# Palm oil: Extraction

Why fruit must reach the mill within a day

Source page: https://www.materialinsights.org/commodities/palm_oil/extraction/

What this tab covers How it is mined, drilled or grown, and processed into a tradeable form: the main methods compared, their unit economics, by-products, and the companies that do this work globally and in India.

The oil palm grows only in the humid tropics, within a few degrees of the equator. It is a tree crop: plantations take several years to yield and then produce for decades. Workers cut heavy fruit bunches by hand all year. The bunches must reach a mill quickly or the oil degrades, so mills sit inside plantations, often owned by the same group (Pirrong, pdf p. 47). Mills sterilise and press the fruit into crude palm oil. Kernels yield a separate lauric oil and meal. Refiners split the oil into liquid olein and solid stearin.

Oil palm is a perennial tree crop grown within about ten degrees of the equator. Unlike annual oilseeds, supply cannot respond quickly: a new palm takes about three years to bear and seven to reach peak yield, and yields fall after about 20-25 years. The main split is between large corporate estates with their own mills and smallholders who sell fruit to nearby mills. Because fruit spoils within a day or two, every plantation area needs a mill close by. Crude oil is then refined at origin or in big importing countries. India is trying to add domestic supply through irrigated oil palm under a national mission.

#### Methods compared

| Method | Share of supply | Typical scale | Recovery / efficiency | By-products | Unit cost |
|---|---|---|---|---|---|
| **Corporate estates with integrated mills (Indonesia, Malaysia)** | Indonesia and Malaysia together grew 82.5% of world output in 2023 (FAOSTAT) | GAR: 531,355 ha planted and 2.19 Mt CPO in 2025; Wilmar: 234,334 ha and 1.52 Mt CPO | FFB yield 19.0 t/ha at GAR and 19.3 t/ha at Wilmar in 2025; OER 20.7% at GAR; palm product yield 5.0 t/ha at GAR | palm kernels (kernel extraction rate 5.5% at GAR), kernel cake, fibre and shells for mill fuel, effluent for biogas | n/a |
| **Smallholders selling fruit to independent mills** | n/a | typical holdings of a few hectares | n/a | as above, at the mill | n/a |
| **Milling: sterilise, thresh, press, clarify** | all palm oil passes through a mill | Malaysia: national OER 19.74% in 2025 | about 20% oil and 5-5.5% kernel by bunch weight | empty fruit bunches, fibre, shells, palm oil mill effluent | n/a |
| **Refining and fractionation (at origin or destination)** | 70% of Indonesia's 2025 exports were processed palm oil | AWL Agri Business: 5.5 Mt a year of refining capacity at 60% utilisation; its Mundra refinery runs 5,000 t a day | n/a | palm fatty acid distillate (feed, oleochemicals) | India duty gap (refined minus crude) about 19.25 percentage points after May 2025 |
| **India: irrigated oil palm under the National Mission on Edible Oils - Oil Palm** | small; India imports most of its palm oil | India's total oil palm area reached 6.20 lakh ha by November 2025 (2.50 lakh ha added under the mission) against a target of 6.5 lakh ha new area by 2025-26; Patanjali Foods had 110,722 ha in FY2026 | India CPO output rose from 1.91 lakh t (2014-15) to 3.80 lakh t (2024-25), against mission targets of 11.20 lakh t by 2025-26 and 28 lakh t by 2029-30 | as above | farmers get a viability price for fresh fruit bunches; processors pay 14.3% (rising to 15.3%) of the CPO price, with viability gap funding from government |

#### How each method works
**Corporate estates with integrated mills (Indonesia, Malaysia)**

Large companies plant tens to hundreds of thousands of hectares in blocks around their own mills, use selected high-yield seed and manage fertiliser, labour and replanting cycles. Many also run plasma schemes that link nearby smallholders to the company mill.

Highest oil yield per hectare of any oil crop, but it is labour-intensive and exposed to deforestation rules (EUDR) and land disputes.
 Golden Agri-Resources and Wilmar FY2025 results presentations; FAOSTAT 2023 **Smallholders selling fruit to independent mills**

Families with a few hectares harvest bunches and sell them through dealers to the nearest mill. Seed quality, fertiliser use and replanting are often weaker, so yields lag estates. Indonesia's smallholder replanting programme (PSR) funds replanting from the export levy, but GAPKI says delays are a risk.

Large rural income source, but low yields and traceability problems under EU rules.
 GAPKI via InfoSAWIT, 2026. Smallholder area share and yields not found in the sources used **Milling: sterilise, thresh, press, clarify**

Steam sterilisation stops enzymes that raise free fatty acids, then fruit is stripped from bunches, digested and screw-pressed. The oil is clarified and dried into CPO; nuts are cracked for kernels, which are crushed separately into palm kernel oil and cake.

Mills must be within a few hours of the fields, which ties capital to plantation regions.
 MPOB 2025; GAR FY2025 **Refining and fractionation (at origin or destination)**

CPO is degummed, bleached and physically refined to RBD palm oil, then cooled and filtered into liquid olein and solid stearin. Producer countries favour exporting refined products through tax design; importers such as India use duty gaps to favour importing crude oil and refining at home.

