Manya Rathore
Research expert covering India
Palm oil industry in Malaysia - statistics & facts
Whether it’s in food, cosmetics, or biofuels, palm oil has proven to be the world’s most used edible oil. In 2024, global consumption of palm oil reached nearly 78 million metric tons. Nevertheless, the Malaysian palm oil industry has been facing several challenges recently, for example, changing weather patterns or a growing awareness of the environmental impact of palm oil monoculture.
Another long-term challenge facing the Malaysian palm oil industry is harder to control. Changing weather patterns in recent years have impacted the production of palm oil. Malaysia had to deal with the dry El Niño cycle since mid-2023 and an extreme heatwave in early 2024. This could negatively affect palm oil yields in Malaysia, which have decreased since 2020.
Despite the threats of climate change, which could affect production volume, Malaysia is still in the position to fulfill global demand for the most used oil. Moreover, with growing sustainable palm oil industry, the country will be able to address environmental concerns of palm oil production.
Malaysia’s role in the global palm oil trade
Malaysia is the second leading producer of palm oil worldwide, supplying around a third of the world’s palm oil. Palm oil is one of Malaysia’s primary industries, contributing 3.7 percent to its overall gross domestic product (GDP). Production is concentrated in Peninsular Malaysia, where more than half of all palm oil planted areas are found. The largest single export markets for Malaysian palm oil were India and China, while the countries of the European Union (EU) made up its largest import region. ÂRecovery of the Malaysian palm oil sector in the post-pandemic world
The palm oil industry in Malaysia was heavily affected during the COVID-19 pandemic. Many businesses that require palm oil, like restaurants or food manufacturing, came to a halt. Malaysia saw a decrease in its palm oil export volume in 2021. Nevertheless, with businesses running as usual and an increase in crude palm oil price in 2024, Malaysia has seen significant improvements in its palm oil industry.Long-term challenges to the Malaysian palm oil sector
The palm oil sector is also facing a long-term decline in exports of Malaysian palm oil to the EU, one of its largest export markets. This is a result of the EU’s Renewable Energy Directive recast, RED II, which phased out the use of palm oil as a biofuel source due to environmental concerns. Even so, with a forecasted increase in global consumption of palm oil this year, the decline in exports to the EU could be offset elsewhere, particularly in the Asian market.Another long-term challenge facing the Malaysian palm oil industry is harder to control. Changing weather patterns in recent years have impacted the production of palm oil. Malaysia had to deal with the dry El Niño cycle since mid-2023 and an extreme heatwave in early 2024. This could negatively affect palm oil yields in Malaysia, which have decreased since 2020.
Despite the threats of climate change, which could affect production volume, Malaysia is still in the position to fulfill global demand for the most used oil. Moreover, with growing sustainable palm oil industry, the country will be able to address environmental concerns of palm oil production.
