Palm Oil Under Discussion: The Pros and Cons of an Agricultural Raw Material in Sustainable Food Production

Moderne Ernaehrung Heute, Official Journal of the Food Chemistry Institute of the Association of the German Confectionery Industry, p. 1-16, May 2011

17 Pages Posted: 2 Jun 2011 Last revised: 16 Jan 2015

See all articles by Juliane Reinecke

Juliane Reinecke

University of Warwick - Warwick Business School

Oliver von Hagen

International Trade Centre (UN/WTO)

Stephan Manning

University of Massachusetts Boston

Date Written: May 31, 2011

Abstract

Since 1980 the amount of palm oil sold on the market has increased more than ten-fold. A critical public discussion regarding the cultivation of palm oil – and above all in the developing countries of South-East Asia – has developed (in the western countries).

Above all local Asian companies are pushing ahead with the exponential growth of the palm oil market. There are three decisive factors for the expansion of palm oil production: 1. Trans fats in food are also held responsible for the emergence of cardio-vascular diseases. Food manufacturers now increasingly use trans fat-free palm oil in western countries for certain products. 2. Consumption of and demand for palm oil are increasing with the rise in the world’s population. 3. Thanks to its technical properties and the fact that it may be used in a variety of ways, palm oil is an alternative to crude oil-based raw materials for many areas of industry. The consumption of palm oil as a biofuel and for energy generation is rising continually.

Compared to other agricultural crops found in the tropics, oil palms provide the highest yield as a ratio of the required growing area. Furthermore, there are no genetically-modified variants in palm oil and palm kernel oil production. Palm oil is nevertheless the subject of criticism as the expansion in the areas cultivated with oil palms has been accompanied by the dramatic destruction of forest areas and the drastic decimation of many species. In addition, with the establishment of new palm oil farms indigenous peoples and small farming cooperatives are often robbed of their established habitats and natural resources.

The Roundtable on Sustainable Palm Oil (RSPO) was formed in 2003 on the initiative of the WWF. The RSPO brings together the major palm oil producers in South-East Asia, representatives of companies along the entire supply chain, and stakeholders from the main consumer markets in Europe and the USA so as to elaborate sustainability solutions.

Yet the Roundtable is also coming in for criticism. Western brand manufacturers may well be prepared to buy sustainable palm oil, but only account for a small proportion of global production. The majority of buyers from less environmentally-conscious threshold countries such as India and China, which are buying ever greater quantities of palm oil, also have to be motivated to participate in sustainability concepts.

Keywords: sustainability, food commodities, standards, certifications, global value chain

JEL Classification: F13, F16, F18, F53, F55, F59, L15, L32, O13, O19, P45, P48, Q11, Q17, Q28, Q56, L2, L5

Suggested Citation

Reinecke, Juliane and von Hagen, Oliver and Manning, Stephan, Palm Oil Under Discussion: The Pros and Cons of an Agricultural Raw Material in Sustainable Food Production (May 31, 2011). Moderne Ernaehrung Heute, Official Journal of the Food Chemistry Institute of the Association of the German Confectionery Industry, p. 1-16, May 2011. Available at SSRN: https://ssrn.com/abstract=1856409

Juliane Reinecke

University of Warwick - Warwick Business School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Oliver Von Hagen

International Trade Centre (UN/WTO) ( email )

54-56 Rue de Montbrillant
Geneva, 1202
Switzerland

Stephan Manning (Contact Author)

University of Massachusetts Boston ( email )

100 Morrissey Blvd
Boston, MA 02125
United States

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