malaysian palm oil: its role in the global oils & fats market › presentation ›...

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


THE IMPORTANCE OF PALM OIL


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%


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%


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%


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


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


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


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


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


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%)


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


FULFILLING OILS & FATS DEMAND OF NET

IMPORTING COUNTRIES


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


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


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


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


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


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


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


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.


PALM OIL’S ROLE

IN FOOD SECURITY


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


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


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


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


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


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


BIODIESEL REQUIREMENTS


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


BIODIESEL OUTPUT FROM

VARIOUS FEEDSTOCKS

Source : Fulton, et.al


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

http://www.fas.usda.gov/


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


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


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


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


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%


world land area for oil bearing crops

2.0 %


world agricultural land area

0.09%

( of 5,660 million ha)

Malaysian palm oil’s contribution to

global oils & fats supply

11.4%


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)


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


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


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


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))


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))


THANK YOU

Visit Our Website : http www.mpoc.org.my

malaysian palm oil: its role in the global oils & fats market › presentation ›...

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