Palm Oil, The Economy, And Deforestation

Glyceryl Stearate, Sodium Lauryl Sulphate, Sodium Isostearoyl Lactylaye; words that may seem foreign to us, but each mean the same thing: palm oil (Jane, 2016). According to research done by the Palm Oil Instigation Organization founder Linda Jane, Palm Oil is the product of palm trees. The mesocarp is taken from the fruit of the plant and is processed to extract the oils within. Indonesia yields the greatest amount of palm oil in the world, “From 2000-2009, Indonesia supplied more than half of the global palm oil market” (Jane, 2016).

Palm oil generates millions of dollars for indonesia’s economy every year. The issue is not the product itself, but truly how the Indonesian plantations clear vital forests to create a temporary plot of land to grow their crops. This plot is temporary because around three years of palm tree crops will deplete the nutrients from the soil and make the land baron. Palm oil may be good for Indonesia’s economy, but the environmental impacts are devastating.

Palm oil should not be used in products based on, the environmental impact, the native population, and the human rights conflicts where the palm trees are grown.

Environmental Impact

Palm oil is used in everyday items and food products including, chips, crackers, shampoo, vegetable oils, beauty products, gas etc. Benjamin Block of the Worldwatch Institute wrote a peer reviewed article titled, Global Palm Oil Demand Fueling Deforestation. In this article Block states that with the large market demand for palm oil, Indonesia has become a highly sought after location for palm oil plantations.

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Indonesia is the prime climate for the palm plants and the “abundance” of land available makes its location irresistible to corporations looking to make a substantial profit. The land is relatively cheap and government control of the land is nearly erased, which allows a large profit margin (Block, 2017). Palm oil plantations are replacing large plots of forest.

Forests that are home to hundreds of species native not that area. Indonesian landowners and corporations primary deforestation method is the slash and burn method to clear large areas of land and carbon sinks are being destroyed (Block, 2017). This means that methane and CO2 are released. In an article written in 2008 by Lian Pin Koh and David Wilcove, two Princeton University research biologists, deforestation alone helps add 20% to the world’s CO2 emissions, “Irreplaceable wildlife species like the Sumatran Rhino are being driven to the brink of extinction… The clearing of rainforests and carbon-rich peatlands for new plantations is releasing globally significant carbon pollution”. Indonesia is home to over fifteen percent of the world’s mammals, plants, and birds (Jane, 2016). Not only are plants and birds being displaced but so are the people. An issue that is commonly ignored is the well-being of the Indonesian natives and their community.

The Native Population

Plantation owners are buying and destroying forest areas. With this, they are also taking over land that has been owned and controlled by native peoples. People that have lived in their villages for hundreds of years are being relocated (Koh and Wilcove, 2008). With Indonsian law enforcement not regulating land to the extent that they should be, plantation owners are able to use force to remove anyone they want in that area. The plantation owners also have control using the most mesmerizing tool of all: money. Money, in a country where it is so scarce for many natives, is hard to reject. For many families, the promise of money for their land is the difference between life and death in some situations. Especially because the land will probably be taken forcibly or without notice if the native peoples do not comply with the owner’s commands (Koh and Wilcove, 2008). Deforestation also pollutes nearby vital water supplies. When land is cleared, the soil is now open to the elements (Koh and Wilcove, 2008).

The soil collects all the rainwater and the runoff will leak into the rivers and streams (Koh and Wilcove, 2008). Water that was once clear can collect enough clay/soil to turn it brown, red, and even black (Koh and Wilcove, 2008). Because oil palm is relatively easy to grow, the land is fine for the plantation, but not for other vital crops. Since the oil palm is not very picky about its surrounding or soil, it has been substituting alternatives including gas (Koh and Wilcove, 2008). Oil palm itself is not a renewable energy or even a cleaner use of energy than other fuels according to the EPA. In fact, the greenhouse gases that would be saved by changing from gasoline to palm oil, would be released during the palm oil processing (Koh and Wilcove, 2008). That being said, palm oil as a source of energy is expected to rise exponentially within the decade (Jane, 2016).

Human Rights

Environmental degradation is a huge issue in Indonesia, but so is money. Indonesia is considered a developing nation. According to peer reviewed article by Krystof Obidzinski, Rubeta Andriani and Augus Andriano titled, Environmental and Social Impacts of Oil Palm Plantations and their Implications for Biofuel Production in Indonesia, the national GDP is about $4,300 per capita. This means that the average Indonesian makes less than 10% the national wage of a United States citizen (Obidzinski , Andriani and Andrianto, 2012). This in mind, the palm oil industry has been a huge factor in boosting the Indonesian economy. 85% of the palm oil used today is exported from Malaysia and Indonesia (Obidzinski et al., 2012). Palm oil plantations begin producing quickly and large companies buy that oil. Pepsico is one of those buyers. Pepsi buys 4,050 tons of palm oil every year to be put inside their products (Obidzinski et al., 2012). This keeps the prices of their products low and their earnings high. Palm oil is not necessarily only an Indonesian issue, but the entire planet is impacted by the choices made there. Without the demand for them to export the oil, there would be less oil supplied. Around the world, 3.5 million people work in the palm oil industry (Obidzinski et al., 2012).

