Palm Oil Production

Global demand for vegetable oils is rising due to shifting diets and demand for cosmetics and biofuels (Wertz-Kanounnikoff & Kongphan-Apirak 2008)²⁰. Consumers in China, India, and other rapidly growing economies are eating more fried and processed foods, which require more vegetable oils, including palm oil.

Global trade in palm oil has expanded 16 fold since 1988. China imported 7 times more palm oil in 2008 compared with 1988, and India imported over 14 times more (USDA FAS, 2009 Table 1)²¹. Together, those two countries account for one third of global palm oil imports, which is roughly in proportion to their joint share of global population (USDA FAS 2009).

A new trans fat labeling requirement of the U.S. Food and Drug Administration in 2006 made palm oil appealing to American companies, too (FDA 2003). Trans fats are the byproduct of the preservation process called hydrogenation, and have been linked to heart disease (Sun et al. 2007). Soy oil needs to be hydrogenated to prevent spoiling, but palm oil does not. The rule change resulted in a rush to replace other oils with palm in processed foods sold in the U.S., even though palm oil is high in saturated fat, another heart-unhealthy type of fat (Sun et al. 2007).
Palm oil appears in small amounts in a range of food and non-food products, from soap and cosmetics to peanut butter, in the U.S and Europe (Shepard 2008). The oil’s complex value chain could be a barrier to creating and expanding niche markets for sustainably produced palm oil.