Some questions on the palm oil issue

If you’ve been paying attention to the palm oil industry recently, you would note that the minister in charge Teresa Kok has been adamantly screeching at Norway for stopping the imports of biofuel.

Apparently France is also going about doing the same thing as well.

But at the same time, why the noise? Personally I think it is a bit too much concern of a “domino effect” cascading throughout the European Union.

If we look at the data found on the Malaysian Palm Oil Council (MPOC) website, the statistics show that the export to the EU has actually been increasing year on year.

To quote the site:

During the period of Jan-Nov 2018, Malaysian palm oil export to the Europe region increased by 66,282 MT or by 3.58% to a total of 1,916,118 MT from 1,849,836 MT registered during the same period of 2018

You would also note that both Norway and France are in the list of importers at 18 and 22 respectively, sorted by volume.

Looking at the list, what should worry everyone is not Norway or France, but the fact that there are new suppliers getting into the game – as noted by the MPOC about countries in Latin America taking over the exports to the Netherlands here:

Additionally, the EU has significantly been importing its palm oil from the countries in the South and Central America such as Colombia, Honduras, Guatemala and Ecuador. These countries have emerged as important palm oil suppliers into this region. Increasing competition from animal fats and recycled vegetable oils as feedstocks for biofuels also led to the total marginal decrease of MPO export into the Netherlands.

However, it does not explain how Latvia went from importing 29,000 metric tonnes to a mere 173 metric tonnes in the span of a year. It also does not explain the shrinking demand in Belgium (71 percent), Germany (44 percent) and Bulgaria (31 percent).

What happened here?

Yes, by all means go yell at Norway and France for saying that palm oil is not “green” enough for them. I’m sure the latter tried to be “greener” by taxing petrol to the point of riots in Paris which cost him dearly.

However, if we are talking purely from a market standpoint, the shift of France and Norway are minor compared to the shifts in others – and these shifts are not being explained.

We are literally, yet ironically, missing the forest from the trees. Thus, if the Malaysian government is truly concerned about the exporting of Malaysian palm oil lagging, they should be asking why are some EU nations preferring Latin American imports rather than our own.

Why are Belgium, Germany and Bulgaria shifting away from our imports? Are they also going for Latin American palm oil, or is it merely a market driven decision to switch?

And, of course, how can a country like Latvia which imported some 29,000 tonnes in 2017, suddenly see a 99.4 percent drop?

If Latin America is starting to cut into the Malaysian palm oil market, then that is something for Malaysia to consider for future competition, not lament and decry how countries want to remove palm oil entirely, but that there is another player in the game.

Simply put- why cry over the person who doesn’t want to buy from you at all, rather than cry at the lost customer who decided to change suppliers?