Sustainable Palm Oil Market: Industry Analysis and Forecast (2024-2030) Trends, Statistics, Dynamics, Segment Analysis

Sustainable Palm Oil Market Overview:

Sustainable palm oil is produced and used in a way that is ethical from an economic, social, and environmental perspective. Palm oil is a multipurpose and frequently utilized vegetable oil that may be found in many common goods like food, cosmetics, and cleaning supplies. However, its production has been linked to a number of detrimental environmental and social effects, such as habitat damage, greenhouse gas emissions, deforestation, and human rights violations.

 

The market's exponential expansion is being driven by demand from the food, beverage, biofuel, energy, personal care, and cosmetics industries. Major manufacturers are located in the area because raw materials are readily available there. The market is intensely competitive and broad in scope as a result of the presence of multiple all-scale companies that fight for market share through high production, excellent distribution networks, high-quality products, and a variety of competitive methods.

 

Palm oil production and exports are dominated by Indonesia. By the country, the items are sent abroad. Also encouraged by the government are palm oil plants. Many of the area's small- and medium-sized farmers depend heavily on it for their revenue. Regional farmers' growth is significantly impacted by the sector.

 

The product has seen an upsurge in demand along with the biofuels sector. It is used to make biofuel, which is subsequently applied as an environmentally friendly substitute for crude oil in a variety of uses, including motor oil. The commercial use of biofuels is still quite limited.

 

Despite the fact that there are numerous firms involved in the industry's research and development, the sector is anticipated to grow. The market for the product is anticipated to be driven by an increase in industrial demand for palm oil as the sector continues to grow.

 

 

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Sustainable Palm Oil Market Dynamics:

Numerous factors, including consumers, companies, and governments, have fuelled the market for sustainable palm oil.

Demand for palm oil that is supplied responsibly has been sparked by consumers' growing knowledge of the detrimental effects of traditional palm oil extraction on the environment and society. To be sure they are making decisions that are environmentally responsible, consumers are actively looking for items with certifications like the RSPO (Roundtable on Sustainable Palm Oil).

 

Various governments and regulatory authorities have created laws and policies to support the development of sustainable palm oil. These regulations frequently include labeling specifications, import limitations on palm oil that is not sustainable, and financial incentives for businesses to use sustainable palm oil in their goods.

 

Access to international markets is often contingent on meeting sustainability criteria. As a result, producers and exporters in palm oil-producing countries have a strong incentive to adopt sustainable practices to ensure continued market access and avoid trade barriers.

 

Innovations in agriculture and palm oil production technology are enabling more efficient and sustainable cultivation practices. These advancements can help reduce the environmental impact of palm oil production while maintaining productivity.

 

Sustainable Palm Oil Market Restraints

Sustainable palm oil production aims to lessen the negative effects that traditional palm oil production has on the environment and society.

Obtaining certification for the sustainable production of palm oil, such as the RSPO (Roundtable on Sustainable Palm Oil) accreditation, can be costly and time-consuming. These costs may be particularly difficult for smaller firms to cover, which may limit their capacity to compete in the sustainable market.

 

Even if sustainable, the expansion of palm oil plantations may lead to conflicts over land use. This could lead to conflicts with indigenous people and other stakeholders, which would result in poor publicity and legal issues.

 

The palm oil supply chain is convoluted and typically includes many middlemen. Maintaining the quality of sustainable palm oil over the whole supply chain can be challenging.

 

Sustainable palm oil is in competition with conventional palm oil since it is more economical. This price discrepancy could sway companies away from sustainable practices and toward less expensive alternatives.

 

Sustainable Palm Oil Market Opportunities:

The sustainable palm oil market presents several opportunities for businesses and investors.

 

Consumer decisions' impacts on the environment and society are becoming more apparent. Businesses that can meet this need have an advantage over their rivals because there is a rising market for products created with responsibly sourced palm oil.

 

Sustainable palm oil is utilized outside of the food business. It is employed in a variety of industries, including biofuels and cosmetics. New company prospects might emerge by looking at these markets.

