Over the past decade, the Brazilian government has actively promoted oil palm in the Amazon biome as an alternative biodiesel feedstock to soy. Because of oil palm's comparatively high productivity, it places less demand on land than soy and could thereby contribute to reducing pressure on the Amazonian forest. Although oil palm has long been a leading driver of deforestation and social conflict in major producer countries in Southeast Asia, the Brazilian government has put in place a number of mechanisms to ensure oil palm is cultivated sustainably and the sector is inclusive of the rural poor. Through research conducted in Brazil's leading palm oil producing state of Pará, this paper analyzes the evolution and dynamics of the Brazilian palm oil value chain and the economic, environmental and social challenges faced by the sector. In so doing, it shows that under the right institutional and regulatory conditions, the palm oil sector can expand sustainably and inclusively within forested ecosystems. This though translates into considerably higher production costs for producers, thus undermining the international competitiveness of the Brazilian palm oil sector.
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Center for International Forestry Research (CIFOR)