What is Palm Oil?
Palm oil is an edible vegetable that is used in food, toiletries, cosmetics, and cleaning products around the globe. Palm oil is derived from the West African palm fruit, which was imported to Southeast Asia from Africa in the 19th century and continues to enjoy extensive production in Indonesia and Malaysia.
Although there are other alternatives, including rapeseed and sunflower oil, palm oil is preferred to a variety of other vegetable oils for the following reasons:
- Palm oil can be extracted all year long – with a year-round harvesting period; palm oil is an attractive choice for product manufacturers as the ingredient is in ample supply throughout the year.
- Less is more – When compared with sunflower and rapeseed oil, palm oil uses ten times less product than sunflower and rapeseed oils used for the same purpose. Palm oil is a popular ingredient as it maintains a solid state in room temperature products, such as lipstick; therefore manufacturers can use less of the ingredient.
- Higher product yield – Approximately 4,000 kilograms of palm oil is produced per hectare. This yield is much higher than other vegetable oils, making palm oil a more affordable product to manufacture and export.
- Less maintenance – A significant problem for most exporters of edible crops is the cost of product maintenance, including pesticides, fertilizers, and water. Overall, palm plants require less fertilizer and pesticides overall. The plant can also retain more carbon, which is better for the environment, as plants use carbon to fuel their growth.
What is Palm Oil used for?
Despite being an edible crop, palm oil is used in a variety of products both edible and inedible. Because it’s safe for consumption, palm oil is a popular ingredient in cosmetics and toiletries such as lipstick, lotion, and cleaning detergent that aren’t eaten but come into contact with the skin. It’s also important to note that palm oil is used and in high demand around the world, including in Africa, Europe, and North America. The following are a few popular uses of palm oil:
- Cosmetics – Palm oil is used in cosmetic products, such as lipstick as it doesn’t have a strong odor or flavor, and as an added benefit it holds color. Palm oil is a viable alternative to other edible vegetable oils, as it doesn’t typically melt at higher temperatures.
- Food – Chocolate, instant noodles, bread, and frozen snack products are just a few places that you may find palm oil in your local grocery store. Palm oil is used in chocolate to improve its texture and appearance and as an alternative to other oils that would be more likely to melt. Palm oil is used to pre-cook noodles in popular microwaveable instant products. Finally, palm oil is used in frozen products including french fries, breakfast items such as waffles and pancakes, and other bread products.
- Soap – Palm oil is used in traditional bar soaps, hair conditioners, and also detergents as a buffer against cleaning agents that strip natural oils.
Top Palm Oil Importing Countries
The top importers of palm oil are India, the European Union (EU), China, Pakistan, and Bangladesh. The US rounds out the list as the sixth top importer. For the purposes of import/export, many people view the EU as one country, but when the countries are examined separately, the top palm oil importing countries are India, China, Pakistan, the Netherlands, and Spain.
Palm Oil Importers
In addition to the top palm oil importers named above, it’s important to note that palm oil is imported in different regions of the world, including Africa and Southeast Asia, where it is most commonly produced. The following list of 15 countries represent the top importers of palm oil in 2017 divided according to their region of the world:
- Netherlands (member of European Union)
- Spain (member of European Union)
- Italy (member of European Union)
- Germany (member of European Union)
- Belgium (member of European Union)
- United States
As noted in the list above, most of the palm oil importing countries are located in Europe and Asia. Though they don’t rank at the top of the list of oil consumption by country, several countries in Africa, North America, and South America also import the product. Additional palm oil importing countries in Africa include Ethiopia, Tanzania, and South Africa. Palm oil importing countries in North America include Mexico and Canada. Top palm oil importers in South America include Colombia, Brazil, El Salvador, and Nicaragua. In the Middle East, Iran, Saudi Arabia, and Yemen are top palm oil importing countries.
