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Asian Agri and the Future of Palm Oil Harvard Essay

For Asian Agri and other Indonesian producers of palm oil, the promised future increase in demand of rapidly growing Asian populations, but also intensifying criticism from environmental groups. With the highest performance and lowest cost of production of any edible oil, palm oil was cheap and abundant source of food for the international markets of Asia and, to a lesser extent. Its production has increased from 1970 to 2010, sparking concern among environmentalists for the conversion of land with high conservation value in Malaysia and Indonesia (where almost 90% of palm oil is produced) in palm oil plantations. Critics have intensified their campaigns in recent years, driving-sometimes successfully, packaged food manufacturers and investors to boycott palm oil suppliers accused of environmental mismanagement.

The Committee notes that some accusations are unjustified, the palm oil producers argued that the industry was moving towards greater sustainability and cited the unique advantages of palm oil: trans-fat free was unhealthy, for example, and requires less land to produce more oil than any known substitute. Asian Agri, an established producer of Indonesian palm oil exporter, had hitherto avoided public scrutiny. The company was a major employer in many rural communities, with extensive experience negotiating complex regulatory environment of Indonesia, and moved to certify its operations in accordance with guidelines established industry sustainability. In 2010, Asian Agri appeared well positioned to capitalize on the growing market for palm oil, but the broad strokes vilification of the palm oil industry is a source of great concern. Faced with great uncertainty, the management team to design a strategy for the future.


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