In the global context, palm oil faces challenges

The Amazon region has more than 31 million hectares suitable for cultivation
06 December, 2024

Among the most consumed foods in the world are vegetable oils, which provide essential fatty acids for the absorption of vitamins. The most widely consumed vegetable oil in the world is palm oil, popularly known as palm oil, which is used in various industries, including food, cosmetics, pharmaceuticals and biofuels, among others.

Currently, 88% of palm oil production is concentrated in Southeast Asia, in countries such as Indonesia, Malaysia and Thailand, according to the United States Department of Agriculture (USDA). The plant was first cultivated in Malaysia for ornamental purposes in 1,870 and had its first commercial production around 1,911 in Indonesia and 1,917 in Malaysia. Oil palm trees yield more oil per hectare than any other oilseed crop, but the growing demand for palm oil in recent decades has accelerated the deforestation of native forests in Asia, a common critical point in the cultivation carried out by the three global leaders, according to industry experts.

In recent years, the global context of palm oil production has been showing signs of scarcity. In October of this year alone, according to monthly data from the Malaysian palm oil industry, palm oil stocks fell by 6.32% compared to September, totaling 1.884 million tons. Production also fell by 1.35%, ending the month at 1.797 million tons. On the other hand, exports of the commodity rose by a significant 11% and imports of palm oil increased by 198%, the Malaysian Palm Oil Board (MPOB) reported on the 11th.

Recent studies also show that palm trees in Malaysia and Indonesia are getting older. A large part of the cultivated area is already at an advanced age, losing efficiency in fruit production and, in turn, in oil extraction, since the plant has productive capacity until its 30th year of life. Other factors responsible for the fall in palm oil production in these countries include a shortage of rural labour, low fertilizer application, climate impacts and the slow expansion of new plantations in the two main Southeast Asian countries.

Specific situations in these countries also impact the medium term: Indonesia is preparing to increase its biodiesel blend from 35% to 40%, requiring it to consume an additional 3 million tons of palm oil on the domestic market and reducing its export supply. B40 will increase Indonesia's use of palm oil for biodiesel to 13.9 million metric tons, compared to the 11 million tons estimated this year with B35, according to an estimate by the Indonesian Biofuel Producers Association (APROBI). Thailand, for its part, has banned palm oil exports until the end of this year in order to meet domestic consumption due to its low production.

And in this global context in which demand for palm oil needs to increase, Brazil can be a reference and contribute to the sustainable transformation of this sector. In the country, sustainable palm cultivation is an example that combines the recovery of the Amazon rainforest biome and degraded soil, accelerates carbon capture and fosters the generation of jobs and income for isolated communities. Its cultivation is perennial and keeps people in the countryside, promoting socio-economic development in the regions where it is grown, as well as following one of the strictest laws in the world, since the country prohibits the felling of native trees for its cultivation.

The plant can only be grown in degraded areas until 2007, in compliance with the Agroecological Zoning of Oil Palm, decree 7.172 of the Federal Government of May 2010. In addition, more than 31 million hectares in the Amazon region have been identified as suitable for growing the plant by the Brazilian Agricultural Research Corporation (Embrapa). Currently, the country ranks 10th among the largest producers of palm oil in the world, with around 300,000 hectares under cultivation and 85% of production concentrated in the state of Pará, according to the Brazilian Association of Palm Oil Products (ABRAPALMA).

And it is in this scenario, based on sustainable palm cultivation, that the business model developed by Grupo BBF (Brasil BioFuels), which since 2008 has been working to promote sustainable agriculture, palm oil extraction, biofuel production and renewable energy generation, fits in.

For the CEO of Grupo BBF Milton Steagall, palm cultivation reinforces the importance of sustainable development in the Amazon region. "Our country has the potential to be a global leader in palm oil production. We need to find ways to keep the forest standing, but also provide jobs, income and wealth for the population. We can do a lot to ensure that the world has enough sustainable palm oil to supply the various sectors of the economy," says the executive.

Currently, Grupo BBF has more than 75,000 hectares under oil palm cultivation in the states of Pará and Roraima, responsible for capturing around 800,000 tons of carbon annually, generating more than 4,000 direct jobs in five states in the northern region.

Once the palm seed is planted, the palm tree's entire life cycle begins, with fruit from the 4th year onwards - its production is continuous and perennial. After harvesting the bunches of fresh fruit, palm oil is extracted in the palm oil mills. Once the oil has been extracted, it is sold to various food production industries and used as the main raw material for biofuel production in the domestic market. Both palm oil biodiesel and the biomass resulting from the production process are used as biofuels by the company to generate renewable energy in isolated locations in the Amazon.

Grupo BBF has 25 thermal power plants in operation in the North, generating electricity for more than 140,000 residents served by the Isolated Systems. One of the highlights is the Baliza TPP - the first hybrid plant to combine vegetable oil and palm biomass - which has been operating since 2023, serving the population of Roraima - the only state in the federation not part of the National Interconnected System.

Faced with a challenging global scenario, Brazil could be one of the major players in the oil palm sector in the coming years, increasing its production capacity without cutting down a single tree in the native forest and making a significant contribution to supplying this growing global demand. "It's up to us, together, to overcome the diplomatic challenges and speed up access to capital so that it's possible to stimulate oil palm as an important commodity in sustainable Amazonian agribusiness to meet the high global demand and supply the vegetable oil market in the medium and long term. The Brazilian palm 'is' and 'will continue to be' the most efficient crop for decarbonizing various sectors of the economy," concludes Steagall.

About Grupo BBF

Grupo BBF (Brasil BioFuels), a Brazilian company founded in 2008, is the largest palm oil producer in Latin America, with a cultivated area of over 75,000 hectares and a production capacity of 200,000 tons of oil per year. The company is a pioneer in creating sustainable solutions for generating renewable energy in isolated systems, with thermoelectric plants powered by biofuels produced in the region. Its agricultural activity recovers areas that were degraded until 2007 in the Amazon, following the Oil Palm Agroecological Zoning (ZAE), approved by Decree 7.172 of the Federal Government, of May 7, 2010.

Grupo BBF has developed an integrated business model in which it operates from the beginning to the end of the value chain, from sustainable oil palm cultivation, crude oil extraction, biofuel production, biotechnology and renewable energy generation. Grupo BBF 's operations are located in the states of Acre, Amazonas, Rondônia, Roraima and Pará, comprising 25 thermoelectric plants in operation, 3 oil palm crushing units and a biodiesel industry.

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