Green Clean Agricultural Industry - Crisis Scenario

Joanne Cabaero and group under PMBA created crisis scenario and contingency planning proposals for the palm oil industry.

1. Ai Ling | Christina | Joanne | Joel | Prateek | Razif | Sai Ram​
Group 8
A World Without Palm Oil​
Crisis Scenarios & Contingency Planning in the Palm Oil Industry​

2. Agenda
Focal Issue or Decision1.
2. Key Forces in the Environment
3. Driving Forces
4. Scenario Framework
5. Implications and Options
6. Signposts and Indicators
7. Contingency Planning

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4. How can palm oil industry sustain in the next 50 years?
Key Issue

5. 70% of total palm oil
demand is used in
food products where
palm oil is a key
ingredient​
Palm oil is the most efficient
and consumed vegetable oil
85% of palm oil is produced by Malaysia & Indonesia

6. Global demand forecast for palm oil
to quadruple to 264–447 million MT (5.1% CAGR) by 2050​
The global palm oil market size was valued at USD 67.3 billion in 2022 and is expected to expand at a
compound annual growth rate (CAGR) of 5.1%​
Revenue forecast in 2050: USD $280 billion​

7. Key Stakeholders in Palm Oil Value Chain

8. WHAT
IF?

9. Potential Issues

10. Key Forces
in Environment

11. Macro Conditions
Economic
Palm oil is an incredibly efficient
crop, producing more oil per land
area than any other equivalent
vegetable oil crop ​
Social
The international Roundtable of
Sustainable Palm Oil (RSPO) label
is intended to guide consumers
toward more sustainable palm oil
product purchases
In 2022, Indonesia bans
palm oil exports as global
food inflation spikes​.
Political
Global warming and burning of
forests to clear lands for
agriculture created huge clouds of
smoke and haze across parts of
Southeast Asia.
Innovations in agricultural practices,
processing techniques, and yield
improvement technologies can boost
productivity and efficiency in the palm oil,
and even alternative products​
Continuing responsibility to
produce palm oil that is free of
forced labour (fair wages, no
excessive overtime and proper
working and living conditions)​
Environment​ Technology Human Rights​

12. Increasing Global Demand​
Key Driving Forces
Increasing Consumer
Awareness and Preferences​
Change in Government
Regulations​
Climate Change ​
(Drought/ Flood)​
Technological
Advancements​
Potential Labour Strike/
Protest​
Mandatory Sustainability
Reporting​
Sustainable Finance​ Deforestation/ Forest Fire​
Price Competitiveness​ Potential Substitute
Products​

13. Uncertainties
High Demand: The demand for palm oil is
strong, and it is widely used in various
industries and consumer products.​
Low Demand: The demand for palm oil is
limited, either due to consumer preferences
shifting away from palm oil or the emergence
of alternative products.
Demand for
Palm Oil
Government
Regulations
Lenient Regulations: Regulations related to
palm oil production, trade, and environmental
impact are relatively lax, providing fewer
restrictions and incentives for sustainable
practices.​
Strict Regulations: There are stringent
regulations on palm oil production and trade,
aimed at promoting sustainability, protecting
the environment, and ensuring ethical
practices.

14. MONITOR & IMPROVE
FOCAL ISSUE: How can palm oil industry sustain in the next 50 years?
GREEN PIVOT
MARKET SHARE WAR DEATH OF PALM OIL
In this scenario, the palm oil businesses remain
winners as the top source demanded by big
conglomerates and retailers globally and
continue its normal production practices with
regulations not being strict. ​
In this scenario, the palm oil businesses are growing
significantly but criticized by several sustainability
groups inc. WWF. Government laws are highly
implemented on free-deforestation products towards
sustainability goals.​
In a scenario with low demand and lenient regulations,
we expect to have growing number of substitutes
resulting to lower demand in palm oil. With lenient
regulations, labor and environmental issues may
continue.​
​
In this scenario, the palm oil businesses are threatened
by disruptors and highly facing challenges in meeting
sustainability mandates resulting in further low palm
oil demand. Increasing transparency is required by
bodies including RSPO and ISCC.​
​
DEMAND
REGULATIONS
High
High
Low
Low

15. MONITOR & IMPROVE
FOCAL ISSUE: How can palm oil industry sustain in the next 50 years?
GREEN PIVOT
MARKET SHARE WAR
DEATH OF PALM OIL
DEMAND
REGULATIONS
High
High
Low
Low
Implications​
Continued high revenues​
Market volatility​
Social issues​
Implications​
Market share lost to substitutes
Changing consumer preferences, such
as a move towards plant-based diets ​
Advancements in food technology
that offer better alternatives​
More smallholders across the world
who need not rely on scale to profit​
Implications​
Strict regulation push palm oil producers to
adopt sustainable practices​
Requires significant investments in green
technology, training, and infrastructure
Implications​
Rise of palm oil alternatives​
Strict regulations push palm oil
producers to adopt sustainable
practices​
Requires significant investments in
technology, training, and
infrastructure
Options​
Monitor yields improvement​
Status quo on production
practices​
Reap more profits through
minimizing costs​
Options​
Strengthen smallholders
relationships​
Consider highly
sustainability
certifications and ratings
for overall operations
Options​
Offer differentiation of product
along different price points​
Position palm oil as premium
ingredient versus alternatives
Options​
Shift consumer perception of palm oil
practices and demonstrate highly
sustainable practices​
Extend the uses of palm oil into new
applications​
Consider exiting market
New acquisition / move to different
crop

16. SIGNPOST & INDICATORS

18. CONTINGENCY PLAN

19. Thank You
Let's prepare and harvest more!