Economics of palm oil

Palm Oil from the Palm tree is a popular crop in Malaysia and Indonesia. One in which they are clearing thousands of hectares of natural vegetation for, increasingly year after year. Palm Oil is used in cosmetics and is especially good in cooking, as it is allegedly healthier with a high smoking point. Palm Oil is also used as biofuel to replace fossil fuels. There is strong steady demand for Palm Oil worldwide.

Here are some figures to dwell upon, that I sourced through a contact in the Industry.

1 Hectare for planting Palm Oil can be bought for as little as 1000RM.

150 Palm Oil trees can be planted on 1 Hectare.

It takes 3 years for a Palm Oil tree to start producing its crop.

Each tree can produce more than a metric ton a year.

Each metric ton is worth about 2500RM in markets today, meaning that a single Palm tree makes about 3000RM a year.

So for each hectare, with 150 trees producing upon it, you can be generate 3000*150=450000RM a year, that's about 90000GBP.

That's a lot of money and therefore will be profound in Malaysia and Indonesia.


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