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Annual Report 2015
Management Discussion and Analysis
(continued)
The Government of Malaysia, via the Economic Transformation Programme aims to
increase the gross national income contribution of the palm oil industry from RM52.7
billion in 2009 to RM178 billion by 2020. This will be made possible through a series of
concentrated efforts spanning across the palm oil industry’s value chain which are aimed
at capturing the growing demand for palm oil. Efforts to improve upstream productivity
include accelerating the replanting of oil palm, improving FFB yield and worker productivity,
increasing oil extraction rate and developing biogas at palm oil mills. Downstream expansion
of the palm oil industry will focus on developing oleo derivatives, commercialising second
generation biofuels and expediting growth in food and health-based downstream segments.
•
Increasing demand from China and India as the two largest consumer markets
China is also the largest importer of edible oils and fats, including soybean oil, palm oil
and rapeseed oil, and these imports have increased from 9.5 million MT in 2008 to an
estimated 10.4 million MT in 2012 at a CAGR of 2.3%. India’s imports have grown steadily
over the same period, increasing from 6.9 million MT in 2008 to an estimated 10.4 million
MT in 2012 at a CAGR of 11.2%. India’s jump in imports over recent years can be attributed
to rising income levels and various government schemes that encourage demand, such
as the Public Distribution System which provides edible oils, including imported oils, at a
subsidised price. In 2012, China and India’s total imports of edible oils and fats accounted
for 14.5% of global imports.
The increasing demand from China and India, in terms of both volume and growth rates,
are the key factors driving the growth of the global edible oils and fats markets
•
Emergence of Africa and Middle East as a key consuming region
Between the years 2000 and 2012, the regions of Africa and Middle East have emerged
as key consuming regions of vegetable oils. While Africa’s consumption of vegetable
oils grew at a CAGR of 3.5% during this period, imports grew at a higher rate of 5.5%.
Key vegetable oils consumed in Africa are palm oil and PKO. Meanwhile, consumption
of vegetable oils in the Middle East countries grew at a CAGR of 0.5% during this period
compared to the higher CAGR of 6% in imports. Key vegetable oils consumed in Middle
East countries are sunflower oil and palm oil.
The popularity of palm oil in the region of Africa stems from the region’s familiarity with oil
palm crops, which are cultivated in countries such as Nigeria, Cote d’Ivoire (Ivory Coast),
Cameroon and Ghana. Palm oil is also the most cost effective vegetable oil, thereby proving
its affordability for the larger segment of middle and lower income population in this region.