THE European Union (EU) has always been a major importer of palm oil.
Even before Malaysia hit the big time in the palm oil business, the EU
had already been importing substantial quantities from Western African
countries, the home of the oil palm.
Those days, much of the
EU’s palm oil purchases came from Nigeria and Cameroon. The real
motivation behind the EU’s everlasting love affair with palm oil had a
lot to do with the oil’s versatile nature.
In the EU, even to this day, palm oil is almost indispensable in the manufacture of both food and non-food items.
In the food applications, palm oil is a much sought after ingredient
for making margarine, shortening and specialty fats. While in the
non-food area, palm oil has always been the preferred raw material for
soap and detergent manufacture.
This explains why the import of palm oil into the EU has always been among the highest in the world.
Lately, it has been consistently in third place, behind China and
India, the other two big palm oil lovers! According to the Oil World, a
Hamburg-based analyst, palm oil demand in the EU for the oil marketing
year to September 2010 is to rise by 4.4 per cent to 5.7 million tonnes.
The EU’s craving for palm oil is quite widespread. It is not merely
confined to the public at large. Consumers in the EU adore palm
oil-based margarine, for example, because it is much more nutritious and
Recent revelations about the unhealthy nature of trans fats have further enhanced the popularity of palm oil-based margarine.
Margarines made from palm oil do not have trans fats. Trans fats are
more associated with margarines made from partially hardened soft oils,
including soya oil, rapeseed oil and even sunflower oil.
also the reason why compared to the US, the incidence of heart-related
ailments in the EU is lower. Most of the margarine consumed in the US
are loaded with trans fats!
The craving for palm oil is also
evident among the business and investor communities in the EU. This is
because palm oil is the most economic edible oil the world will ever
Palm oil’s runaway yield compared to the other oils is the
main reason why it is attractive to businesses. It is therefore no
wonder that over the years, the EU has reaped much profit from the
global trade in palm oil.
The bustling port of Rotterdam, for
example, is a clear evidence of the EU profiting the palm oil’s
expanding logistic business. And despite a number of attempts to derail
palm oil from the top spot in the export trade, experts predict the EU’s
addiction to palm oil will continue well into the future.
recent attempt by some environmental NGOs to make it difficult for palm
oil biodiesel to enter the EU market will eventually end in palm oil’s
favour. This is because palm oil biodiesel is not only the most economic
biofuel for the EU, but it is also the one which demonstrates the
highest reduction in the greenhouse gas (GHG) emission.
to the claim made under the EU’s Renewable Energy Directive, experts
have calculated that GHG reduction in the case of palm biodiesel is much
higher than that reported for rapeseed biodiesel.
At a recent
forum hosted by the Malaysian Palm Oil Council, a trade expert from the
EU has suggested that the palm oil industry has a case for the WTO. But
the most revealing fact which supports the contention that the EU will
soon come to their senses is the recent data on a jump in palm oil
import into the EU.
It has been reported recently that the EU
will have to increase its import of palm oil despite a vigorous campaign
by green groups against it, after a drought that shrivelled oilseed
crops across the Black Sea region.
In fact, palm oil futures on
the Bursa Malaysia Derivatives Exchange has climbed to a 15-month high.
And the market is set for further gains as EU consumers scurry for
supplies to satisfy demand from the food and fuel sectors.
It is bullish time for palm oil prices in the coming months.
A commodities analyst at Rabobank in London was quoted as saying that
Europe’s rapeseed crop was lower than expected and Ukraine is going to
have a very limited supply available for exports. He added that with the
restrained rapeseed oil supplies, palm oil will come handy as a
It is expected that the EU’s rapeseed crop will fall by 7.8 per cent to 19.9 million tonnes this year compared to a year ago.
Ukraine’s sunflower crop on the other hand may drop 2.7 per cent to 7.1 million tonnes.
In addition, excessive rains are likely to cut canola production in Canada.
This will consequently reduce exports by nearly 20 per cent to six million tonnes.
Many believe EU buyers may have to push their grossly unsubstantiated
environmental issues linked to palm oil on the back burner as they
struggle with lower domestic supplies.
It would be disastrous
for the EU if they cannot have access to sufficient palm oil to offset
their supply deficiency. This can well happen if palm oil exporters from
Malaysia and Indonesia decide one fine day to just ignore the EU.
That should teach them a lesson never to bully palm oil with all kinds of discriminating non-tariff barriers.
The writer is a fellow with Academy of Sciences Malaysia