Demand for Sustainable Palm Oil Will Double in Five Years – Rabobank

In order to meet demand from food and consumer goods manufacturers, suppliers of palm oil are sourcing increasing volumes of sustainable palm oil.

In a recent report titled, Many Flavors of Sustainable Palm Oil, Rabobank estimates that global demand for palm oil certified as sustainable by the Roundtable on Sustainable Palm Oil (RSPO) will double in the next five years, from 5.3 million tons in 2014 to 11 million tons, or 15% of total global demand, by 2020.

“Many industry players are committing to sustainable palm oil in response to increasing calls from consumers across the globe,” says Rabobank analyst Pawan Kumar. “Numerous buyers of palm oil have already adopted the sourcing criteria developed by the Roundtable on Sustainable Palm Oil (RSPO).”

Rabobank also foresees the trend to bring about more opportunities for niche players and suppliers that can establish vertically integrated supply chains and can specialize in highly transparent palm oil supply systems. The specialized, small volumes obtained through a strict framework of criteria will preclude economies of scale, and therefore will result in premium prices for such specialized oil.

Rabobank goes on to state that other commodity and oilseed markets, such as sugar and soybeans, should watch the shifts occurring in sustainable palm oil as their sectors are beginning to show signs of following the same path toward higher demand for sustainability.

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