No need to fear European palm oil boycott, says commodities expert

Commodities consultant James Fry at the recent Malaysia-Vietnam Palm Oil Trade Fair and Seminar in Ho Chi Minh, Vietnam.

HO CHI MINH: A commodities consultant has downplayed fears over the impact of initiatives by European countries to curb the use of palm oil, citing their low consumption of palm oil and palm oil products.

Speaking to FMT on the sidelines of the Malaysia-Vietnam Palm Oil Trade Fair and Seminar (POTS) here recently, UK-based James Fry said many people were not aware that Europe accounted for less than 10% of the world’s palm oil demand, and this includes biofuel and food products.

Biofuel, he said, accounted for more than half of the palm oil demand, while the demand in the food sector had been dwindling for some years due to anti-palm oil campaigns.

“If in the absolute, worst-case scenario, the demand from Europe vanishes overnight, there will be a big shock to the market and prices will drop, but the market will adapt. The drop in price will make it cheaper than other vegetable oils.

“Countries like India, China and Pakistan would switch to buying more palm oil.”

In recent times, European countries have sought to curb the use of palm oil products as part of their efforts to fight deforestation.

Norway’s Parliament has voted to ban biofuels based on palm oil while the French national assembly ended tax incentives for diesel fuels containing palm oil.

Fry said when palm oil became cheaper than crude oil, the demand for biofuels from countries which used them would increase, and this would naturally see the demand for palm oil growing.

“Refined palm oil can also be used in power generation. So there are still many ways to make palm oil work.”

Markets, the former economics lecturer said, would find the best way to use palm oil as the commodity’s prices dropped.

In Malaysia’s case, Fry said the government should step up its use of biodiesel especially since it was one of the first countries to promote and test the use of biodiesel.

Malaysia needed to push for the greater use of biodiesel as the technology was there, he said. Indonesia is expected to switch to B30 (a blend of 70% diesel and 30% biofuel) biodiesel next year.

Some car companies and transport associations have in the past opposed the implementation of B10 biodiesel due to its supposed impact on vehicles but Fry rubbished these concerns.

“If you take your car now to Indonesia, and fill it with B20 biodesel, do you believe your car will somehow fail? Biodiesel works, it’s been proven. The cars running on biodiesel in Indonesia are also used here too.”

A greater use of biodiesel, he said, would help the Malaysian palm oil industry should European countries continue to play their “silly games”.

Last year, Prime Minister Dr Mahathir Mohamad urged the local palm oil industry to join the ranks of countries already using B20 biodiesel like Indonesia.

He said he hoped everyone would be prepared to accept B20 biodiesel fuel by 2020.