Eradication may not be the future of the palm oil industry

17 Jun 2020

Environmental advocates have been calling for a reevaluation of the palm oil industry for years. While some like the European Palm Oil Alliance are calling for companies to perform mandatory due diligence of their palm oil sourcing, others are calling for the eradication of the oil source. Yet, a new study from Germany’s University of Goettingen and Indonesia’s Bogor Agricultural University says that eradicating the industry entirely may do more harm than good for the environment.

Suddenly implementing a moratorium on worldwide palm oil production will likely lead to increased deforestation and biodiversity loss, according to this new study that synthesizes decades of research done on the environmental and economic impacts of palm oil production.

Eradication may not be the future of the palm oil industry

While deforestation remains rampant in Indonesia and Malaysia, where the majority of the world’s palm oil is produced, other production regions such as Nigeria and Latin America are more likely to be increasing production through expansion on already-converted agricultural lands. Not only that, but the study said the economic repercussions of eradicating the commodity from the world market would be severe.

Most of the land cultivated for palm oil is owned by smallholder farmers who have drastically improved their economic standing thanks to increasing demand for palm oil through the decades. The worldwide acreage used for palm oil cultivation increased over 400% from 12 million acres to 50 million acres between 1980 and 2018.

At the same time that this increase in demand has lifted farmers out of poverty, concerns about increased deforestation remain as farmers develop more land for this intensive monoculture practice, especially in Southeast Asia.

Due to the continuation of this damaging environmental practice, the European Palm Oil Alliance recently called for a mandatory, EU-wide review of company due diligence for sustainable palm oil sourcing. According to Food Navigator, the majority of palm oil in the European Union is already certified sustainable, but 40% in the food and beverage sector remains uncertified. To encourage 100% sustainable sourcing, the alliance is calling for a compulsory regulatory environment for all stakeholders from suppliers to distributors and farmers to FMCG brands.

Finding an avenue to sustainably source this commodity could be beneficial for brands that are reliant on this oil and want to maintain it on their ingredient lists. Not only is palm oil cheaper, but it has a longer shelf life than other options and can stand up to higher-temperature processing than alternatives like rapeseed, soybean and sunflower. Additionally, the output per acre is significantly higher than other oils making it more sustainable to produce per acre than other oil sources.

If companies commit to making their palm oil supply chains sustainable, it could be advantageous not only for them but also for the individual farmers and the economies of palm oil-producing nations.

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