 

Businesses have the option to take part in consumer and producer education programs. This could encourage the usage of sustainable palm oil and help spread the word about its benefits.

 

Companies can increase trust and make sure that their sustainable palm oil projects are actually advantageous to both the local community and the environment by working with NGOs, local groups, and other stakeholders.

 

Investment in research and development to find alternatives to palm oil in products, or to develop more sustainable palm oil varieties, can be a significant opportunity.

 

Sustainable Palm Oil Market Challenges:

The challenges stem from the complex nature of the palm oil industry, including environmental, social, and economic considerations.

The ongoing deforestation and habitat destruction brought on by the production of palm oil is one of the biggest problems. Despite initiatives to encourage sustainable practices, some places continue to see illicit logging and land clearing for palm plantations, which results in biodiversity loss and carbon emissions.

 

Peatlands being drained for palm oil plantations is a serious environmental issue. It can cause ground subsidence and flooding in the affected areas, releases a significant amount of carbon dioxide that has been stored, and contributes to climate change.

 

It is still difficult to provide fair pay and secure working conditions for plantation employees. In some palm oil plantations, there have reportedly been reports of labor violations and subpar living conditions.

 

Since the palm oil supply chain is so intricate, it can be challenging to determine where a product's palm oil came from. The task of maintaining sustainability standards throughout the whole supply chain never ends.

 

Sustainable Palm Oil Market Trends:

Margarine, biscuits, instant noodles, bread, lipsticks, cereals, chocolates, sweets, ice cream, shampoos, and detergents all include palm oil, a frequently used vegetable oil. Due to its increased demand globally, palm oil is both economical and low in trans-fat. It is predicted that technological advancement combined with major foreign investment in the field of sustainable production techniques will open up numerous chances for players from around the world. It is assumed that a higher production cost brought on by the use of sustainable manufacturing methods is a crucial barrier for new market entrants.

 

The economy depends on palm oil, a multipurpose vegetable oil that is a key component of food and other essentials. The "new natural product packages" that can be separated into several organic things have grown noticeable red and orange oil palms. Both the tiny, delicate natural product and the living thing—palm—are used to make palm oil. The Palm Oil Innovation Group (POIG) is committed to creating cooking oil-grade, trans-fat-free, ultra-pure palm oil. The program, which debuted in 2013, was created in association with progressive NGOs and palm oil producers.

 

In the past 20 years, associations of the general public have criticized the growing usage of palm oil and the concomitant expansion in the region as causes of deforestation, population shifts, and other disruptions of human and non-human life.

 

Sustainable Palm Oil Market Regional Insights:

More than 71% of market revenue in 2023 came from the Asia Pacific region. Due to the region's growing population and increasing demand from end-use industries like the food and beverage industries, this is ascribed to both rising consumption and population expansion. The reason for the region's high consumption of palm oil is attributed to the countries' rapid population growth, fluctuating demographic patterns, and diverse food consumption.

 

For nations like Indonesia and Malaysia, which are significant global producers, this product is a significant source of wealth.  The production of palm oil has aided in the development and advancement of the nations that produce it. The only source of income for the small and medium-sized businesses in these nations is the sale of petroleum oil.  Due to rising demand brought on by a growing population, the regional product market is anticipated to expand quickly throughout the forecast period.

 

The distinct demography of the region, changes in the general population's eating preferences, and increased demand from the food business for diverse delicacies are all contributing factors that will likely cause the North American region to grow exponentially in the near future.

 

Sustainable Palm Oil Market Segment Analysis:

By Nature: In 2023, the conventional category controlled a revenue share of more than 99% of the market for palm oil. This is a result of the segment's affordable price and wide availability. Small and medium-sized growers rely heavily on conventional oil palm fields as a source of revenue since they have the ability to use synthetic chemicals to boost productivity.  In high-population, low-income countries, the typical nature category is more well-liked.

 

The organic nature category, which competes with the conventional nature segment, has a relatively tiny market share because it is more difficult to produce and therefore less readily available on the market. It is difficult and financially unfeasible for the producers to create in big quantities because of the strict production standards and the extremely expensive materials that are required for production, such as specialized soil maintenance supplies. Although there is a high expectation for the growing knowledge of the advantages of organic products.

