Copyright by Malaysian Palm Oil Council 2015
Malaysian Palm Oil:
Its Role in The Global Oils & Fats Market
BY
Dr. Kalyana Sundram & Tan Sri Dr. Yusof Basiron
Malaysian Palm Oil Council
Copyright by Malaysian Palm Oil Council 2015
THE IMPORTANCE OF PALM OIL
Copyright by Malaysian Palm Oil Council 2015
Oils and Fats Production (1990 – 2014)
1990 Production : 80.89 million MT
2014 Production : 199.75 million MT Source: Oil World
0.00%
Rapeseed oil
10.09% Soybean oil
19.90%
Palm oil 13.62%
Sunflower oil
9.73%
Others 46.67%
Rapeseed Oil
13.61% Soyabean Oil
22.56%
Palm oil 29.63%
Sunflower Oil
8.17%
Others 26.04%
Copyright by Malaysian Palm Oil Council 2015
Growth in population, income growth, low per caput consumption level
Against a backdrop of lack of arable land and reduced supply from competing soft oils, palm oil reliability in supply gives it the added advantage
Food and industrial demand: an increased application in the production of food and non food (oleo chemicals/bio diesel), especially in countries such China, India, Middle East, EU , America
1990 Exports : 23.27 million MT
2014 Exports :78.58 million MT
Oils and Fats Exports (1990 – 2014)
Source: Oil World
Soyabean oil
12.63%
Sunflower oil
5.18%
Palm oil 59.79%
Rapeseed oil
10.69%
Others 11.71%
Soybean oil
14.15%
Sunflower oil
9.13%
Palm oil 36.22%
Rapeseed oil
6.93%
Others 33.57%
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IMPORTANCE OF PALM OIL CONSUMPTION – PALM OIL VS OTHER OILS in 2014
Soybean oil
22.45%
Sunflower oil
7.37%
Palm oil
30.00%
Rapeseed oil
12.69%
Others
27.50%
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IMPORTANCE OF PALM OIL & ITS DERIVATIVES
1. Source of food (global food security ): 80%
2. Oleochemicals: 15%
3. Biofuel : 2%
4. Renewable energy source: Potential Remains Largely Untapped
through Palm Biomass
Palm Oil Currently Accounts for 30% of Global Oils & Fats Supply
Palm Oil 30%
Soybean Oil 23%
Rapeseed Oil 13%
Sunflower Oil 7%
Others 27%
Source : Oil World
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Palm Oil Supply from Malaysia and Indonesia (‘000 MT)
Source : Oil World
2011 (MT)
2012 (MT)
2013 (MT)
2014 (MT)
Change 2014/
2013 (MT)
Change 2014/ 2013 (%)
Production
(Malaysia) 18,912 18,785 19,216 19,500 284 1.48
Production
(Indonesia) 24,300 26,900 28,300 30,100 1,800 6.36
Total 43,212 45,685 47,516 49,600 2,084 4.39
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The world population is projected to grow from 7 billion in 2011 to
9 billion by 2043, an increase of 29 percent. Food production
must meet this rate of increase.
Future of
palm oil is
driven by
growth in
demand
for food,
oleo
chemicals
and
biofuel
due to
population
and
economic
growth
GROWTH IN POPULATION
Ever Growing World Population Results in More Mouths to Feed
Copyright by Malaysian Palm Oil Council 2015
World’s Growing Dependence on Palm Oil Will Boost Demand Further in the Future (Consumption)
Source: Oil World
13.70
29.91
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
Palm Oil - % of Oils & Fats Consumed Other Oils - % of Oils & Fats Consumed
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MEETING FUTURE PALM OIL DEMAND
The world's current demand for oils and fats is being met by 17
major sources.
