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Food, Fuel, or Forests? Charting a Responsible U.S. Role in Global Palm Oil Expansion

Palm oil has overtaken soybean and canola as the world’s largest source of vegetable oils. Over the next decade, global demand for vegetable oils and biofuels are expected to rise between 50% and 40% respectively. However, palm oil expansion has been linked to significant increases in tropical deforestation, social conflict, and emissions of greenhouse gases that result from the clearing and draining of tropical forests and peatlands. While the majority of plantations are currently in Southeast Asia, the palm oil industry is aggressively branching out into Latin America and Africa.

It is estimated that up 50% of packaged retail food products now contain palm oil, and U.S. demand may rise sharply in the years ahead. This new report published by National Wildlife Federation (NWF) sets out the steps U.S. companies can take to play an active role in improving the environmental and social standards of the palm oil industry.

An international climate change treaty, with a recognized price for carbon, could help protect forests. But this will take time and our planet cannot wait.

Here, Thinktosustain.com reproduces the Summary & Recommendations of this study…


The world demand for vegetable oils is rapidly expanding. Roughly 80 million new people each year will require an estimated 6 million metric tons of vegetable oils annually [1]. Such oils are the staple of many cultures and necessary for a wide array of cooking and household products. The oil derived from African palm trees has emerged to be a highly profitable and desirable source of vegetable oil due to its chemical properties and its comparatively high yields. As of 2007, palm oil has the largest share of world production followed by soybean and canola oils.

Unfortunately, palm oil expansion has come at a steep price in many regions: it has been a major driver of tropical forest loss and forest degradation and has been implicated in the dislocation of indigenous communities and native wildlife. Highly visible NGO campaigns, primarily focused on Indonesia to date, have vilified major palm oil producers and exposed the extent of forest conversion, draining of peatlands, water pollution, and habitat loss from industrial scale palm plantations.

The U.S., while a relatively small market player at this time, has nevertheless seen a four-fold jump in palm oil imports in the last four years. Some of the biggest private sector industries in the global palm oil market are based in the U.S. and many of them have recently joined the Roundtable on Sustainable Palm Oil (RSPO). The RSPO, as one of several commodity certification systems that has emerged in the last decade, is intended to guarantee sustainable production practices and clean supply chains through a business-to-business and consumer facing label.

While the RSPO is oriented primarily towards Malaysia and Indonesia, which account for over 85% of the world palm oil supply, the RSPO is branching out to other regions, notably in equatorial regions of Latin America. With both public support and private investment, several countries and sub-regions, especially the Brazilian state of Pará in the Amazon basin, are planning for dramatic growth in the number and extent of palm oil plantations. If not managed properly, this growth will exacerbate land use conflicts with indigenous communities, with the cattle ranching sector and with efforts to properly zone and secure title to lands. It will also undermine efforts to limit greenhouse gas emissions from forest conversion and maintain Forest Reserves under federal forest codes.

U.S.-based companies and U.S. consumers have a responsibility to influence the inevitable expansion of palm oil in a more sustainable direction, especially as more palm oil enters U.S. markets. While the U.S. is a relatively small importer of palm oil by bulk, a myriad of food products, cosmetics, detergents, soaps and lubricants that contain palm oil find their way into the U.S. market. Uptake of palm oil in the U.S. has also been encouraged by 2006 federal rules on the labeling of trans fat and the complete ban of vegetable oils containing trans fat from restaurants in California and New York City. Yet, the health effects of palm oil are debatable. While palm oil is generally acknowledged to be more healthful than partially hydrogenated vegetable oils containing trans fat, the naturally high saturated content of palm oil is also seen as a culprit in heart disease, especially in countries that rely on palm as their primary cooking oil such as India. However, supporters also point to the unusually high levels of Vitamin E and Vitamin A compounds found in palm oil.

In Europe, palm oil is increasingly being looked to as a source of biofuels due to its availability and low cost. Some countries, such as Indonesia and Brazil, have set internal targets for palm oil production to meet their domestic fuel needs. In the U.S., the EPA is studying palm oil as a potentially eligible fuel under the Federal Renewable Fuels Standard.

Given the growing and ubiquitous role of palm oil in the global appetite for basic food commodities, fundamental questions arise about whether palm oil production at scale can be sustainable in a meaningful way. Will it make conditions on the ground better or worse for small producers and local communities in tropical forest regions? Can palm oil expansion be used to restore degraded crop lands and secure new forest protections? Who will enforce sustainability standards and ensure that bad actors are penalized? And what role does the U.S. have in all of this?

This report highlights the key opportunities, challenges and leverage points for making palm oil supply chains more sustainable. In particular, it focuses on the role that U.S. companies and consumers have to help ensure that our markets do not inadvertently contribute to tropical rainforest and habitat destruction.