Low-margin, scale business; location depends on duty structure.
 GAPKI 2025; AWL investor presentation, Jan 2025; Business Standard, 31 May 2025 (IVPA) **India: irrigated oil palm under the National Mission on Edible Oils - Oil Palm**

The Centre and states subsidise planting material and pay farmers a viability price linked to CPO prices, with processors allotted zones in which they must buy fruit. Most area is in Andhra Pradesh, Telangana and the Northeast. Patanjali Foods and others run mills in allotted zones.

Cuts import dependence over time, but needs irrigation and four to seven years before full yield.
 PIB fact sheet, December 2025; Cabinet approval of NMEO-OP, 18 August 2021 (Business Today); Patanjali Foods FY2026 Unit economics are indicative ranges from the sources named; costs vary widely by deposit, region and year.

#### Who does it: global

| Company | Country | Activity | Volume | Year | Source |
|---|---|---|---|---|---|
| **Wilmar International** | Singapore | plantations, refining, merchandising (largest palm oil processor) | 26.4 Mt tropical oils sales volume (own CPO output 1.52 Mt) | 2025 | [Wilmar FY2025 results briefing presentation](https://links.sgx.com/1.0.0/corporate-announcements/PYS9LAOYNCGL6401/876240_Wilmar%20FY2025%20Financial%20Results%20Briefing%20Presentation.pdf) |
| **Golden Agri-Resources (Sinar Mas)** | Indonesia / Singapore | plantations, milling, refining | 2.19 Mt CPO produced (2.77 Mt palm products); 11.9 Mt sales volume | 2025 | [GAR FY2025 performance presentation](https://links.sgx.com/1.0.0/corporate-announcements/TXVJ8W4FXT6IE515/876249_GAR%2026-02-2026-GAR%20FY2025%20Performance%20Presentation.pdf) |
| **SD Guthrie (formerly Sime Darby Plantation)** | Malaysia | plantations, milling (largest by planted area) | 2.29 Mt FFB in Q4 2025 only; full-year FFB rose 1% but the total was not found | 2025 | [The Edge Malaysia, Q4 2025 results](https://theedgemalaysia.com/node/794041) |
| **PT Agrinas Palma Nusantara** | Indonesia | state-owned plantation operator | 1.7 million ha of seized plantations handed over by the Forest Area Control Task Force | 2025 | [GAPKI via InfoSAWIT, 2026](https://en.infosawit.com/news/17408/gapki--palm-oil-production-rose-7-2--in-2025--industry-faces-governance-and-global-pressures) |
| **Musim Mas** | Singapore / Indonesia | plantations, refining, oleochemicals | not published | 2025 | not available |

#### Who does it: India

| Company | Country | Activity | Volume | Year | Source |
|---|---|---|---|---|---|
| **AWL Agri Business (formerly Adani Wilmar; Wilmar consolidated it from 4Q2025)** | India | importer and port-based refiner, Fortune brand | 5.5 Mt a year refining capacity; 2.98 Mt edible oil sold in 9M FY25; 6.8 Mt total sales volume in FY2026 | FY2025-FY2026 | [AWL investor presentation Jan 2025; AWL annual report FY2025-26 (FilingReader)](https://nsearchives.nseindia.com/corporate/AWL_27012025151051_Investor_Presentation_SE.pdf) |
| **Patanjali Foods (formerly Ruchi Soya)** | India | importer, refiner, largest private oil palm developer | 110,722 ha under oil palm cultivation | FY2026 | [Patanjali Foods annual report FY2025-26 (FilingReader)](https://filingreader.com/news-wire/mumbai/2026-09-05/patanjali-foods-crosses-40000-crore-in-annual-revenue) |
| **Godrej Agrovet** | India | oil palm processing in Andhra Pradesh, Telangana and the Northeast | not published | n/a | not available |

India is the world's largest palm oil importer (25.2% of world import value in 2024, UN Comtrade) and Malaysia's top market (2.66 Mt in 2025, MPOB). Domestic output is small. Policy works through import duties: in May 2025 the basic customs duty on crude palm, soy and sunflower oil was halved to 10% (effective duty 16.5%), while refined oil stayed at about 35.75%, favouring domestic refining. India imported 15.66 Mt of edible oils in 2023-24, about 56% of demand (PIB, Dec 2025). The National Mission on Edible Oils - Oil Palm (Rs 11,040 crore, approved August 2021) targets 28 lakh t of domestic CPO by 2029-30, against 3.80 lakh t in 2024-25.

## Other sections

- [Summary](https://www.materialinsights.org/commodities/palm_oil/index.md)
- [Overview](https://www.materialinsights.org/commodities/palm_oil/overview/index.md)
- [Correlation](https://www.materialinsights.org/commodities/palm_oil/correlation/index.md)
- [Production](https://www.materialinsights.org/commodities/palm_oil/production/index.md)
- [Stocks](https://www.materialinsights.org/commodities/palm_oil/stocks/index.md)
- [Cycles](https://www.materialinsights.org/commodities/palm_oil/cycles/index.md)
- [Trading](https://www.materialinsights.org/commodities/palm_oil/trading/index.md)
- [Movement](https://www.materialinsights.org/commodities/palm_oil/movement/index.md)
- [Criticality](https://www.materialinsights.org/commodities/palm_oil/criticality/index.md)
- [Characteristics](https://www.materialinsights.org/commodities/palm_oil/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/commodities/palm_oil/emissions/index.md)
- [Relationships](https://www.materialinsights.org/commodities/palm_oil/links/index.md)