Production of oils and fats totalled 200.24 million MT in 2014 out
of which palm oil and soybean production were 59 million tonnes
and 45 million MT respectively, thus together accounting for more
than 50% of the total
Production of palm oil has grown faster than that of any other oil
or fat and overtook soybean as the most produced oil in 2005
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AVERAGE ANNUAL GROWTH IN WORLD VEGETABLE OIL PRODUCTION (1990 – 2014)
Source: Oil World
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Palm Oil Production Soybean Oil Production
Sunflower Oil Production Rapeseed Oil Production
Average Annual Growth (1990 – 2014) Palm Oil (7.03%) Rapeseed Oil (5.2) Soybean Oil (4.6%) Sunflower Oil (4.4%) Coconut Oil (-0.01%) Palm Kernel Oil (6.3%)
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TOP 10 MAJOR DESTINATIONS OF MPO
EXPORT IN 2014
Source : MPOB
No. Country 2014 (MT) 1 India 3,229,965 2 China 2,839,283 3 Netherlands 1,598,221 4 Pakistan 812,191 5 USA 783,105 6 Vietnam 604,193 7 Japan 513,483 8 Philippines 493,742 9 Singapore 481,455
10 Benin 456,254
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FULFILLING OILS & FATS DEMAND OF NET
IMPORTING COUNTRIES
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MEETING OILS & FATS DEMAND
GLOBAL OILS & FATS PRODUCTION AND CONSUMPTION
2000 & 2014
0
25
50
75
100
125
150
175
200
225
Production Production Consumption Consumption
2000 2014 2014 2014
(Mill
ion
MT)
Palm Oil Soybean Oil Rapeseed Oil Sunflower Oil Others
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OILS & FATS PRODUCTION VS
CONSUMPTION 1990 – 2050 (F)
-
100 000
200 000
300 000
400 000
500 000
600 000
700 000
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Oils & Fats Production
Oils & Fats Consumption
Linear (Oils & Fats Production)
Expon. (Oils & Fats Consumption)
Source : Oil World
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NET IMPORTING & EXPORTING COUNTRIES
FOR OILS AND FATS (2014)
Russia
Philippines
Canada
Ukraine
Brazil
Argentina
Malaysia
Indonesia
Taiwan
Nigeria
South Korea
South Africa
Turkey
Japan
Egypt
Mexico
Iran
Bangladesh
Pakistan
North Africa
India
EU-27
China
-15000 -10000 -5000 0 5000 10000 15000 20000 25000
Net Importers
Net Exporters
FAO estimates that by 2050, rising population and incomes
will require 70 percent increase in global food production
› Net exporters of oils and fats – Asia Pacific (palm oil) & Americas (soybean)
› The rest of the countries are net importers
Source : Oil World
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Copyright by Malaysian Palm Oil Council 2015
2010 2011 2012 2013 2014
Rapeseed oil 931 791 843 953 998
Butter as fat 138 150 146 144 147
Lard 225 234 219 217 237
Tallow & Grease 53 54 52 50 57
Others 8 12 9 16 16
TOTAL 1355 1241 1269 1380 1455
Poland Oils & Fats Production (‘000 MT)
Source : Oil World
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Poland Oils & Fats Import (‘000 MT)
2010 2011 2012 2013 2014
Palm oil 170 217 209 246 215
Rapeseed oil 38 84 99 161 200
Soybean oil 65 71 70 66 96
Sunflower oil 50 75 92 53 61
Palm kernel oil 15 27 20 22 31
Others 72 86 73 71 58
Total 410 560 563 619 661
Source : Oil World
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2010 2011 2012 2013 2014
EU28 130.7 178.1 173.8 210.1 175.6
Malaysia 31.8 27.6 27.1 35.9 35.2
Indonesia 7.1 10.9 7.8 0 2.6
Other countries 0.1 0.1 0 0.1 1.1
TOTAL 169.7 216.7 208.7 246.1 214.5
Poland Palm Oil Import (‘000 MT)
Source : Oil World
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PRICE (USD/MT) Jan Feb Mar Apr May Jun Jul Aug
PO 642 634 608 592 601 606 576 548
SBO 708 698 683 692 716 738 696 731
RSO 774 747 743 742 764 812 796 755
Discount
SBO (66) (64) (76) (100) (115) (132) (120) (183)
RSO (133) (113) (136) (151) (162) (205) (221) (207)
PRICE OF MAJOR OILS JAN – AUG 2015
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Food Trends In Poland
The public in Poland are now attaching increasing importance to a healthy lifestyle, looking for less processed food.
Traditional Polish cuisine is prepared in a healthier way than ever before.
This trend affects oils and fats, exemplified by the growing demand for natural products with health and wellness-related properties
Consumers are seeking for ways to lower cholesterol through consumption of spreadable oils and fats with plant sterols and stanols, reducing cardiovascular risk.
