Palm Oil Market to Surpass USD 88.84 Billion by 2033, Backed by Versatile Applications and Expanding Emerging Economies

Palm Oil Market Analysis

The palm oil market is projected to grow at a compound annual growth rate (CAGR) of 4.23% from 2025 to 2033, from US$ 61.19 billion in 2024 to US$ 88.84 billion by 2033. Some of the main drivers propelling market expansion include rising product diversity and application, population growth, economic development, the expansion of the middle class in emerging nations, the cost-effectiveness of palm oil production, and rising awareness of the health advantages of these products.

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Palm Oil Market Overview

The palm oil market is one of the world's most widely consumed vegetable oils. Palm oil is edible and is commonly used in processed foods like chocolate, biscuits, margarine, frozen desserts, and frying fats. It contains both saturated and unsaturated fats and has antioxidant properties. One of the main advantages of palm oil is its affordability, along with its applications across various industries, including food and beverage, cosmetics, and pharmaceuticals. Additionally, the industry's demand is being driven by increased knowledge of the health benefits of palm oil.

Additionally, the production of palm oil, which involves many workers, smallholders, and households worldwide, improves job prospects in rural areas. However, palm oil cultivation can also have significant social and environmental impacts, such as deforestation, habitat endangerment for various species, soil erosion, and other related challenges. To address these issues, many NGOs and environmental advocates raise awareness about the problems associated with unsustainable palm oil production and promote more sustainable practices.

Key information covered in the report

Base Year - 2024
Historical Period - 2021-2024
Market Forecast - 2025-2033
Market - US$ Billion

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For example, in January 2023, the World Wildlife Fund (WWF), a Swiss-based international NGO, partnered with Beiersdorf AG, a German multinational company, to support conservation efforts in West Kalimantan, Indonesia. This partnership aims to prevent the conversion of natural forests by encouraging sustainable palm oil cultivation.

Government initiatives also play a crucial role in supporting the palm oil market. A notable example is India's National Mission for Edible Oils - Oil Palm (NMEO-OP), which was launched to promote oil palm cultivation. The mission has set an ambitious target of producing 1.12 million tonnes of crude palm oil by 2025-26. Out of a national budget of INR 11,040 crore allocated for promoting oil palm, INR 5,870 crore is designated for the North-Eastern Region (NER), with the central government covering 90% of the costs. This initiative aims to benefit palm oil farmers by increasing capital investments and creating job opportunities, paving the way for significant growth in the sector in the coming years.

Palm Oil Market Trends

Growing Demand for Fortified Palm Oil

Fortified palm oil is enriched with essential vitamins such as A and D, which are crucial for overall health. As consumer preferences shift towards healthier food options, the demand for fortified palm oil is rising. By fortifying cooking oils, consumers can increase their intake of vitamins A and D by 25% to 30% more than the recommended levels. Several countries have initiated large-scale programs to promote the fortification of staple foods, especially oils, in response to heightened public awareness about health. According to market forecasts, government authorities are recognizing the importance of food fortification and its potential to support international nutrition goals, thereby boosting the palm oil market share. For example, in 2021, the Food Safety and Standards Authority of India (FSSAI) proposed making the fortification of cooking and edible oils with vitamins A and D mandatory to strengthen immunity and address malnutrition, particularly micronutrient deficiencies. Additionally, a number of palm oil producers are investing in the creation of nutritionally enhanced palm oils and implementing sustainable methods. In October 2023, for example, KTC Edibles, the biggest edible oil supplier in the UK, introduced Planet Palm, a new line of certified sustainable, traceable, and ethically sourced palm oil products targeted at UK food producers. Similarly, in September 2021, BASF West Africa partnered with EDCEL Limited to introduce a Vitamin A premix for edible oils. These initiatives are expected to drive sales and revenue in the palm oil market in the coming years.

Expanding Food and Beverage Industry

Because of its many uses, such as its neutral flavor, high smoke point, and remarkable oxidative stability, palm oil is widely utilized in the food and beverage industry. The market for palm oil has a lot of potential due to the expansion of the food and beverage industry. As this sector grows, more palm oil is produced worldwide to keep up with the rising demand. For example, Indonesia, the leading producer of palm oil, reported a production volume of 45.5 million metric tons for the 2022-2023 period. Additionally, the rising use of palm oil in the production of processed and ready-to-cook meals, such as instant noodles and frozen snacks, positively influences the outlook for the palm oil market. The increasing preference for convenient food options, driven by busy lifestyles, is expected to further boost market growth.

Increasing Production of Biofuel

Palm oil serves as a key feedstock for biofuels, especially biodiesel. Palm oil-based biodiesel is a renewable energy source that helps reduce reliance on fossil fuels, contributing to energy security and the diversification of energy sources. Governments of various nations are encouraging the use of biofuels as alternatives to fossil fuels, which enhances the demand for palm oil, particularly in regions with biofuel mandates and incentives. For instance, India's Ministry of Petroleum and Natural Gas introduced its "National Policy on Biofuels" in 2018, later amending it in June 2022. This policy aims to decrease the import of petroleum products by promoting domestic biofuel production. In line with this, many biofuel manufacturers are increasingly investing in expanding their operations, creating a positive outlook for the overall market. For instance, Eni Kenya B.V. started producing its first vegetable oil for bio-refineries in July 2022 after finishing the construction of an oilseed collecting and pressing plant (agri-hub) in Makueni, Kenya. With a 15,000-ton capacity, this agri-hub is projected to produce 2,500 tons in 2022. Various government initiatives to promote bio-based products like palm oil are anticipated to enhance the palm oil market size in the coming years.

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Will Increasing Demand for Edible Oils Drive the Palm Oil Market?

The growing demand for edible oils is a significant driver of the palm oil industry, with palm oil being one of the most versatile and cost-effective cooking oils available. The increase in the worldwide population, along with changing dietary habits and a preference for processed foods, has led to a rise in edible oil consumption. Palm oil's unique properties, including its stability at high temperatures and long shelf life, make it a favored choice among consumers and food manufacturers, contributing to its expanding market share.

In June 2023, the Malaysian government announced a $200 million initiative aimed at increasing sustainable palm oil production to meet both domestic and international demand. Reflecting this rising trend, both governments and companies are making significant investments in palm oil production. For example, in July 2023, Cargill announced plans to develop its palm oil processing facilities in Indonesia, with the goal of enhancing supply capacity while adhering to sustainability standards. These initiatives underscore the strategic importance of palm oil in the global edible oil market and demonstrate a commitment to meeting the growing consumer demand.

Latest News and Developments:

January 2025: Hindustan Unilever Limited (HUL) has approved the acquisition of Vishwatej Oil Industries' palm operation in Telangana. This acquisition supports HUL's strategy to localize palm production, reduce import dependence, enhance supply chain resilience, and contribute to India's National Mission on Edible Oils by promoting sustainable farming practices.

July 2024: The Roundtable on Sustainable Palm Oil (RSPO) and the Indian Vegetable Products Association (IVPA) signed a Memorandum of Understanding (MoU) to promote sustainable palm oil cultivation and imports in India. With India importing 9 million tonnes of palm oil annually, the focus is on raising awareness, advocating for policy changes, and increasing domestic production under the National Mission on Edible Oils - Oil Palm (NMEO-OP). As a result, RSPO membership in India grew by 20%, reaching a total of 118 entities.

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