or EUDR) entered into force. It states that from 1 January 2027 certain products may be placed on the EU market only if they were produced without deforestation and forest degradation. To that end, companies must fulfil due diligence obligations. The EUDR applies to products from palm oil, soya, beef and leather, coffee, natural rubber and wood.