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PALM OIL’S ROLE
IN FOOD SECURITY
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Source : FAOSTATS
WORLD ARABLE & PERMANENT CROP LAND
PER CAPITA
Per capita crop land has declined since 1960 thus more pressure on farms to increase yields
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SCARCITY OF ARABLE LAND
Year World’s population (bil)
Arable land per capita
(x10-3km2)
Arable land per capita (ha)
1922 1975 2005 2030 2042
2.0 4.0 6.6 8.0 9.0
7.50 3.75 2.27 1.88 1.67
0.75 0.38 0.23 0.19 0.17
• World population increasing • Arable land resource decreasing
Source: Freeworld Academy & University of Michigan
Need to Use Land Wisely
“The FAO has called upon governments to pay urgent attention to the needs of agriculture and to increase investments in agricultural practices.”Sustainability Team Discussion Paper- March 2010- Dexia Asset Management
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DISTRIBUTION OF AGRICULTURAL AREA
Livestock , 71.27%
Other Crops, 23.17%Oilseeds, 5.25%
Oil Palm, 0.31%
Total Agricultural Area : 5 Billion HectaresSource : FAOSTATS
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HIGH LAND PRODUCTIVITY OF OIL PALM YIELD – PALM OIL VS OTHER OILSEEDS
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Soybean Oil Sunflower Oil
Rapeseed Oil
Palm Oil
0.36 0.420.59
Seed Oil
Palm Oil
Productivity of oil palm is:
• 11x more thansoyabean
• 10x more than sunflower
• 7x more than rapeseed
3.68
(Kernel Oil)
Source: * FAO ** Oil World *** MPOB
MEETING FUTURE PALM OIL DEMAND IS
DEPENDENT ON YIELD IMPROVEMENTS
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THE GROWING MIDDLE CLASS – A
REAL CONCERN
There is a concern about the growing middle class in the world which is expected to reach 2.9 billion by 2030 attributed by Europe, China and the USA
This growing middle class will fuel demand for food as increasing affluence will change dietary habits
Demand for protein and meat will increase and food production will have to increase by as much as 250 million MT to 470 million MT
FAO predicts that the food production must increase by 37% to meet this demand
Land will inevitably be a shrinking resource as the current rate of 4.5 persons / hectare will increase to 6.5 persons /hectare
Copyright by Malaysian Palm Oil Council 2015
A VOTE FOR FOOD SECURITY
The UN estimated that the world will need at least
50% more food by 2030
The NGOs claim that global food production can be
met by simply by improving crop yields and
productivity but there are limits to this such as soil
degradation
The Rio+20 Conference recorded strong vote for the
rights of developing nations to expand their
agricultural sector on a sustainable basis
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BIODIESEL REQUIREMENTS
Copyright by Malaysian Palm Oil Council 2015
Source 2015 2030
Food
147.2
160.7
Biofuels 57
102
TOTAL 204.2
262.7
PROJECTED GLOBAL BIOFUEL REQUIREMENTS (MT) AND
PRODUCTION BY COUNTRIES
Source: Legge
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BIODIESEL OUTPUT FROM
VARIOUS FEEDSTOCKS
Source : Fulton, et.al
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1. Increasing biodiesel consumption mandates in Brazil and Argentina along with robust European demand
continues to divert South American soybean oil into the fuel market.
2. 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.
3. Further growth in biodiesel production is expected as capacity expands in response to additional
consumption mandates
Source: USDA FAS
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ASSURING SUSTAINABLE SUPPLY OF PALM OIL INTO THE
FUTURE BY MALAYSIA
Consumer demand for palm oil and
require it not only to be safe and high
quality but also sustainable
The EU demand for CSPO will be fully
met as there are ample supply of CSPO
“Customers are always right” to this end
Malaysia will meet and supply what the
customers want
THE PRODUCTION OF SUSTAINABLE PALM OIL
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Year
Matured Land
Area
('000 Ha)
Production
('000 MT)
Efficiency
Ratio
1985 1,480 4,133 1: 2.79
1990 2,030 6,095 1: 3.00
2000 3,370 10,840 1: 3.22
2005 4,050 14,961 1: 3.69
2014 4,689 19,667 1: 4.20
MALAYSIAN PALM OIL PRODUCTION
EFFICIENT USE OF LAND
Source : MPOB
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MALAYSIAN SUSTAINABLE PALM OIL (MSPO)
The Malaysian Sustainable Palm Oil (MSPO) standard is being tested by the industry before its implementation by the end of this year
MSPO was developed to address the grouses of mid-range and smallholder oil palm cultivators who face difficulty complying with the principles and standards of the Roundtable on Sustainable Palm Oil (RSPO) certification due to exorbitant charges, conflicting views of inspectors and changing criteria
A pilot run for seven palm oil mills and seven estates have been completed.
