Latin America Palm Oil  Market Size (2024-2030)

The Latin America Palm Oil Market was valued at USD 8.47 billion and is projected to reach a market size of USD 9.77 billion by the end of 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of  2.06%. 

An edible vegetable oil called palm oil is produced from the mesocarp of oil palm fruit. The oil is utilized mainly for the production of food, cosmetics, and biofuel. Latin America saw a growth in palm oil during the early 2000s owing to economic improvements and stability. In the present, this market has expanded significantly. This is because import-export trade activities that are carried out help in revenue generation. In the future, this market is set to develop tremendously. This is possible by focusing on sustainable methods, and technological advancements, and adhering to the necessary regulatory changes. During the forecast period, this market is set to see considerable growth.

Key Market Insights:

In Latin America, approximately 470,000 hectares of area were planted with oil palm trees as certified by the RSPO.

As per a November 2020 report, Colombia’s production of certified sustainable palm oil increased by five percent, reaching 406,000 tons (27 percent of all palm oil produced)

In 2016, the total palm oil market revenue value amounted to four billion U.S. dollars and it was expected to rise to about 5.2 billion U.S. dollars by 2021.

Latin America Palm Oil Market Drivers:

The creation of employment opportunities is contributing to the market success.

Palm oil production provides jobs to many farmers as their only income. Millions of farmers depend on this cultivation to run their households. To support this, the Latin American Government has invested in various schemes, training programs, campaigns, and other initiatives. Companies are also focusing on technological advancements to aid the farmers. Secondly, palm use is extensively used in the food and beverage industry, especially in manufacturing units.  They act as stabilizers and help in maintaining the taste as well as consistency in processed foods. Thirdly, it's a common ingredient in cleaning products and personal care items, acting as the foaming agent in almost all soaps, shampoos, and detergents. Over 70% of personal care products, such as soap, shampoo, cosmetics, and lotion, include palm oil as a main component. Furthermore, import-export trade is carried out in European countries, the United States, Canada, and other Asian countries. This helps in creating numerous occupational opportunities. All these opportunities make this an attractive choice owing to revenue generation.

Increasing demand for biofuel is helping the market to develop.

Palm oil meets the standard regulation set by the European Union. They are mainly used in biodiesel due to their low FFA content which is 0.1% -0.5%which helps minimize the impact of saponification. Additionally, they have a very low carbon residue making them a suitable choice. They are used due to their eco-friendly nature in place of crude oil.

The favorable climate in Latin America is paving the way for the market to grow.

Countries like Colombia, Peru, Brazil, etc., have tropical and sub-tropical weather conditions. Along with this, many areas and lands have the right rainfall as well as altitude which is essential for the crops to grow. Besides, there are many technological advancements which include weather monitoring devices, irrigation facilities, pumps, etc., in these areas. Companies have shown a good involvement in facilitating support towards having a strong economy. 

Palm Oil Market Restraints and Challenges:

Environmental issues, health concerns, compilation to standards, and costs are the main hindrances that the market is currently experiencing.

Palm oil cultivation is often associated with a lot of environmental concerns. It can lead to deforestation, carbon dioxide emission, global warming, and forest fires. Additionally, a lot of chemicals and pesticides are used to double the production and the speed. This causes a huge impact on disrupting the ecosystem balance. It leads to the prevalence of allergies and other chronic illnesses in humans and kills aquatic life. Secondly, many studies have found the impact it can have on human health. It contains heavy amounts of saturated fats leading to cardiovascular diseases and cholesterol. Apart from this, it can cause obesity. Thirdly, due to damage to the environment, many organizations issue quality checks and sustainability certificates. Many people can ignore this due to the heavy costs and can produce faulty documents. Furthermore, due to the recent inflations, sourcing of seeds, land availability, cultivation, maintenance, reaping, and commercializing can be a huge barrier to local and other small farmers.

Palm Oil Market Opportunities:

Technological adoption has been providing the market with an ample number of opportunities. This includes drones, satellite-based pieces of equipment, GPS-guided systems, precision agricultural techniques, data analytics tools, and other IoT sensors. Through this the farms are constantly monitored, soil condition is improved, irrigation is achieved, and labor costs are reduced. Secondly, Latin America is focusing on the global expansion of these crops. As per a report, this accounts for 6.2% of the total global production. Organizations have been working towards expanding their farms, producing organic crops, and obtaining sustainability certifications. Moreover, research and developmental activities are being carried out by prestigious universities to improve the yield and enhance crop growth.

