At a glance

What is it used for?

Palm oil and palm kernel oil are squeezed from the fruit of the oil palm tree. The oil is traditionally used in Africa and Asia for cooking and frying.

Thanks to its numerous health benefits and antioxidant properties, palm oil is found in a wide variety of produce on supermarket shelves, from canned soup, frozen pizza and ice cream, to lipsticks, soaps, shampoos and detergents. The environmental group WWF estimates that every tenth product in the supermarket contains palm oil. And the peels of the palm-oil fruit are processed into pig feed.

In Europe, palm oil is increasingly used to generate electricity. It is burned in large combined heat-and-power plants and used to dry sawdust, which is then turned into wood pellets for heating.

Palm oil can also be processed into biodiesel - known as palm oil methyl ester (PME), similar ato rapeseed in Europe and sugar cane in Brazil. Since 2007, laws in Germany require 4.4 percent of conventional diesel fuel to be made of biodiesel.

Palm oil used as biodiesel is seen as an attractive quick fix to reduce greenhouse gas emissions. It's estimated that a car powered by palm oil-based diesel emits 80 percent less carbon dioxide than one using fossil-based fuel.

Every 12th liter of biodiesel used in the European Union is based on palm oil. And experts say demand for palm oil could soar from the current 40 million tons to around 80 million tons in the next three decades.

Where is it produced?

Indonesia and Malaysia are the world's leading palm oil producers, together controlling four-fifths of the global market. Thailand plans to boost its oil palm plantations in the coming years by as much as five times its current capacity. Uganda, Columbia and Brazil also have vast oil palm plantations. The Earth Policy Institute says that China has acquired rights to 2.8 million hectares of land in the Democratic Republic of Congo to plant oil palms.

Oil palm plantations are hugely lucrative. Palm oil is relatively cheap to produce. The trees also have an extraordinarily high oil yield - as much as up to six tons of oil per hectare each year. It's estimated that the same oil output from rapeseed, sunflower or soy would require ten times the acreage.

Oil palms don't require a lot of care, thus keeping labor costs low. A ton of palm oil currently costs about 320 euros ($434). Prices during the height of its boom were as high as 700 euros.

Between 1998 and 2007, Indonesia expanded its plantations from three to seven million hectares. And the country plans to extend that further to 20 million hectares by 2020.

Researchers Lian Pin Koh and David Wilcove from Princeton University have proven in their studies that more than half of Indonesia's plantations are located on land formerly covered by rainforests.

Oil palm plantations on the islands of Sumatra and Borneo are the homes of several endangered animal species. The orangutan has become a symbol of the fight against the erosion of rainforests in Indonesia.

In Malaysia, 9.3 percent of all jobs are found in the palm oil industry. The sector employs almost a million people and has an annual turnover of more than 8 billion euros ($11 billion). The palm oil industry accounts for seven percent of all Indonesian exports.

Who buys it?

Europe is one of the largest importers of palm oil. China, Japan and India are also big buyers. Germany is the world's fifth-largest importer.

Author: Oliver Samson (sp)
Editor: Jennifer Abramsohn