Supply Chain Characteristics that Impact Traceability

Traceability Takeaways

  • The palm oil sector includes both large commercial plantations and smaller producers. Palm oil from different producers is mixed at mills and refineries. The large conglomerates who own these processors may also control some upstream suppliers, but processors typically source products from many third-party suppliers to meet market demands for palm oil. Given the complexity of supply chains, Roundtable on Sustainable Palm Oil (RSPO), which is the leading palm oil certification initiative, provides for mass balance and certificate trading approaches to product tracking that do not require segregation of product from certified suppliers. While these approaches are common, they have received NGO, media, and advocate criticism for reduced transparency.1Torrico, Gonzalo and Edwin Montesinos. “RSPO: Over a Hundred Complaints Fail To Curb Palm Oil’s Impact on Rainforests.” Pulitzer Center, 14 June 2022,
  • Mid-tier Gatekeeper approaches at mills (which are common chokepoints for palm oil) require mills to implement due diligence systems for responsible sourcing and can fill some upstream traceability gaps.
  • The palm oil sector relies heavily on both domestic and transnational migrant labor; migrant workers are often recruited by third-party labor brokers. These workers are vulnerable to forced labor indicators, such as deceptive employment and debt bondage. Understanding the practices of these brokers is a critical aspect of combating forced labor risk. Existing certification systems have not always been successful in identifying and addressing risk for vulnerable workers, including migrant workers; therefore, companies seeking to more directly address labor rights risks should use traceability methods that enable them to conduct on-the-ground assessments with workers and local community members.

Nature of Labor Rights Risk/Vulnerable Workers

Forced Labor or Trafficking in Persons cited by U.S. Government

Child Labor cited by U.S. Government

Risk of Forced Labor or Trafficking in Persons cited by other source

Risk of Child Labor cited by other source

Documented presence of migrant workers

Documented presence of other vulnerable workers

Documented presence or significant likelihood of third-party labor recruiters

Features of Production and Supply Chain

Large numbers of dispersed, unorganized, or informal small producers or other worksites

Multiple points of aggregation, co-mingling, and/or transformation across supply chain

Complex/opaque supply chains and/or lack of vertical integration

High degree of flexibility in procurement practices of downstream entities

Distribution of Labor Risk in Various Production Areas

Scale or nature of risk is present across multiple tiers or nodes of supply chain (including in associated downstream or upstream goods)

Scale or nature of risk varies significantly based on geographic area of production.

Scale or nature of risk is strongly associated with certain types of suppliers/entities.

  • There is a documented risk of forced labor and child labor in many palm oil producing countries, including the two top producing countries, Indonesia and Malaysia.
  • Forced labor exists at many points in the supply chain, including the cultivation and harvesting of palm fruit as well as milling and refining stages.16Fair Labor Association. “Assessing Forced Labor Risks in the Palm Oil Sector in Indonesia and Malaysia.” November 2018,

Linked Upstream and Downstream Risks

Risk in Nodes in Oil (palm) Production

The cultivation and harvesting stage in palm oil production begins with a three-year process of weeding, growing, and applying pesticides to oil palm trees. When the fruit that grows on oil palm trees is ripe, it is typically removed using scythes or long poles with sharp chisels and collected from the ground. In the milling stage, the fruit is softened by heating it before it is separated from the bunch through a process called threshing. Once separated, palm fruit kernels are delivered to processing plants to extract crude palm oil, which is then further processed and refined for the target good.17Verité, ”Commodity Atlas: Countries Where Palm Oil is Reportedly Produced with Forced Labor and/or Child Labor,” Forced labor and child labor risks are highest in these stages, particularly in the cultivation and harvesting nodes. To learn more about the nodes that comprise Palm oil supply chains and where risk is present, read through the U.S. Department of Labor’s Palm Oil Storyboard, which is part of the Exposing Exploitation in Global Supply Chains Series. 

Cultivation and Harvesting of Palm Fruit


Processing and Refining

Manufacturing of Target Good


Associated Upstream Goods with Labor Risk

Palm oil is derived from palm fruit.

Associated Downstream Goods and Consumer Sectors

Food and Beverage

Palm oil is the world’s most widely used vegetable oil and is used in many consumer foods and beverages including chocolate and confectionary products, baked goods, and processed food products.

Cosmetics and Personal Care

Palm oil is commonly found in cosmetics, personal care products like soaps and body creams, cleaning products, and candles.


Palm oil is also used in biofuels.

Top Global Countries

  1. Indonesia18List of exporters for the selected product in 2021 Product: 1511 Palm oil and its fractions, whether or not refined (excluding chemically modified). ITC Trade Map,
  2. Malaysia
  3. Netherlands
  4. Papua New Guinea
  5. Thailand
  6. Guatemala
  7. Colombia
  8. Germany
  9. Nepal
  10. Honduras
  1. Indonesia19“Crops and livestock products.” Food and Agriculture Organization of the United Nations,
  2. Malaysia
  3. Thailand
  4. Colombia
  5. Nigeria
  6. Guatemala
  7. Honduras
  8. Papua New Guinea
  9. Brazil
  10. Côte d’Ivoire


Examples & Resources: Traceability Efforts Associated With Oil (palm)