Palm oil, known as red palm oil in its crude form due to its high beta carotene levels, is present in approximately 50% of products on supermarket shelves. As well as simple frying oil – it accounts for 35% of the global vegetable oils market – palm oil can be found in skincare and cosmetics products, food items and pharmaceuticals, making it one of the 10 major oils traded in the global edible oils and fats market.
As a tropical oil, ideal growing conditions are between 10 degrees north and south of the equator. Palm oil trees, which can grow up to 20 metres tall, start to bear fresh fruit bunches (FFBs) after three years, and each individual piece of fruit contains 50% oil. Up to 10 tonnes of FFBs can be harvested per hectare, producing around 4 tonnes of crude palm oil (CPO); this process requires 10x less land than other oil-bearing crops, such as soya, and is an entirely GM-free process.
"CPO production has increased tenfold since 1980, and is expected to rise by a further 50% by 2050"
Although palm oil may have been use 5,000 years ago, as several kilograms of the oil in its semi-solid state were discovered in an Egyptian tomb dating from 3,000 BC, written records by European travellers show palm oil was used as a local food source in West Africa in the 15th Century. By the early 19th Century, palm oil was in such high demand that exports from West Africa could not keep up and plantations were established in Central Africa and South East Asia, but it was not until 1910 that palm oil was introduced into Malaysia by Britons William Sime and Henry Darby; Sime Darby is now one of the leading palm oil producers in the world.
In 1966, Malaysia overtook Nigeria as the leading CPO producer worldwide, a position it held until 2005, when it was pushed into second place by neighbouring Indonesia. Together, the two countries account for 87% of the world’s palm oil production, at 33 million and 20 million tonnes respectively. Lagging behind are countries such as Thailand, Colombia and Nigeria, which each produce around one million tonnes annually. Overall, CPO production has increased tenfold since 1980, and is expected to rise by a further 50% by 2050.
China, India and Pakistan were the largest single consumers of palm oil in 2014, importing around 55% of total production. Global market demand was $61 billion in 2014, and is forecast to hit $88 billion by 2022. Although the sector has been beset by falling prices in recent years, the higher revenues in 2016 mean the year as a whole should represent an overall upward trend. And despite declining prices, CPO production in Malaysia is expected to witness the highest growth between 2015 and 2022, of 7.5%.
Of the 17 million hectares of palm oil plantations across the equatorial region, Malaysia’s growing area accounts for almost 5.5 million of the total, across Peninsular Malaysia, Sabah and Sarawak. Although the former produces around half of the country’s entire CPO output, the region of Sarawak is undergoing the most growth, experiencing an increase of 8.8% of growing areas in 2014 – or an extra 100,000 hectares of plantation.
After harvesting, the FFBs are transported to a palm oil to extract the oil from the orange flesh of the fruit. The palm kernel also produces oil and is sent to a kernel crushing mill. Following the initial milling stage, the oil goes through a refining process to remove impurities and create various palm oil products for different end uses. Residual pulp is compacted together to form a kind of cake used in the animal feed industry, called palm kernel expeller.