12 August, 2010

I was recently interviewed by Dow Jones on a number of topics ranging from campaigns carried out by NGOs to market demand for Malaysian palm oil. The following are highlights of the interesting Q & A.

1. How do you see the palm oil imports into the US ?

The trend is on the increase as the country is a sizeable consumer of oils & fats. Should the US economy improve, palm oil demand will also increase and could possibly reach the one million tonne mark as before. Although the trans fat issue has certainly created an increased demand for palm oil as food companies are using palm oil to replace hydrogenated oils, US as a country could easily import more as it is not self sufficient in meeting its domestic requirements .

2. Has the anti palm oil campaign had any impact on the palm oil industry?

There has been minimum impact on the industry , statistics will show that demand is increasing , buyers are still asking for palm oil and prices of palm oil remain strong. The campaign may have affected its image but those who have been using palm oil are aware of its functional attributes, therefore continue to use it in their formulations, both in the food and non food sector.

NGO campaigns will continue as they have their own agenda to fulfill but many a time this hits the poorest people . Is this justified? Greenpeace for example is trying to self-police the industry but it’s rather ironic that it is not accepting the standards set by its own counterparts in RSPO. They prefer to remain at the sides and keep criticizing the industry rather than becoming a member and help improve industry practices. Why waste your energy by remaining outside when you could improve much more by being inside?

3. There are those who claim that RSPO has not been responding effectively to the NGO allegations in the media ? What do you think about this ?

Let us be clear that the role of RSPO is to ensure more stringent standards are set for the industry and not to contain the negative voices. Sidetracking to other matters will only make RSPO lose its focus. In a way, RSPO has responded to the allegations by setting higher standards for the industry to comply with through its Principles and Criteria which many players willingly adopted . While the industry has easily adopted stringent standards to meet sustainability needs this is yet to satisfy the NGOs. What more do they want?

4. How has Malaysian palm oil played a major role in markets such as China and India?

These countries are benefitting from amongst others, their close proximity to Malaysia which gives an added advantage in terms of transportation cost , in addition to their large population, increasing per capita consumption and growth.. For example, Malaysia can easily participate in the Chinese market while Indonesia enjoys closer proximity to India. Therefore, suppliers are taking advantage of this aspect when marketing their products . We see both as important partners to Malaysia .

China is the largest vegetable oil consumer in the world. China’s palm oil usage accounts for more than 15% of the total global consumption. The country imported 6.4 million tomes of palm oil last year, up by 22 % over the previous year , thus hitting a record high for the past decade. Malaysia and Indonesia, the two major exporters to China, account for 97% of the country’s total imports. Malaysia holds a larger share – 61% . Meanwhile, India imported a total of 6.2 million tonnes of palm oil last year with Malaysian imports at 1.3 million tonnes .

5. How do you select your markets?

The world is our market , we continue to put our best efforts in getting more people to accept and use palm oil. But if we base on proximity , then certain countries have an added advantage in fulfilling the demand. Certain markets may also prefer Malaysian source. Our main task is to ensure that Malaysia remains the preferred supplier . Each and every customer is important and we will continue to offer them our best services. Markets are treated equally in terms of quality and service .

We need to create opportunities in both big and small markets . The smaller markets can always add up to be big markets and can also counter the shortfall in imports by big markets . Our activities at MPOC reflect this philosophy.

The Palm Oil Trade Seminars (POTS) are organized in selected major importing countries but for the smaller countries where it may not be viable to hold this event, we invite the potential buyers to gather instead here in Malaysia. Our job is to ensure that buyers are given equal attention be it big or small, as they are all important current and future customers.

And for those who are unable to make it to Malaysia, we now organize internet seminars , we have just concluded one recently called POINTERS where we had 200 over people joining the web seminar which is a very healthy number taking into account that this was the first web seminar we did. We will be doing two such seminars per year where price forecast will also be included. We have to continue churning out new creative ideas to remain on top of our customers minds.

6. Any plans for markets such as Russia and Ukraine?

We will be soon setting up an office in Moscow to promote the palm oil business and to tap into the surrounding markets. Imports are reaching half a million tonnes each in these countries .

Palm oil can play a role as a solution provider for these markets. Erratic weather pattern means their supply can get affected therefore there is a potential for palm oil to meet their need for oils and fats. These countries can export their expensive sunflower oil or supplement their sunflower shortage by substituting with the more economical palm oil.

Both Russia and Ukraine have similar potential . They benefit by trading in oils and fats therefore , depend partly on imports to meet their domestic requirements. Palm oil can easily meet their need as it has a significant nett export capability .

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