Palm Oil Market Shifts Away from Sustainability

The global palm oil market is shifting away from sustainability, according to a new report from management consultancy NewForesight. The study found that demand for palm oil is moving towards markets that prioritize price over sustainability credentials.

Indonesian palm oil consumption has increased by 39% between the 2019 and 2020 season and the 2024 and 2025 forecast, driven largely by biodiesel and industrial use. In contrast, consumption in the European Union and China has fallen significantly, with a 44% decrease in EU consumption and a 31% decrease in Chinese consumption.

The result is a two-tier market, where traceable, certified supply is concentrated among a shrinking pool of sustainability-sensitive buyers, while a larger share of volume flows towards markets that prioritize price. The report notes that 5.2 million tonnes of certified palm oil were sold in 2024 without any sustainability claim attached.

Smallholder farmers are being left behind due to their inability to meet certification requirements. They account for an estimated 35-40% of global palm oil production but supply only 8% of certified palm oil.