Palm Oil

The Oil Palm Tree

The oil palm tree (Elaeis guineensis jacq.) originates from West Africa where it grows in the wild and later was developed into an agricultural crop. It was introduced to Malaysia, then Malaya, by the British in early 1870’s as an ornamental plant. In 1917, the first commercial planting took place in Tennamaran Estate in Selangor, laying the foundations for the vast oil palm plantations and the palm oil industry in Malaysia. The cultivation of oil palm increased at a fast pace in early 1960s under the government’s agricultural diversification programme, which was introduced to reduce the country’s economic dependence on rubber and tin. Later in the 1960s, the government introduced land settlement schemes for planting oil palm as a means to eradicate poverty for the landless farmers and smallholders. The oil palm plantations in Malaysia are largely based on the estate management system and smallholder scheme.

Today, 4.49 million hectares of land in Malaysia is under oil palm cultivation; producing 17.73 million tonnes of palm oil and 2.13 tonnes of palm kernel oil. Malaysia is one the largest producers and exporters of palm oil in the world, accounting for 11% of the world’s oils & fats production and 27% of export trade of oils & fats. The industry provides employment to more than half a million people and livelihood to an estimated one million people.

Oil palm is a monoecious crop as it bears both male and female flowers on the same tree. Each tree produces compact bunches weighing between 10 and 25 kilograms with 1000 to 3000 fruitlets per bunch. Each fruitlet is almost spherical or elongated in shape. Generally, the fruitlet is dark purple, almost black and the colour turns to orange red when ripe. Each fruitlet consists of a hard kernel (seed) enclosed in a shell (endocarp) which is surrounded by a fleshy mesocarp.


Palm trees may grow up to sixty feet and more in height. The trunks of young and mature trees are wrapped in fronds which give them a rather rough appearance. The older trees have smoother trunks apart from the scars left by the fronds which have withered and fallen off.

Oil palm tree will start bearing fruits after 30 months of field planting and will continue to be productive for the next 20 to 30 years; thus ensuring a consistent supply of oils. Each ripe bunch is commonly known as Fresh Fruit Bunch (FFB). In Malaysia, the oil palm trees planted are mainly the tenera variety, a hybrid between the dura and pisifera. The tenera variety yields about 4 to 5 tonnes of crude palm oil (CPO) per hectare per year and about 1 tonne of palm kernels. The oil palm is the most efficient oil-bearing crop in the world, requiring only 0.26 hectares of land to produce one tonne of oil while soybean, sunflower and rapeseed require 2.22, 2 and 1.52 hectares, respectively, to produce the same.

Palm oil refining in Malaysia emerged in the country's industrial scene in 1974. Prior to this, only a few factories such as Lam Soon (M) Berhad, Lever Brothers (M) Sdn Bhd and Senawang Edible Oils Sdn Bhd, were refining some 10% of the country's total crude palm oil production. Most of the crude palm oil produced in the country were exported to industrialized countries like the EEC, USA, Japan and Australia.

The year 1974 marked the beginning of a succession of refineries which were set up throughout the country. Within two years, a total of 15 refineries were in operation, making Malaysia the largest palm oil refining country in the world. Currently, there are 50 refineries in operation. A majority of the operating refineries are in one way or another associated with the oil palm plantation and milling sectors, or both. Some of the refineries have also tied up with manufacturers of specialty products and oleochemicals. Today, more than three decades after the inception of the palm oil refining industry, refined and processed palm oil accounts for almost 85% of the total palm oil exports. The rapidly increasing palm oil refining and fractionation capacity consolidated Malaysia's position not only as a leading producer, but also as a major marketing factor in the international trade of oils and fats. This position had been achieved through, among other factors, the stringent observance of quality control and the capability of local refiners to meet the high standards demanded by world markets.

Much of the success of the industry was contributed by the fact that it was possible to open up new markets which were once dominated by other vegetable oils and fats. However, there is now a marked shift of concentration away from the industrialized countries to the non-traditional or developing countries such as India, Pakistan, China, Bangladesh, Egypt, Turkey and Saudi Arabia. Several Latin-American and African countries are also buyers of Malaysian palm oil.

The growth and development of the palm oil refining industry in Malaysia have helped palm oil to achieve worldwide acceptance. In terms of exports, palm oil/palm kernel oil is still the largest oils and fats traded in the world, accounting for about 60% (2008) of total exports. Malaysia continued to be the world's largest exporter of palm oil, accounting for about 46% (2008) of the world palm oil exports.

Most refiners in Malaysia are now members of The Palm Oil Refiners Association of Malaysia (PORAM). These refiners produce a wide range of processed palm oil products such as Refined, Bleached and Deodorised Palm Oil / Palm Olein / Palm Stearin / Cocoa Butter Equivalents / Substitute (Lauric /Non-Laurics), Cooking Oils (Pure Palm Olein, Blended or Polyunsaturated) and many others.