GLOBAL MARKET REPORT

The report examines the global palm oil sector, highlighting the growth of VSS-compliant production and the challenges faced by smallholders. It analyzes how climate change and geopolitical conflicts, such as the war in Ukraine, affect supply and pricing. The document argues that while VSSs can reduce deforestation and improve yields, the lack of consistent price premiums and high certification costs hinder their adoption by smallholders. It concludes with recommendations for better price transparency, living wage benchmarks, and stronger government support to build a more sustainable value chain.

• Palm oil is the most widely produced edible oil, meeting 40% of global vegetable oil demand while using less than 6% of the land dedicated to vegetable oil production.
• The palm oil sector's market value exceeded USD 50 billion in 2021 and is projected to reach USD 65 billion by 2027, with a compound annual growth rate (CAGR) of at least 4%.
• Climate change poses significant risks to production; for example, oil palm yields in Malaysia are projected to decrease by 10% to 41% due to temperature changes.
• VSS-compliant oil palm fruit production reached 17% of total global production in 2019, with a CAGR of 76% between 2008 and 2019, accelerating to 129% between 2014 and 2019.
• The palm oil value chain is characterized by high market concentration, with five corporate groups controlling approximately two-thirds of refining capacity and export volume from Indonesia and Malaysia.
• Downstream actors capture the majority of value and profit in the embedded palm oil value chain, with the retail and fast-moving consumer goods (FMCG) sectors capturing about 66% of gross profits.
• Independent smallholders are the most disadvantaged in the value chain, generating around 6% of the embedded value with profits close to zero.
• Internalizing natural capital costs, such as GHG emissions and pesticide toxicity, would require at least doubling the market price of crude palm oil (CPO).
• Price premiums for RSPO-certified palm oil are inconsistent and depend on the chain-of-custody model; in 2019, premiums ranged from USD 2.50 to 3.50 per tonne for book-and-claim to USD 25 to 30 per tonne for segregated or identity-preserved models.
• Certification costs are a significant barrier for smallholders, adding an estimated USD 8 to 12 per tonne, plus audit and logistics fees.

APA

Voora, V., Bermúdez, S., Farrell, J. J., Larrea, C., & Luna, E. (2023). GLOBAL MARKET REPORT. International Institute for Sustainable Development. https://www.iisd.org/system/files/2023-06/2023-global-market-report-palm-oil.pdf

Chicago

Voora, Vivek, Steffany Bermúdez, Johanna Joy Farrell, Cristina Larrea, and Erika Luna. GLOBAL MARKET REPORT. International Institute for Sustainable Development, 2023. https://www.iisd.org/system/files/2023-06/2023-global-market-report-palm-oil.pdf.

Wikipedia

{{cite report |last1=Voora |first1=Vivek |last2=Bermúdez |first2=Steffany |last3=Farrell |first3=Johanna Joy |last4=Larrea |first4=Cristina |last5=Luna |first5=Erika |title=GLOBAL MARKET REPORT |publisher=International Institute for Sustainable Development |date=June 2023 |url=https://www.iisd.org/system/files/2023-06/2023-global-market-report-palm-oil.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{voora2023global, author = {Voora, Vivek and Bermúdez, Steffany and Farrell, Johanna Joy and Larrea, Cristina and Luna, Erika}, title = {{GLOBAL MARKET REPORT}}, institution = {International Institute for Sustainable Development}, year = {2023}, month = jun, url = {https://www.iisd.org/system/files/2023-06/2023-global-market-report-palm-oil.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }