The oil palm industry has grown to become an important part of Indonesia’s economy, representing 4.5% of GDP and lifting millions of Indonesians out of poverty. It is one of edible products that plays a significant role in the most world’s consumption of food products.
As an ingredient of the products, oil palm has been difficult to avoid almost everywhere. It is in all manner of supermarket food items: from chocolate, bread, biscuits, ice cream, to baked goods. And, the demand for oil palm for food continues to rise worldwide, outstripping other vegetable oils.
In Sri Lanka, oil palm is widely used as consumer goods as well as primary inputs to some industries, such as bakeries and confectionaries. Estimates have shown that oil palm is used in 50% of all consumer products in Sri Lanka. The related industries support at least 100,000 jobs in Sri Lanka. It clearly indicates that oil palm has characteristics which are not ready replaceable.
The significant contribution of production of oil palm to the GDP of Indonesia shows the importance of these oils in helping the economy of the country and playing a role in alleviating poverty. For Indonesia, oil palm has been one of its most valuable commodities over the years. In 2022, Indonesia produced around 46 million tons of crude oil palm, making it the world’s largest oil palm producer.
Much of this growth has been fuelled by international demand for oil palm products. Indonesia is the world’s largest exporter of crude and refined oil palm, exporting over 58% of its production and contributing 59% of total global exports.
As a labor-intensive industry, it has contributed concretely to poverty alleviation and to reduce inequality of more than 17 million people. Therefore, like in other producing countries, oil palm has enabled Indonesia to achieve SDGs 2030.
It is asserted that the size of global market for vegetable oils is predicted to be increased from 199.1 million Mt in 2020 to 258.4 million Mt by 2026 in line with the growing global population and widespread use of vegetable oils in various industries. Therefore, it is important to ensure the continuity of enough supply of vegetable oils to the global market so as to prevent further price volatility and shocks to the global economy.
Indonesia also emphasizes for the agriculture commodities including vegetable oils to meet the global sustainability standard. In this regard, the common efforts to ensure sustainability in the global vegetable oil market should be conducted in holistic and non-discriminatory manners. Furthermore, such efforts should broadly take into account international agreement such as the United Nations Sustainable Development Goals (SDGs) 2030.
The oil palm industry in Indonesia has been implementing the best practices of sustainability under a program called the ‘Indonesian Sustainable Oil palm (ISPO). Similar to Indonesia and Malaysia, the industry in Sri Lanka is now significantly implementing the concept of sustainable oil palm cultivation adhering to stringent sustainability criteria related to social, environmental and economic good practices.
This has resulted in a direct positive contribution successfully achieving 11 of the SDGs. The adoption of sustainable oil palm production schemes, offers the opportunity to improve many indicators of the socio-economic impact, linked to the expansion of oil palm production.
The oil palm industry has grown rapidly, so much so it transforms the competition within the global vegetable oil industry. Soybean oil, sunflower oil, and rapeseed oil once dominated the vegetable oil market worldwide. However, the total areas of oil palm plantations is much less considerable than that of the plantations of other vegetable oil sources, such as soybean, rapeseed, and sunflower.
In terms of water consumption, it is also shown that oil palms consumes relatively low water. According to data sources released by Coster (1938) and the FAO (2013), the vegetable oil crop with the largest water footprint is sunflower (3,366 m3 per ton), followed by rapeseed (2,271 m3 per ton) and then soybean (2,145 m3 per ton). Meanwhile, the water footprint of oil palm is only 1,098 m3 per ton, the lowest among the world’s major vegetable oil crops.
Related with deforestation issue, it is a fact that oil palms is using less land and more efficient than other vegetable oils. For comparison, if 80,000 MT of oil is produced from coconut, it requires around 80,000 ha while oil palms needs only 20,000 ha. These facts show that oil palm is more water-efficient compared to forest plants and the world’s other main vegetable oil crops.
Not only does oil palm consume less water, but it also has a mechanism to conserve soil and water. Oil palm comes from Africa, where water is limited, enabling the plant to save water. Oil palm has an ecophysiological adaptation system through a layered morphological structure of leaf sheaths and a massive, broad, and deep fibrous root system that serves as a natural biopore system.
From the description above, oil palm is water efficient, conserves soil and water, and preserves the hydrological cycle. Such a function lasts quite a long time, around 25 years, from when the oil palm is planted until it is replanted.
Based on the positive facts and advantages of the oil palm industry, all stakeholders need to support the development of oil palm plantations and industry. As one of oil palm producing countries, Indonesia encourages the plantation of oil palm in Sri Lanka and the expansion of its industry for the most benefits of the country and the people. Indonesia is pleased to support the Sri Lankan oil palm plantations and industry with knowledge and best practices to advance the development of the industry while improving the economic standing and quality of life of the communities involved.
It is important for the stakeholders, especially the oil palm plantations and industries, to collaborate with the government to empower farmers in Sri Lanka through the ‘smallholder model’, as such initiatives will enhance the quality of the livelihoods of the farmers involved in the sector. Collective measures by oil palm producing countries are also indispensable. Collaboration, cooperation and partnership are the keys.
Therefore, the oil palm plantations and industry can benefit food security, energy security, economic security, and environmental security. Its development will contribute to improving food security, energy security, economic security, and environmental security at local, regional, national, and global levels.
