Palm Oil Imports Disadvantage Developed Countries | Myths & Facts 2-06

FACTS – The benefits of Indonesia’s palm oil are not only enjoyed by the Indonesian people, but almost all the people of the world through that country’s palm oil exports. The main destinations of Indonesia’s palm oil exports are India, China, the European Union and other countries (Figure2.5).

Palm oil as a vegetable oil is available in sufficient volume globally and at competitive prices. This is why palm oil is consumed in almost every country in the world. The presence of palm oil also has reduced the problem of food-fuel tradeoff faced by developed countries including in the European Union. Based on an OECD analysis (2007), if the EU reduces 10 percent of itsfossil fuel consumption and replaces it with biofuels (as per the EU energy directive), the EU must convert 70 percent of its agricultural land into vegetable oil plantations.

Meanwhile, to substitute 10 percent of diesel with soy oilbased biodiesel, the United States must convert 30 percent of its agricultural land to soybean farming, which could disrupt the food security of the United States and the EU, even globally. With the availability of palm oil in the world, the program to substitute fossil fuel with biodiesel can be done in the EU and United States, without having to convert agricultural land.

This has been confirmed in the EU (Figure 2.6) where about 38 percent of EU palm oil imports are used for energy both biodiesel and electricity. The availability of palm oil in developed countries has also created economic benefits for importing countries. In the EU, for example, the economic benefits created by the annual consumption of palm oil raised the EU’s GDP by 5.7 billion euros, providing government revenues of 2.6 billion euros and creating employment opportunities for 117,000 people (Table 2.5).

Table 2.5: Economic benefits of using palm oil on the economy of the European Union