ASEAN: Regional Trends in Economic Integration, Export ... - USITC

the tree produces its fruit in bunches over a lifespan of 20–25 years. 5 Eight to 12 bunches
are cut from the tree annually 6 and undergo the initial stages of processing, including
steaming the fruit, stripping the fruit from the bunches, and extracting and purifying the
fruit pulp, at mills usually located on or very near the plantations or small farms
(fig. 8.1). 7 This process, which produces the crude palm oil, begins within 24 hours of
harvesting under the best circumstances, as the fruit begins to degrade quickly once cut
from the tree. 8 The crude palm oil is then refined immediately nearby or transported to a
refinery for refining. Many ASEAN countries refine various crude vegetable oils,
including palm oil, and agricultural products at the same refinery. Refined palm oil can
be consumed as cooking oil or used in a variety of processed food products or in the
chemicals or personal care products industries.
FIGURE 8.1 Palm oil production chain
Plantation
(growing / harvesting)
Fruit
Mill
(sterilizing / threshing /
extraction / purification)
Crude palm oil exports
Crude palm oil
Refined palm oil exports
Source: Compiled by USITC staff.
Refinery
(fractionation /
bleaching /
deodorization)
The equatorial climate is one of the most defining characteristics of oil palm tree growth,
with the requirements of high temperatures, generous rainfall, and fertile soil naturally
limiting the regions that can grow oil palm trees. Beyond 10 degrees latitude north or
south of the equator, palm oil production is not commercially viable. 9 Nearly all of
Indonesia’s and Malaysia’s land area devoted to oil palm tree production is located
within this equatorial range, while Burma, Laos, and Cambodia lie wholly outside it;
elsewhere in ASEAN, only the southernmost portions of Thailand and the Philippines lie
within this range. 10 Efforts to create a type of oil palm tree that would be commercially
5 Smallholders account for less than one-third of the planted area in Indonesia and Malaysia. Biodiversity
and Agricultural Commodities Program (BACP), “Market Transformation Strategy for Palm Oil,”
May 1, 2008, 15–16.
6 American Palm Oil Council (APOC), “Palm Oil: Gift to Nature, Gift to Life,” n.d.
7 Basiron, “Palm Oil Production through Sustainable Plantations,” 2007, 290.
8 Government official, telephone interview by USITC staff, April 16, 2010; Southern Group,
“Manufacturing: Palm Oil Mill”; Agriprods.com, “Anglo Eastern Plantations PLC.”
9 USITC, hearing transcript, February 3, 2010, 35–36 (testimony of Rosidah Radzian, Embassy of
Malaysia).
10 A small portion of southern Vietnam is located between 9 and 10 degrees north latitude; Indonesian
sources indicate that the Vietnamese are trying to grow oil palm commercially despite the less-than-favorable
conditions. Palm production in the Philippines is also reportedly hindered by soil conditions. Industry
representatives, interview by USITC staff, Jakarta, Indonesia, March 2, 2010.
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