In a bid to guarantee supplies, edible oil companies have joined forces to create a new organisation, the Roundtable on Sustainable Palm Oil (RSPO), whose principal objective is to promote the growth and use of sustainable palm oil through co-operation within the supply chain and open dialogue with stakeholders.
The UK's Food and Drink Federation, that represents the £69 billion the food and beverage industry, this week showed support for the draft criteria set out by the RSPO.
"We actively encourage our member companies to participate in the RSPO process. We believe it is an excellent basis on which to work to achieve more sustainable palm oil production," said the UK group.
Palm oil is currently enjoying strong appeal as an ingredient in a wide range of foods: linked to the fact the oil is free of artery-clogging trans fats, formed when fats are hydrogenated to make them more solid and extend their shelf life. Because palm oil is semi-solid naturally, it does not require hydrogenation.
Mounting evidence suggests the TFAs raise LDL (bad) cholesterol levels, causing the arteries to become more rigid and clogged. An increase in LDL cholesterol levels can lead to heart disease, the number one global killer.
As a result, food makers are turning to alternatives to use in their recipes, in turn pushing up demand for the commodity.
In addition, the oil also continues to benefit from a growing awareness of the health properties of the antioxidant-rich oil.
Although widespread commercial plantings only began in the 1990s, Malaysia is now the world's largest producer of palm oil, with Indonesia coming up as a close second. Last year Malaysia produced 14 million tons and Indonesia 11 million, on a global total of 30 million tons.
Josh Dadd, an economist at the UK Home Grown Cereals Authority (HGCA), recently told FoodNavigator.com that in previous weeks prices for palm oil have fallen steadily, due to the sheer volume of vegetable oils on the market at the moment.
The oil is now trading at around the $370 a ton, mark compared to about $470 (€359) a ton for soy oil.
Food firms are looking to cash in on the growing popularity of palm oil. A new palm oil plant - the biggest in Europe - is due to open in the Dutch port of Rotterdam in mid 2005, owned and operated by former Unilever subsidiary Loders Croklaan.
Now the property of Malaysian palm plantation owner IOI, Loders said it hoped to process 2,500-3,000 tons of palm a day.