Malaysian Palm Oil: Its Role in The Global Oils & Fats Market

Transcription

1 Malaysian Palm Oil: Its Role in The Global Oils & Fats Market BY Dr. Kalyana Sundram & Tan Sri Dr. Yusof Basiron Malaysian Palm Oil Council

2 THE IMPORTANCE OF PALM OIL

3 Oils and Fats Production ( ) Rapeseed oil 0.00% 10.09% Soybean oil Others 19.90% 46.67% Others 26.04% Rapeseed Oil 13.61% Soyabean Oil 22.56% Sunflower oil 9.73% Palm oil 13.62% Sunflower Oil 8.17% Palm oil 29.63% 1990 Production : million MT Source: Oil World 2014 Production : million MT

4 Oils and Fats Exports ( ) Others 33.57% Soybean oil 14.15% Sunflower oil 9.13% Rapeseed oil 10.69% Others 11.71% Soyabean oil 12.63% Sunflower oil 5.18% Rapeseed oil 6.93% Palm oil 36.22% Palm oil 59.79% 1990 Exports : million MT Source: Oil World 2014 Exports :78.58 million MT 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

5 IMPORTANCE OF PALM OIL CONSUMPTION PALM OIL VS OTHER OILS in 2014 Others 27.50% Soybean oil 22.45% Sunflower oil 7.37% Rapeseed oil 12.69% Palm oil 30.00%

6 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 Rapeseed Oil 13% Sunflower Oil 7% Source : Oil World Soybean Oil 23% Others 27% Palm Oil 30%

7 Palm Oil Supply from Malaysia and Indonesia ( 000 MT) 2011 (MT) 2012 (MT) 2013 (MT) 2014 (MT) Change 2014/ 2013 (MT) Change 2014/ 2013 (%) Production (Malaysia) 18,912 18,785 19,216 19, Production (Indonesia) Source : Oil World 24,300 26,900 28,300 30,100 1, Total 43,212 45,685 47,516 49,600 2,

8 GROWTH IN POPULATION Ever Growing World Population Results in More Mouths to Feed Future of palm oil is driven by growth in demand for food, oleo chemicals and biofuel due to population and economic growth 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.

9 World s Growing Dependence on Palm Oil Will Boost Demand Further in the Future (Consumption) Palm Oil - % of Oils & Fats Consumed Other Oils - % of Oils & Fats Consumed Source: Oil World

10 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 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

11 AVERAGE ANNUAL GROWTH IN WORLD VEGETABLE OIL PRODUCTION ( ) Average Annual Growth ( ) 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%) Palm Oil Production Soybean Oil Production Sunflower Oil Production Rapeseed Oil Production Source: Oil World

12 TOP 10 MAJOR DESTINATIONS OF MPO EXPORT IN 2014 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, Benin 456,254 Source : MPOB

13 FULFILLING OILS & FATS DEMAND OF NET IMPORTING COUNTRIES

14 (Million MT) MEETING OILS & FATS DEMAND GLOBAL OILS & FATS PRODUCTION AND CONSUMPTION 2000 & Production Production Consumption Consumption Palm Oil Soybean Oil Rapeseed Oil Sunflower Oil Others

15 OILS & FATS PRODUCTION VS CONSUMPTION (F) Oils & Fats Production Oils & Fats Consumption Linear (Oils & Fats Production) Expon. (Oils & Fats Consumption) Source : Oil World

16 NET IMPORTING & EXPORTING COUNTRIES FOR OILS AND FATS (2014) China India EU-27 Source : Oil World North Africa Pakistan Bangladesh Iran Mexico Egypt Japan Turkey South Africa South Korea Nigeria Taiwan Brazil Philippines Russia Ukraine Canada Net Importers Net Exporters FAO estimates that by 2050, rising population and incomes will require 70 percent increase in global food production Argentina Malaysia Indonesia Net exporters of oils and fats Asia Pacific (palm oil) & Americas (soybean) The rest of the countries are net importers

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18 Poland Oils & Fats Production ( 000 MT) Rapeseed oil Butter as fat Lard Tallow & Grease Others TOTAL Source : Oil World

19 Poland Oils & Fats Import ( 000 MT) Palm oil Rapeseed oil Soybean oil Sunflower oil Palm kernel oil Others Total Source : Oil World

20 Poland Palm Oil Import ( 000 MT) EU Malaysia Indonesia Other countries TOTAL Source : Oil World

21 PRICE OF MAJOR OILS JAN AUG 2015 PRICE (USD/MT) Jan Feb Mar Apr May Jun Jul Aug PO SBO RSO Discount SBO (66) (64) (76) (100) (115) (132) (120) (183) RSO (133) (113) (136) (151) (162) (205) (221) (207)

22 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.

