Palm Oil Industry Profile
Providing about half of the world’s supply of palm oil, Indonesia remains to be the world’s biggest producer and consumer of the commodity. Palm oil production is central to the economy of Indonesia and accounts for 11% of Indonesia’s export earnings of $5.7 billion. This makes it the largest export commodity, exceeding oil and gas export value. Notably, the export value of the Indonesian palm oil reaches up to USD 23 billion in 2017, marking an increase of 26% from 2016.
The palm oil Industry in Indonesia is labor intensive with over 5.3 million direct employments and 21.2 million of both direct and indirect employments. The three main business models for palm oil production in Indonesia are private large-scale plantations, nucleus estate smallholders, and independent smallholders. Around 53% of the plantation is state-owned while 42% of the land is owned by smallholders which is comprised of over 2,3 million business units.
Oil palm plantations stretch across 12 million hectares, and is projected to reach 13 million by 2020. Almost 70 percent of Indonesia’s oil palm plantations are located in the island of Sumatra, and the rest is largely found on the island of Kalimantan. As for other commodities, Indonesia has been mainly focused on the export of raw palm oil, but over the past decade, authorities have shifted their priority to more refined products in means to higher up in the value chain. Maintaining its status as the world’s largest producer of palm oil, Indonesia has projected a figure of 40 million tones by 2020
Palm Oil Industry Profile
As the world’s second-largest producer of the commodity, the oil palm industry is not only vital to the Malaysian economy but it also plays a pivotal role in ensuring that the demand of a growing global population is met. Malaysia has a vital role to play in achieving the rising global need for oils and fats, as Malaysia is one of the major producer and exporter countries of palm oil and palm oil products. Each year, Malaysia produces almost 20 million tons of of palm oil traded in 160 different countries. At present, Malaysia accounts for a significant contribution to world’s palm oil production and export which is 39% and 44%, respectively.
Malaysia is also home to the West African palm, first introduced to Malaysia (then known as Malaya) as an ornamental plant in 1875 and now has turned into a huge industry. In Malaysia, palm oil sector alone contributes 3,5% to the national Gross Domestic Product(GDP). As of 2017, the Malaysian national revenue in palm oil reached 82 million.
The palm oil industry in Malaysia is labor-concentrated where palm oil growth and production provide jobs to more than half a million people in Malaysia. As data suggested that 5,2 million of direct beneficiaries are dependent of palm oil sector, consisting of employees, farmers and their families (2017). A massive 17.73 million tons of palm oil and 2.13 tons of palm kernel oil have been produced from about 4.49 million hectares of land and around 40% of oil palm cultivation is owned by nearly 640,000 smallholders.