LATIN PALM OIL MARKET REPORT COVERAGE:

Palm Oil Market Segmentation:

Palm Oil Market Segmentation: By Nature

• Organic
• Conventional

Based on nature, the conventional segment is the largest and fastest growing in the market holding a share exceeding 85%. This is because of lesser cost, higher yield, lesser time for cultivation, demand, accessibility, and availability of raw materials. However, with the ongoing health and wellness trends, the demand for organic crops is expected to see an upsurge during the forecast period.

Palm Oil Market Segmentation: By Product Type

• CPO
• RBD Palm Oil
• Palm Kernel Oil
• Fractionated Palm Oil

Based on product type, fractionated palm oil is the largest segment in the market with an estimated share of around 40%. This is because of its cost-effectiveness, availability, and accessibility. This makes it an apt choice to be used in developing and other under-developed countries of Latin America. However, CPO (Crude Palm Oil) is the fastest growing with an approximate share of 25%. This is because of its longer shelf life and higher yield. Industries like food and beverage, cosmetics, and pharmaceutical have started to adopt this oil for their activities.

Palm Oil Market Segmentation: By End-User:

• Food and Beverage Industry
• Personal Care and Cosmetics
• Pharmaceuticals
• Biofuels and Energy Sector
• Others

Due to the widespread use of palm oil as a food component, the food and beverage industry is the largest end user in this market holding a total share of around 65%. Palm oil is employed in cooking for frying, sugar confectionaries, shortening, and as an oil product to make chips, fried items, and other foods. Additionally, it acts as a preservative and prevents the food from spoiling along with maintaining the shelf life. The biofuels and energy sector is the fastest growing. Numerous projects are being undertaken using palm oil. As a fuel substitute, palm oil has gained prominence for its usage in biofuels due to its advantages. A variety of laws and regulations are being put into place to encourage a more sustainable way of life.

Palm Oil Market Segmentation: Regional Analysis:

• Colombia
• Brazil
• Argentina
• Chile
• Rest of Latin America

Based on region, Colombia is the largest growing in the market. This region holds a rough share of around 35%. This is due to favorable weather conditions, technological advancements, the presence of key players, investments, economic development, population, and demand. Brazil is the fastest growing owing to rising adoption, expansion of the food and beverage sector, demand, increasing cultivation, Governmental support, emerging companies, and economic stability. Brazil holds a share of approximately 23%.

COVID-19 Impact Analysis on the Latin America Palm Oil Market:

The outbreak of the virus hurt the market. Lockdown, movement restriction, and social isolation were the new norm. This led to disruptions in supply chain, transportation, and logistics. Import export trade was affected by this causing an economic downfall. There was a lack of labor as well. Investments were being prioritized towards vaccine development, COVID kits, and other healthcare applications. Moreover, the pandemic highlighted the importance of having good health. Palm oil being linked with heavy fats was avoided. People started leaning towards healthier alternatives. Furthermore, palm oil is used in the cosmetics industry. However, there were very few shows, functions, events, marriages, and other social events that affected the market for palm oil. However, the market has started picking up steadily. A research article predicted that palm oil operation normalcy was around 65% during the latter half of 2020 and the start of 2021.

Latest Trends/ Developments:

The companies in this market are motivated to achieve a higher market share by implementing different strategies, such as acquisitions, partnerships, and investments. Companies are also spending heftily to improve existing crops and technologies alongside maintaining competitive pricing.

Recent trends in the market include the cultivation of organic crops. This uses no pesticides or other chemicals. The environment is not damaged due to these crops and studies have shown that organic crops tend to contain more nutritional content. Besides, since there is an increasing demand for these food crops, farmers can get greater profits assisting the market to enlarge.

Key Players:

1. Corporación Dinant
2. Agropalma
3. Grupo Palmas
4. Cargill
5. Unilever
6. Oleoestepa
7. Grupo Oleoplan
8. Grupo Jaremar
9. Grupo Agroindustrial Tuman
10. AgroAmerica

• In June 2023, Solidaridad, in collaboration with AAK, is working together in Mexico’s palm oil sector to understand current living conditions among smallholders and improve environmental conditions. This partnership will enable AAK, a global leader in plant-based oils, to improve its practices and incorporate new methodologies into its sustainability program.
• In October 2022, Cargill and Solidaridad partnered with farmers to advance action on climate, land use, and livelihoods in soy and palm oil supply chains
• In June 2021, RSPO Latin America signed two key Memoranda of Understanding (MoU) with the palm oil federations of Mexico and Guatemala, the Mexican Federation of Oil Palm Producers (FEMEXPALMA) and the Guild of Palm Growers of Guatemala (GREPALMA), aiming to jointly align strategic efforts by defining common objectives, identifying high impact projects, and fulfilling commitments effectively.