- Palm oil supplied 39.4% of global vegetable oil production in 2023 while using only 7.6% of the world's harvested area for oil crops.
- Global palm oil production reached 87.9 million metric tons in 2023, with Indonesia and Malaysia accounting for 82.7% of output.
- Refined products made up 74% of palm oil exports between 2019 and 2023, highlighting the importance of value-added processing.
- Smallholders produce an estimated 40% of global palm oil supply but may face growing challenges meeting new traceability and anti-deforestation requirements.
- The report calls on producing countries to strengthen sustainability, increase value addition and support smallholders to benefit fully from the palm oil value chain.
Palm oil is widely used in cooking oils, processed foods, cosmetics, industrial products and biofuels. It plays a central role in global value chains.
The report examines the current state of palm oil trade, focusing on challenges facing palm-oil-producing developing countries. It highlights the crop's productivity advantages, growing sustainability pressures and a changing trade policy environment shaped by new environmental regulations.
A high-yield crop dominates global vegetable oil markets
Palm oil's rise has been driven largely by productivity. From 2014 to 2023, oil palm plantations produced an average of 3.14 metric tons of oil per hectare – more than four times the average yields for rapeseed and sunflower oil.
As a result, palm oil accounted for 39.4% of global vegetable oil production in 2023 despite occupying only 7.6% of harvested area devoted to oil crops. Global palm oil production reached 87.9 million metric tons, more than any other vegetable oil.
The report notes that higher yields can help reduce pressure on land, provided land expansion and forest conservation are managed sustainably.
Value-added processing drives trade
Refined products account for most international palm oil trade. Between 2019 and 2023, refined palm oil products represented roughly 74% of global palm oil export volumes.
Indonesia and Malaysia dominate this trade. Together, they accounted for around 90% of global refined palm oil exports. The report says this reflects their success in building integrated value chains that add value before export.
The report argues that other producing countries could capture more value by expanding refining and processing rather than relying mainly on crude palm oil exports.
Sustainability pressures are reshaping the industry
The rapid expansion of palm oil production has brought significant sustainability challenges. The report highlights risks linked to deforestation, biodiversity loss, greenhouse gas emissions and labour conditions.
It also calls for better land management, stronger enforcement of forest conservation rules and improved treatment of palm oil mill effluent. This liquid residue represents more than half of the original mass of fresh fruit bunches processed by mills and can create environmental and health risks if not properly managed.
Smallholders are central to the sector. The report stresses the need to support them because they often face financial, technical and administrative barriers.
New trade rules raise the stakes
Several major importing economies have introduced or proposed environmental and anti-deforestation requirements for agricultural products, including palm oil. Companies will increasingly need to demonstrate where products come from and how they were produced.
The report warns that compliance could be particularly difficult for small producers that lack land titles, traceability systems or the resources needed to meet detailed due diligence requirements.
To address these challenges, the report recommends investment in traceability systems, technical assistance and support programmes for smallholders. It also calls for greater international cooperation to help smaller producers meet sustainability requirements and maintain market access.
The challenge is to combine growth, sustainability and inclusion
The report argues that producing countries should capture more value through processing while meeting rising sustainability expectations. Stronger traceability systems, investment in downstream industries and targeted support for smallholders are key priorities.
The aim is to help producing countries reduce dependence on commodity exports, strengthen economic resilience and move into higher-value segments of the palm oil value chain.