FYEC002 - Palm Oil Economics Industry Assignment

Assignment Task

At the end of 2018, Indonesia and Malaysia made up around 85% of the global supply of palm oil. Palm oil is contained within nearly 50% of packaged products from pizza, doughnuts and chocolate, to deodorant, soap, shampoo, toothpaste and lipstick. It’s also used in animal feed and increasingly as a biofuel in many parts of the world.

Palm oil is an extremely versatile oil with low production costs which make it cheaper than frying oils such as cottonseed or sunflower. In Asian and African countries, palm oil is used widely as a cooking oil and is also a cheap substitute for butter. In addition, rising global demand for palm oil has lifted incomes in poor rural areas, created jobs and reduced poverty, boosting the multiplier effect.

However, palm oil has been and continues to be a major driver of deforestation of some of the world’s most biodiverse forests, destroying the habitat of already endangered species such as the Sumatran tiger, Sumatran rhino and orangutans. Fires to clear land for more palm oil plantations are a major source of greenhouse gas emissions into the atmosphere which contribute to climate change. There are also widespread reports of exploitation of workers and child labour in palm oil production.

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