Meeting demand

EDIBLE OIL SUPPLY: Malaysia and Indonesia must accelerate oil palm plantings to avoid acute shortage, warns analyst

KUALA LUMPUR: HAMBURG-BASED ISTA Mielke GmbH executive director Thomas Mielke has warned that developing nations will face acute shortage of cooking oil in the next few years if Indonesia and Malaysia continue to slow down their oil palm plantings.



“We must not be lulled into believing the green activists’ skewed ideology. We must differentiate between perception and reality. 

"The truth is, there is a huge discrepancy between the supply and demand of certified sustainably produced palm oil. We have 10 million tonnes of this oil but the demand is only a fraction of that.”

Mielke, a well-respected and authoritative vegetable oil analyst, appealed to the public to wake up and smell the coffee.

In addressing an audience of some 500 at the Oils and Fats International Congress 2014, here, yesterday, he said in the last 10 years, the global oil palm planted area had only added 7.5 million hectares.

“This is so small compared to soyabean’s increment of 27.2 million hectares, rapeseed’s 8.8 million hectares and sunflower’s 4.3 million hectares.”

In the last 25 years, global palm oil consumption had expanded threefold. Rapeseed oil purchases, however, only increased by 2.5 times and soyabean oil’s popularity just doubled. 

As global palm oil usage increased in the last two decades, so did trade rivalry. Hence, the smear campaign against the oil palm industry.

Oil palm plantation companies face relentless false allegations spread by well-funded green activists. Damning accusations of air pollution, forced labour and land grab in Indonesia, Papua New Guinea and Liberia are wrongly hurled at these corporates.

“Consumers must reject green activists’ protests against the expansion of oil palm plantings. We must not be misled by perception. The current bearish sentiment is not fundamentally justified. The market is in transition,” Mielke said.

Yesterday, the third-month benchmark for crude palm oil contract on Bursa Malaysia Derivatives Exchange fell RM56 to close at RM2,252 per tonne. 

“China oilseed output has declined to a 15-year low. Agricultural land is scarce and India’s population continues to multiply. In order to satisfy the daily oils and fats need of an increasing global population, Indonesia and Malaysia must accelerate the planting of more higher yielding oil palms,” he said.

In 2010, the world population was 6.92 billion. By 2020, the figure is estimated to expand to 7.72 billion. As the developing world progresses, the rising middle class’ changing diet for tastier snacks and confectionery will fuel demand for more edible oils. This can only be realistically met by palm oil.

“Every year, the world’s hunger for edible oils grow by an additional five million tonnes. Since oil palm is, by far, the most productive oil crop, we must pick up the pace of planting oil palms. If not, the world will face edible oil shortage by 2020,” he added.

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