- Latest OECD-FAO Agricultural Outlook shows vegetable oil consumption flattening in high-income economies while developing markets drive growth
- Palm oil maintains volume leadership with 0.8% annual supply expansion projected through 2034, supported by productivity gains
- Indonesia and Malaysia’s 53% share of global vegetable oil exports positions them to benefit from sustained import demand in Asia, Africa, and Middle East
The latest OECD-FAO Agricultural Outlook 2025-2034 – released last week — validates palm oil’s strategic position in meeting worldwide demand. While high-income economies show signs of consumption easing off, the report shows a fundamental shift toward developing markets that plays directly to palm oil’s competitive advantages.
In developed economies, the report notes that “per capita consumption of vegetable oil is levelling off” due to mature food markets, dietary shifts toward alternative fats, and limited population growth.
But this is more than offset by robust growth in developing economies. The report projects that “per capita consumption of vegetable oil for food is projected to increase (0.5% p.a.) due to strongly increasing food demand in lower middle- and low-income countries.”
China and Brazil are forecast to reach consumption levels approaching 27 kg per person by 2034, while India’s per-capita intake is projected to grow at 2.5% annually. This aligns with palm oil’s established trade flows and cost competitiveness in price-sensitive markets.
It also notes that “global palm oil output has outpaced the production of other vegetable oils over the past decade” and projects supplies to “expand at an annual rate of 0.8%.”
This growth trajectory is anchored by sustained productivity improvements across Indonesia and Malaysia, with Thailand, Colombia, and Nigeria emerging as additional sources.
Despite this, Indonesian and Malaysian palm oil will continue to dominate the global vegetable oil trade: “vegetable oil exports continue to be dominated by a few players, notably Indonesia and Malaysia which account for about 53% of total vegetable oil exports.”
India exemplifies this import dependency, with purchases set to climb approximately 2% annually to reach 21 million tonnes by 2034, even as New Delhi pursues domestic oilseed expansion programs.
While food applications represent 52% of global vegetable oil use, industrial demand continues expanding. Nearly one-fifth of vegetable oil supplies already serve the biomass-based diesel sector, with further gains being driven by policy incentives in Indonesia, Brazil, and the United States.
This industrial demand reinforces palm oil’s position as the preferred feedstock in major biodiesel programs, providing an additional pillar of support beyond traditional food applications.
The also translates into a constructive price environment. The report projects that “vegetable oil prices are expected to remain relatively stronger due to sustained demand growth and slower production growth for palm oil and other oilseeds.”
The report outlines key implications for stakeholders:
For producers, Southeast Asian farmers and processors are positioned to benefit from stable global demand. Productivity-enhancing investments, particularly replanting and improved agronomy, will be rewarded in a market requiring incremental tonnage.
For importers, inpopulous nations where vegetable oil self-sufficiency remains elusive, palm oil provides an efficient and readily available option for meeting dietary and industrial requirements. Securing supply through diversified sourcing and long-term offtake arrangements will remain critical.
For governments, thedifferent demand paths between developed and developing economies highlight the importance of maintaining open trade flows. Facilitating predictable, rules-based commerce will help contain food costs and support value-added downstream industries globally.
The OECD-FAO baseline projects global vegetable oil demand to grow through to 2034 in line with population and income trends, even as richer economies plateau. Palm oil’s established cost competitiveness, high yield per hectare, and versatility across multiple end-uses ensure its central role in meeting this demand.
With annual supply growth approaching 1% and resilient import appetites in Asia, Africa, and the Middle East, the fundamentals support sustained, broad-based palm oil utilization over the coming decade.
The data confirms that while Western markets may be maturing, the global vegetable oil story remains one of growth—and palm oil is uniquely positioned to capture that opportunity.