20% of the local palm oil industry adheres to the voluntary RSPO certification
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CONSERVATION EFFORTS OF MALAYSIAN
PALM OIL INDUSTRY
Malaysian Palm Oil Wildlife
Conservation Fund (MPOWCF)
Launched in 2006
RM 20,000,000:- RM 10m from
Malaysian palm oil industry
RM 10m as grant from
Malaysian government
MPOWCF welcomes donations
& grants
Matches third party funding on
a 1:1 basis
Copyright by Malaysian Palm Oil Council 2015
CONSERVATION OF FOREST / BIODIVERSITY
Malaysian Oil Palm Industry Is Land Conservation Friendly
Parameter Area or %
Malaysian palm oil area 5.23 million ha
Malaysian agricultural land area 6.89 million ha
Total world land area for vegetable
oils
244 million ha
Total world agricultural land area 5,660 million ha
Malaysian palm oil as % of total
Malaysian agricultural land area
70%
Malaysian palm oil as % of total
world land area for oil bearing crops
2.0 %
Malaysian palm oil as % of total
world agricultural land area
0.09%
( of 5,660 million ha)
Malaysian palm oil’s contribution to
global oils & fats supply
11.4%
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TREND IN LAND USES AS A PERCENTAGE OF
TOTAL LAND AREA IN MALAYSIA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
% o
f la
nd
are
a
Other land uses (urbanisation-
industrial, housing, etc)Forest area
Agricultural land
Oil palm planted area
Source: FAOSTAT (2014); Malaysian Palm Oil Board (2013) Source: FAOSTAT (2014); Malaysian Palm Oil Board (2013); World Bank Data (2012)
Copyright by Malaysian Palm Oil Council 2015
82 100*
167
147*
35.6 26.9
40.5 49
147
217
0
50
100
150
200
250
300
350
Forest
Palm Plantation
Palm Plantation
Forest
Total Co2 Removal by LULUCF 249.8
Total Co2 Emission 223.1
Total Co2 Emission 292.9 Total Co2
Removal by LULUCF
247
Emission by LULUCF + Agriculture (Rice) Sectors
Emission by Others
Emission by Energy Sector
Impact of Oil Palm Forest on CO2 emission
MALAYSIAN GREENHOUSE GAS EMISSION AND REMOVAL
* Trend Estimate
CO2 MT
2000 2007
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CONSERVATION OF BIODIVERSITY IN
PROTECTED RAINFORESTS (PRFS)
Malaysia is also a signatory to Convention on
Biological Diversity
Importance of Biological Diversity conservation
accorded high priority
National Policy on Biological Diversity adopted
in April 1998
Copyright by Malaysian Palm Oil Council 2015
Palm oil will continue to be a major source of oils & fats that
is required to meet global food security demands
Oil palm cultivation is shown to require less land to produce
each unit equivalent of edible oil
When arable land is limited, it makes sense to choose palm
cultivation over other oilseeds given the higher yields from
oil palm
Higher yield projections increasing stepwise from 4MT/ha to
almost 12MT/ha will make palm the oilseed crop of choice in
many countries aspiring for greater food (oils) security
CONCLUSIONS
Copyright by Malaysian Palm Oil Council 2015
Sustainability is not an issue for Malaysian palm oil, but made an
issue by the western environmental NGOs
In terms of unit of input per unit of output, oil palm also requires
significantly less fertilizers, pesticides and fuel per unit produced
than rapeseed and soybean, in the end delivering over three times
more oil per unit of input
Apart from use in food, tocotrienols (a type of vitamin E) is found
in abundance in palm oil which is used, among others, by the
high‐end cosmetics manufacturers such as Crabtree & Evelyn as
an active ingredient to increase sunscreen efficiency by reducing
UV ray penetration which can cause cellular ageing
CONCLUSIONS (con't))
Copyright by Malaysian Palm Oil Council 2015
Palm oil is a major revenue earner for Malaysia and it can be the same for the developing countries
Palm Oil will assist the developing countries to promote poverty eradication and improve income for small holders and uplift the economy of developing nations
Palm oil production respects and adopts the 3Ps principles of sustainability – People, Planet and Profit.
CONCLUSIONS (con't))
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THANK YOU
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