23 PALM OIL S ROLE IN FOOD SECURITY

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25 WORLD ARABLE & PERMANENT CROP LAND PER CAPITA Source : FAOSTATS Per capita crop land has declined since 1960 thus more pressure on farms to increase yields

26 SCARCITY OF ARABLE LAND Year World s population (bil) Arable land per capita (x10-3 km 2 ) Need to Use Land Wisely World population increasing Arable land resource decreasing Source: Freeworld Academy & University of Michigan Arable land per capita (ha) The FAO has called upon governments to pay urgent attention to the needs of agriculture and to increase investments in agricultural practices. Sustaina bility Team Discussion Paper- March Dexia Asset Management

27 DISTRIBUTION OF AGRICULTURAL AREA Livestock, 71.27% Oil Palm, 0.31% Oilseeds, 5.25% Other Crops, 23.17% Total Agricultural Area : 5 Billion Hectares Source : FAOSTATS

28 HIGH LAND PRODUCTIVITY OF OIL PALM YIELD PALM OIL VS OTHER OILSEEDS Seed Oil Palm Oil (Kernel Oil) Productivity of oil palm is: 11x more than soyabean 10x more than sunflower 7x more than rapeseed MEETING FUTURE PALM OIL DEMAND IS DEPENDENT ON YIELD IMPROVEMENTS Soybean Oil Sunflower Oil Rapeseed Oil Palm Oil Source: * FAO ** Oil World *** MPOB

29 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

30 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

31 BIODIESEL REQUIREMENTS

32 PROJECTED GLOBAL BIOFUEL REQUIREMENTS (MT) AND PRODUCTION BY COUNTRIES Source Food Biofuels TOTAL Source: Legge

33 BIODIESEL OUTPUT FROM VARIOUS FEEDSTOCKS Source : Fulton, et.al

34 Source: USDA FAS 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

35 ASSURING SUSTAINABLE SUPPLY OF PALM OIL INTO THE FUTURE BY MALAYSIA THE PRODUCTION OF SUSTAINABLE PALM OIL 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

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37 MALAYSIAN PALM OIL PRODUCTION EFFICIENT USE OF LAND Year Matured Land Area ('000 Ha) Production ('000 MT) Efficiency Ratio ,480 4,133 1: ,030 6,095 1: ,370 10,840 1: ,050 14,961 1: ,689 19,667 1: 4.20 Source : MPOB

38 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

39 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

40 CONSERVATION OF FOREST / BIODIVERSITY Malaysian Oil Palm Industry Is Land Conservation Friendly Malaysian palm oil area Parameter Area or % Malaysian agricultural land area Total world land area for vegetable oils Total world agricultural land area Malaysian palm oil as % of total Malaysian agricultural land area Malaysian palm oil as % of total world land area for oil bearing crops 5.23 million ha 6.89 million ha 244 million ha 5,660 million ha 70% 2.0 % Malaysian palm oil as % of total world agricultural land area Malaysian palm oil s contribution to global oils & fats supply 0.09% ( of 5,660 million ha) 11.4%

41 % of land area TREND IN LAND USES AS A PERCENTAGE OF TOTAL LAND AREA IN MALAYSIA 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Other land uses (urbanisationindustrial, housing, etc) Forest area Agricultural land Oil palm planted area Source: FAOSTAT (2014); Malaysian Source: Palm Oil FAOSTAT Board (2013); (2014); World Malaysian Bank Data Palm (2012) Oil Board (2013)

42 Impact of Oil Palm Forest on CO2 emission MALAYSIAN GREENHOUSE GAS EMISSION AND REMOVAL CO 2 MT Total Co 2 Removal by LULUCF Total Co 2 Emission Total Co 2 Emission Total Co 2 Removal by LULUCF Forest 147 Emission by Energy Sector * Forest Palm Plantation * Trend Estimate Emission by Others 40.5 Emission by LULUCF + Agriculture (Rice) Sectors * Palm Plantation

43 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

44 CONCLUSIONS 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

45 CONCLUSIONS (con't)) 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

46 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.

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