Global palm oil production up 2% on previous year

According to the US Department of Agriculture (USDA), global palm oil production in 2023/24 is set to rise to a record high of 79.5 million tonnes, exceeding the previous year’s level by just under 2%.

The main reason for this forecast is anticipated production increases in Malaysia and Indonesia.

Although Malaysian production was seasonally strongly curbed, the USDA currently projects an output of 19 million tonnes, which would be up 613,000 tonnes on the previous year.

The possibilities of increasing palm oil output in the short term are limited. Even if new plantings are expedited, appreciable yields cannot be expected for another three or four years.

Oil palm plantations have an economic life cycle of approximately 25 years. According to the Agrarmarkt Informations-Gesellschaft, this means that output is initially reduced even further when new plantations are created on existing land.

Annual growth of production is therefore likely to progress slowly, at least in the coming years – provided, however, that the palm oil area will not be expanded further either by changing the use of existing land or, in the worst case, by clearing primeval forest.

This is precisely what the provisions of the Renewable Energy Directive (RED II) are intended to prevent. The directive stipulates that by 2030 at the latest, biofuels (biodiesel/HVO) from palm oil can no longer be counted towards national quota obligations.

However, member states have been authorised to advance the exclusion. Some member states, such as France and Germany, have made use of this authorisation. The provision was subject of a case Malaysia brought before the World Trade Organisation (WTO).

In last week’s ruling, the WTO acknowledged that sustainability requirements as laid down in the RED II justify the exclusion palm oil.

From the perspective of the UFOP, the ruling is pointing the way forward on a global scale. The association assumes that the WTO will rule the pending case brought by the Indonesian government in the same way.

Tags: output, Renewable Energy Directive, USD, Indonesia, Production, Malaysia, WTO, yields, palm oil, forecast