 

By Product: With a global revenue share of over 39% in 2023, the fractionated palm oil category dominated. This is a result of the product being readily available and having pricing that is within reach. Being widely accessible and inexpensive for the general public, it is highly well-liked in low-income countries. The product can be manufactured in greater abundance due to its constituent composition.

 

The Crude Palm Oil (CPO) product segment is another important product category that comes after the fractionated palm oil product category. This is because CPO has a significant end use in the food and beverage industry, which contributed 25% of the global revenue. Its use in edible items is more desirable due to the competitive advantage that vitamin A confers over other product areas.

 

Demand for it is anticipated to be driven by its widespread application in the food industry. Since CPO is a necessary element for the creation of many items from the cosmetics and pharmaceutical end-use industries, there is also a sizable demand from these sectors.

 

By End-Users: The palm oil market was dominated by food and beverage in 2023, accounting for more than 65% of total revenue. Due to the product's expanding end applications in the industry and the expansion of product portfolios requiring palm oil as a raw ingredient, it has a sizable market share. The growth of the world's population has an effect on product growth globally, and this has also raised the demand for products on the market globally.

 

In terms of revenue share, the end-user segment for food and beverage is closely followed by personal care & cosmetics, biofuel & energy, and biofuel & energy. This market segment is growing as technology progresses and is expected to do so quickly in the years to come.

 

The personal care and cosmetics end-user segment, which now has a moderate growth rate, is predicted to significantly expand its share of global sales by the end of the projection period. The category's contribution to the market's overall sales in 2023 was 16%. The diversification of product portfolios and increased demand for plant-based, organic, and sustainable products are expected to be the main drivers of demand in this market sector.

 

Sustainable Palm Oil Market Competitive Landscape:

Market stability and intense competitiveness coexist. Crude oil's shifting price is influenced by its cost on a global scale. The advent of foreign businesses like ADM and Wilmar International Ltd. has increased the level of competition in the sector. In order to assure a steady supply of raw materials, the larger firms have either purchased plantations or traded with the farmers.  The profitability of the product is adversely affected by changes in raw material prices.

 

Manufacturers of the product use a range of tactics, such as ongoing R&D projects, capacity growth, mergers, and acquisitions, to acquire a competitive advantage over rivals. For instance, the PT. Mahkota Group bought a palm oil mill in South Sumatra in November 2019 through its subsidiary, PT Berlian Inti Mekar. Each day, this factory processes about 400 tons of palm kernel oil to produce products like cooking oil and olein.

 

Sustainable Palm Oil Market
Market Size in 2023	USD 72.00 Bn.
Market Size in 2030	USD 97.98 Bn.
CAGR (2024-2030)	4.5%
Historic Data	2018-2022
Base Year	2023
Forecast Period	2024-2030
Segment Scope	By Nature Conventional Organic
	By Product Fractionated palm oil Crude Palm Oil
	By End-User Food & beverages personal care & cosmetics pharmaceutical biofuel and energy others
Regional Scope	North America- United States, Canada, and Mexico Europe – UK, France, Germany, Italy, Spain, Sweden, Austria, and Rest of Europe Asia Pacific – China, India, Japan, South Korea, Australia, ASEAN, Rest of APAC Middle East and Africa - South Africa, GCC, Egypt, Nigeria, Rest of the Middle East and Africa South America – Brazil, Argentina, Rest of South America

 

Sustainable Palm Oil Market Key Players:

• Archer Daniels Midland
• Wilmar International Ltd.
• Sime Darby Plantation Berhad
• IOI Corporation Berhad
• Kuala Lumpur Kepong Berhad
• United Plantations Berhad
• Kulim (Malaysia) Berhad       
• IJM Corporation Berhad
• PT Sampoerna Agro, Tbk
• Univanich Palm Oil Public Company Ltd.
• PT. Bakrie Sumatera Plantations tbk
• Asian Agri
• Agropalma S.A.
• Boustead Holdings Berhad
• Fuji Vegetable Oil, Inc.
• New Britain Palm Oil Limited