Key Takeaways
- Malaysian palm oil supplies a significant share of global vegetable oil demand while using a relatively small portion of agricultural land.
- Malaysia maintains production on 5.7 million hectares, prioritizing yield improvements over land expansion.
- The mandatory MSPO certification now covers 90% of planted areas, including 85% of independent smallholders.
- Palm oil imports in major MENA countries increased from 3.2 million tonnes in 2020 to 4.3 million tonnes in 2025.
- Malaysia is strengthening traceability, digital systems, and regulatory alignment to maintain access to global markets.
As global demand for food continues to rise, vegetable oils remain a central component of food manufacturing, foodservice, and household consumption. Palm oil, including Malaysian palm oil, plays a vital role in the global supply of edible oils, particularly in regions that rely heavily on imports.
Malaysian Palm Oil and Global Food Supply
Palm oil accounts for approximately 36% of global vegetable oil supply while using about 0.5% of total agricultural land. According to United Nations estimates, global food production may need to increase by roughly 50% by 2100 to meet the needs of a growing population. In this context, yield per hectare has become an important measure of agricultural efficiency.
“Oil palm is the world’s most efficient vegetable oil crop,” said Ms. Belvinder Sron, Chief Executive Officer of the Malaysian Palm Oil Council (MPOC). “Replacing palm oil with other vegetable oils would require four to 10 times more land.”
Regions such as Sub-Saharan Africa, South Asia, and the Middle East and North Africa (MENA) depend on imports to meet domestic oils and fats demand. Malaysian palm oil forms part of that supply base, contributing to price stability and availability.
Managing Demand Without Expanding Land Area
Global consumption of oils and fats increased from approximately 204.6 million metric tonnes in 2015 to around 266.6 million metric tonnes in 2025. Over the same period, Malaysia’s palm oil production rose modestly from 19.96 million to 20.3 million metric tonnes.
Malaysia’s planted area has remained stable at about 5.7 million hectares. Industry growth strategies now focus on replanting, improved planting materials, mechanization, automation, and digital tools aimed at increasing productivity within existing land boundaries.
“Malaysia’s future palm oil growth will be driven by productivity gains rather than land expansion,” Sron stated.
Certification, Traceability and Sustainability Measures
Malaysia’s Malaysian Sustainable Palm Oil (MSPO) certification scheme is mandatory and currently covers about 90% of planted areas, including 85% of independent smallholders. In January 2025, MSPO 2.0 became mandatory, introducing a ‘No Deforestation’ cut-off date of 31 December 2019 and enhanced traceability requirements.
“Our eMSPO traceability system tracks palm oil from plantation to product with plot-level precision,” Sron said, noting its relevance for compliance with international regulations such as the EU Deforestation Regulation (EUDR).
Beyond plantation management, the sector also utilizes palm biomass and by-products. Palm oil mill effluent (POME) is used for biogas generation, and certain mills supply excess electricity to the national grid.
Role in MENA and the UAE
Palm oil imports by nine major MENA countries increased from approximately 3.2 million tonnes in 2020 to 4.3 million tonnes in 2025. Malaysia has expanded exports to the region during this period.
“Malaysia’s palm oil industry aligns closely with the UAE’s National Food Security Strategy by providing a reliable, scalable and cost-effective source of essential food ingredients,” Sron said.
Malaysia’s integrated supply chain infrastructure supports refined palm products used in bakery, confectionery, and packaged food applications.
Malaysian Palm Oil Outlook for the Next Decade
Looking ahead, the Malaysian palm oil sector expects increasing emphasis on measurable sustainability outcomes, including carbon management, biodiversity protection, and social compliance. Digital traceability systems and stronger governance frameworks are being developed to meet evolving regulatory and market expectations.
“Over the next decade, Malaysian palm oil will evolve beyond its traditional role as a commodity supplier to become a strategic partner in advancing sustainable and resilient global food systems,” Sron said.
As food security concerns, regulatory standards, and supply chain requirements continue to evolve, Malaysian palm oil remains part of the broader discussion on balancing agricultural productivity with environmental and market expectations.
