Sustainability of Palm Oil Production in Indonesia
Palm oil is the leading edible vegetable oil by production volume. It is an essential ingredient in the manufacture of a wide variety of products that are used globally every day, such as chocolate, soap, and cosmetics. It is also a common cooking oil in many countries, notably in Asia, and is used in other industries, including livestock and, increasingly, biofuels.
Palm oil is produced from the fruit of oil palm tree (Elaeis guineensis). Palm oil can be separated into a various distinct oils with different properties. Because of this versatility, palm oil has replaced animal and other vegetable oils to be used in a wide variety of products. Palm oil is also a very productive crop. The amount of oil produced per hectare per year, or the yield, is far greater than that of other vegetable oils. Best-in-class palm oil plantations can produce up to 10 times more oil per unit area than that of soybean or sunflower oil. The production costs for palm oil are also lower, mainly due to low labor costs in the countries in which oil palm trees are grown. Less fertilizer, pesticide, and fuel energy are needed in the cultivation and processing of palm oil.
In the past few years, palm oil production has sparked many contentious debates. On one hand, palm oil production has an important positive socioeconomic impact in the countries which produce it. On the other hand, palm oil production has a severe negative impact on the ecological sustainability. These positive and negative impacts are considered major issues in Indonesia, the world’s largest producer of crude palm oil.
Palm Oil Production in Indonesia
The versatility, high yields, and low production costs of palm oil are the reasons why it is a successful global commodity. These factors make production of palm oil economical within the limited agricultural land available globally. However, historically, palm oil industry has used more new land rather than improved the yields of existing plantations. About 75 percent of plantation estates and palm oil production are located in Sumatra and Kalimantan, areas in Indonesia with a long history of oil palm cultivation, both in the form of large-scale estates as well as smallholder operations. In 2008, approximately 49 percent of palm oil plantations in Indonesia were owned by private companies, 41 percent by smallholders, and the remaining 10 percent by the Indonesian government.
Indonesia’s crude palm oil production has recorded a phenomenal increase from 157 thousand tons in 1964 to 31 million tons in 2013. With its current production capacity, roughly 12 million tons more in capacity than Malaysia, Indonesia is now...