Business

Saturday August 11, 2012

Regular supply

By THOMAS HUONG
huong@thestar.com.my


Palm oil ensures sustainable supply to meet increasing global demand for oils and fats.

THE Malaysian palm oil industry provides a sustainable supply of oils and fats amidst a rapidly increasing world population, which according to the US Census Bureau is expected to swell to nine billion people by 2043.

“To meet this growing demand (for oils and fats), palm oil can ensure a regular, affordable and sustainable supply which should help to cover any shortfall in the production of soybeans,” Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron told delegates at the Malaysia-India Palm Oil Trade Fair and Seminar 2012 (POTS) in Mumbai recently.

Essential food: Shoppers buying cooking oil at a supermarket in Huaibei, in eastern China’s Anhui province. China is the biggest customer for Malaysian palm oil. Last year, China’s imports of Malaysian palm oil was about four million tonnes. Essential food: Shoppers buying cooking oil at a supermarket in Huaibei, in eastern China’s Anhui province. China is the biggest customer for Malaysian palm oil. Last year, China’s imports of Malaysian palm oil was about four million tonnes.

Recent media reports had stated that global production of soybeans was expected to record a downturn due to weather factors, said Dr Yusof, and “this, together with the slowdown in the processing of 10 other oilseeds, will have a severe impact on the supply on oils and fats in the global market.”

Palm oil is a hugely critical component of the global oils and fats supply, with a 28% share, said Dr Yusof. This is followed by soybean oil (23%), rapeseed oil (13%) and sunflower oil (7%), with the balance consisting of other types of oils and fats such as corn and olive oil.

Dr Yusof was among the speakers at the two-day event in Mumbai, themed Managing Global Challenges Through Innovative Partnerships, which was jointly organised by MPOC and the Malaysian Palm Oil Board (MPOB), and supported by the Solvent Extractors Association of India, the Central Organisation for Oil Industry and Trade, the Indian Vanaspati Producers Association, and the Vanaspati Manufacturers Association of India.

Speakers at POTS India 2012 included consultants, industry captains and experts in the oils and fats industry from Malaysia, India, the United States and Britain. The event provided a platform for industry players to network and exchange information, as well as to update them on the latest developments, market outlook and trade policies concerning the palm oil sector.

China and India’s demand

Dr Yusof highlighted the growing demand for palm oil in emerging markets such as China and India – countries with huge and increasingly affluent populations. According to MPOB data, China is the biggest customer for Malaysian palm oil. Last year, China’s imports of Malaysian palm oil rose 14.3% year-on-year to 3.98 million tonnes.

He said China’s domestic oilseed production, especially for soybean and rapeseed, has been on the decline in recent years as a result of reduced acreage dedicated to oilseeds, and poor yields from existing plantations.

Oil palm cultivation requires less land to produce the equivalent amount of edible oils from other crop, says Dr Yusof. Oil palm cultivation requires less land to produce the equivalent amount of edible oils from other crop, says Dr Yusof.

“Owing to insufficient domestic production and reduced stocks, Chinese imports of oilseeds and oils are set to rise sharply in the January to September period this year,” he said.

Meanwhile, in the first five months of 2012, Malaysian palm oil exports to India jumped 93.4% year-on-year to 783,075 tonnes. This means that India recorded the biggest volume increase in Malaysian palm oil imports for a single country, for the five months under review.

In the same period (January-May 2012), India was the third largest importer of Malaysian palm oil after China (1.28 million tonnes) and the European Union (869,889 tonnes).

Biodiesel offset

The European Union (EU) which has 27 member countries has seen production deficit of oils and fats in recent years due to accelerating consumption and insufficient domestic production.

Dr Yusof noted that the rise in EU consumption was due to a sharp rise in the usage of oils and fats for biodiesel production during the past seven years, during which 65% of the consumption growth had to be covered with imports, either in the form of seed or oil.

He said that higher biodiesel consumption in Brazil and Argentina, along with robust European demand, continues to divert South American soybean oil into the fuel market.

“While the United States has seen some gain in soybean oil exports as a result of the limited South American supply, most of the offset has been in larger global exports of palm oil.”

The German Energy Agency reported that global production of biodiesel in 2010 was about 18 million tonnes, of which 26% was produced in Brazil and Argentina, 13% in the United States, and 61% in the EU.

The global production of biodiesel is projected to hit 38 million tonnes in 2020, according to Pawan Kumar, associate director at Rabobank International’s Food and Agribusiness Research and Advisory based in Singapore.

Citing findings from the International Energy Agency’s Clean Energy Progress report in April 2011, Dr Yusof said global biofuel production grew from 16 billion litres in 2000, to more than 100 billion litres in 2010.

“Biofuel provides around 3% of the world’s fuel for transport. In Brazil, biofuel provides 21% of all transport fuel, compared with 4% in the United States and 3% in the EU.”

Biomass uses

The Malaysian Industry-Government Group for High Technology (MIGHT) is looking into producing industrial sugar on a commercial scale from oil palm trunks, empty fruit bunch and fronds.

This plant – the first in the world – will use woodchips and oil palm biomass to make bio-isobutanol, an essential chemical in solvents, coatings, bio-plastics, bio-fibre and bio-fuels.

Malaysian company QL Resources Bhd is venturing into palm pellet biofuel, made from palm oil mill by-products such as empty fruit bunch. Palm pellet biofuel can be a substitute for coal in power plants, and QL has a patent pending on this biomass technology.

QL has invested more than RM12mil in research and development on palm biomass-related renewable energy technologies since 2008.

Dr Yusof said the Malaysian palm oil industry generates about 79 million metric tonnes of various palm biomass annually, from oil palm fronds (46.4 million tonnes), trunks (14.4 million tonnes), fibre and shells (11 million tonnes), and empty fruit bunch (7 million tonnes).”

“The potential for use as second generation renewable energy source is an important driver and opportunity towards the reduced use of polluting fossil fuels,” he said, adding that the use of palm biomass to produce biofuel should be encouraged, while palm oil should be for food.

Distorted picture

Dr Yusof noted that over the years, palm oil has played a significant role in not only supplying oils and fats for global needs, but also in environment preservation through sustainable production methods.

He pointed out that non-governmental organisations (NGOs) in the West have gone on the offensive against the oil palm industry, and their well-orchestrated and funded campaigns have distorted facts pertaining to palm oil.

“As a result, MPOC has to often find suitable avenues to establish the facts relating to palm oil, by collaborating with various research organisations worldwide that are free to use their findings and disseminate them to the public in any suitable form,” he stated.

He said oil palm cultivation has been shown to require much less land to produce equivalent amounts of edible oils from other crop.

When arable land is limited, it makes sense to choose palm cultivation over other oilseeds, given the significantly higher yield from oil palm which is 11 times that of soybean, 10 times that of sunflower, and seven times that of rapeseed, he said.

Dr Yusof said Malaysia has pledged to retain at least 50% of the country’s land mass under forest cover. “Malaysia is a signatory to United Nations-sponsored biodiversity agreements and honours these pledges, even while seeking economic advancements for its people,” he said.

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