Sustainability of Palm Oil Production in Indonesia

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Sustainability of Palm Oil Production in Indonesia
Palm oil is the leading edible vegetable oil by production volume. It is an essential ingredient in the manufacture of a wide variety of products that are used globally every day, such as chocolate, soap, and cosmetics. It is also a common cooking oil in many countries, notably in Asia, and is used in other industries, including livestock and, increasingly, biofuels.
Palm oil is produced from the fruit of oil palm tree (Elaeis guineensis). Palm oil can be separated into a various distinct oils with different properties. Because of this versatility, palm oil has replaced animal and other vegetable oils to be used in a wide variety of products. Palm oil is also a very productive crop. The amount of oil produced per hectare per year, or the yield, is far greater than that of other vegetable oils. Best-in-class palm oil plantations can produce up to 10 times more oil per unit area than that of soybean or sunflower oil. The production costs for palm oil are also lower, mainly due to low labor costs in the countries in which oil palm trees are grown. Less fertilizer, pesticide, and fuel energy are needed in the cultivation and processing of palm oil.
In the past few years, palm oil production has sparked many contentious debates. On one hand, palm oil production has an important positive socioeconomic impact in the countries which produce it. On the other hand, palm oil production has a severe negative impact on the ecological sustainability. These positive and negative impacts are considered major issues in Indonesia, the world’s largest producer of crude palm oil.

Palm Oil Production in Indonesia
The versatility, high yields, and low production costs of palm oil are the reasons why i...

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... the large market size and the increase in demand, it is obvious that crude palm oil can be a significant source of economic benefits for Indonesia. The palm oil industry contributes to regional development. Palm oil represents a huge economic opportunity for the myriad numbers of smallholders, as more than 6.6 million tons of palm oil in Indonesia is produced by smallholders. The industry provides jobs for a large number of Indonesia’s rural population. It is estimated that in 2006 almost 2 million people worked in the Indonesian palm oil industry.
Palm oil offers Indonesian government a means to fight poverty. Penalizing palm oil expansion, therefore, may not be economically feasible. Instead, serious effort should be done for ensuring the sustainability of palm oil production while minimizing, or better yet, avoiding, the negative impacts of palm oil production.

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