In an article by the World Growth Organization titled, Smallholder, it mentions that palm oil created thousands of jobs for Indonesian natives in impoverished farming communities, but they are not always paid as much as promised and many work in horrible conditions. This being said, the World Growth Palm Oil Green Development claims that “With over half of Indonesia’s population lives in rural areas—of which over 20 percent live below the poverty line—the palm oil industry provides an incomparable means of poverty alleviation” (Smallholders, 2013), The pesticides and lack of safety equipment can cause serious harm to the workers. Many do not have the luxury of having any time off and medical care is limited. There are no strict child labor laws in place, so many children will be put to work instead of going to school in order to help their parents with their finances (Obidzinski et al., 2012). This is a serious human rights issue.

Those Who Support Palm Oil

Even with all of the issues surrounding palm oil, individuals and companies still support palm oil use. Palm oil has high yield and high demand, while the cost of production is low and the time put into the crops is also low (Smallholders, 2013). This is prime conditions for both the buyer and seller. Buyers are able to buy larger quantities of products at a lower cost since the initial monetary input to the crop is so low, there is more room for profit. Like most agricultural crops, the price is fixed based on the supply and demand. The prices are in turn going to be a lot cheaper than a more labor intensive crop (Smallholders, 2013). When companies are looking into buy ingredients for their products, they are going to look at cheaper alternatives for everything they use. Palm oil can replace coconut oils, cocoa butter, shea butter, etc in most items, so why pay more than the company has to. This is beneficial for the consumer also because the lower the price on a good will allow the company to lower its retail price. For example, if there are two shampoos on the market, one with palm oil and one with coconut oil in it, which one is going to be cheaper.

The answer will almost always be the one with palm oil in it. This is because the overall cost to grow and produce the coconut oil is going to be much higher than the oil from a palm tree. So theoretically if a company bought 500 gallons of coconut oil for $10/gallon that would be $5,000. If a company bought 500 gallons of palm oil for $5/gallon it would equal $2,500. Why would one buy the coconut oil if palm oil could save you $2,500? The company could then produce the product with an extra $2,500 and sell it for a much lower price than the with the coconut oil with the same/higher profit. The consumers will then most likely buy the palm oil product over the coconut oil product because instead of paying $5 for a shampoo they may only have to pay $2.50-3.00 for basically the same product. Seeing this very simple economic equation, one can rationally see why Indonesian plantation owners continue to produce palm oil and why companies would buy that oil from them (Block, 2017 ). It is easy to see from an environmental standpoint why oil palm plantations are bad, but when those involved make a lot of money, it makes it hard to take a stand for some. Is the money they receive right now worth the invaluable biodiversity loss and irreparable damages?

Palm Oil plantations clear millions of acres of land and forest and emit billions of tons of carbon pollution into the atmosphere. Orangutans, birds, tigers, and so much other endangered wildlife are having their homes destroyed to make a profit. In 2016, 62,000 square miles were dedicated to palm oil around the world and 10,000 miles were set on fire to clear land (Jane, 2016). These fires were able to be seen from satellites in space. Most environmentally conscious people would see these facts and realize the profits do not seem to be worth it, but how do we stop it? Palm oil is in so many products, in fact, it has been shown that more than 50% of packaged goods have palm oil in them (Block, 2017). There seem to be two main choices for these people. First is to stop buying things that contain palm oil. This can be hard to accomplish because companies are able to hide the palm oil under a copious amount of long scientific names that would be nearly impossible to memorize.

There are a few ways to make this easier. One could print out all of the names and when they shop they can reference the sheet. This can be a pain in the neck if you are in a rush or if one has lots of groceries to buy, so another option is buying from a palm oil free website such as There is also an app called ethical consumer that will give you categories of foods and products that a free of palm oil. The other option is the use of sustainable palm oil. Since palm oil is such a high yielding crop and has low production costs, palm oil is technically a good choice for the farmer to plant and for companies to buy (Block, 2017). The difference between sustainable palm oil production and unsustainable palm oil production is that sustainable palm oil does not lead to deforestation or loss of lives (animal and human) (Jane, 2016). Palm oil and its origins are often blurred. According to a peer reviewed article by Dr. Yousef Basiron, a world renowned biologist well known for his research of palm oil, most companies do not know where their palm oil is sourced from.

This makes it nearly impossible to tell if the palm oil is from a sustainable area or from the middle of a former Indonesian orangutan habitat. In order to assure that palm oil is sustainable costs too much and is simply too hard for large companies to keep track of (Basiron, 2007). Even if it was clear to see which oil is sustainable, this again comes to if sustainable palm oil is $1 more expensive than unsustainable palm oil, a company seeking a larger profit will pick the cheaper choice. Since many people are unaware or do not care about the impact palm oil has on our planet, companies can easily slip palm oil into your everyday products and not change the demand for that product. In fact, if they put in the palm oil it may become a more desirable product for consumers due to the lower price point. Palm oil has changed Indonesia’s economy and environment in both positive and negative ways, but the money that Indonesia receives from the oil will not bring back the forests, the animals or the rights and habitat of native inhabitants, and that is the real issue.

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Palm Oil, The Economy, And Deforestation. (2022, Jul 13). Retrieved from

Palm Oil, The Economy, And Deforestation
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