Palm Oil Consumption by Country
Reviewing top palm oil importing countries alone can be misleading. Though both India and the United States are top importers of palm oil, there is a significant difference in how much palm is oil is consumed or purchased in each country. According to World’s Top Exports, India imports 20% of the world’s palm oil. China ranks second in palm oil imports, the amount imported is nearly half of India’s import rate at approximately 10%. Rounding out the list of imports by consumption are Pakistan, the Netherlands, and Spain, importing 6%, 6%, and 4% of the world’s palm oil respectively.
Index Mundi, examines palm oil imports per 1,000 metric tonnes. When examining oil imports in this way, India still consumes the most palm oil at 11,600,000 metric tonnes. The EU, which groups top palm oil importers the Netherlands, Spain, Italy, and Germany, imports 6,500,000 metric tonnes. China imports are slightly less than those in the EU at 5,250,000 metric tonnes. Completing the top five palm oil importers by metric tonnes are Pakistan at 3,250,000 metric tonnes and Bangladesh at 1,650,000 metric tonnes.
Palm Oil Imports in the United Kingdom
Iceland, a European grocery store based in the UK, has announced that it will no longer use palm oil in their products citing ecological concerns. Specifically, the chain believes that their increased need for palm oil will contribute to deforestation in Malaysia and Indonesia, the two countries where most of the world’s palm oil is derived. By the end of 2018, the supermarket expects to remove palm oil from all of the products produced under its brand name. According to World’s Top Exports 2017 data, the United Kingdom imported 1% of palm oil around the world. If other European countries follow suit, it’s possible to see a decrease in palm oil consumption in Europe.
Palm Oil Exports by Country
According to World’s Top Exports, top palm oil exporters include Indonesia, Malaysia, the Netherlands, Papua New Guinea, and Guatemala. The top palm exporter, India, produced over 18 billion in exports in 2017, which is almost double that of the second highest exporter, Malaysia. Malaysia’s 2017 palm oil exports were just over nine billion. It’s interesting to note that third on the list, the Netherlands, is also a top palm oil importer in the EU. Several of the top palm oil exporters are also top palm oil importers in their region.
According to Statistics Netherlands (CBS), more than half of the Netherlands’ palm oil imports are in the form of Crude palm oil, meaning that the palm oil in the Netherlands is likely exported in a processed form. The same is also true for Colombia. As the top importer of palm oil in South America, the nation is also on the list of top exporters in the world. World’s Top Exports ranked Colombia as the world’s fastest growing palm oil exporter, with exports that have increased more than 100%. Finally, the United States, which is one of the top importers in the world is also the top exporter in the North American region.
Palm Oil Exporters
Unlike the top palm oil importers, which are concentrated in Asia and Europe, a significant amount of palm oil exporters are located in South America. In fact, five of the 15 top palm oil exporters are located in South America, the most of any region. The remaining palm oil exporters are located in Asia, Europe, the Pacific, North America, and the Middle East. The following list of countries represent the top 15 palm oil exporters in the world as determined by World’s Top Exporters:
- Papua New Guinea
- Costa Rica
- United States
- United Arab Emirates
Import Palm Oil From Malaysia
Many of the world’s top palm oil importers import palm oil from Malaysia including India, the Netherlands, and many more European countries. According to the Malaysian Palm Oil Council, a corporation that tracks the export and import of palm oil from Malaysia, the top countries that import palm oil from Malaysia, are India, China, Pakistan, the Netherlands, and Turkey. Other top importers of Malaysian palm oil include Turkey, the Philippines, the United States, and Singapore. In August 2018, approximately 1,099,583 metric tonnes of palm oil was imported from Malaysia.
Palm Oil Prices
If you are researching Palm Oil prices, Malaysian palm oil prices are readily available each business day as the Malaysian government publishes them. You can find current Malaysian palm oil prices for the day on the websites of the Malaysian Palm Oil Council or the Malaysian Palm Oil Board, a division of the Malaysian government’s Economics & Industry development division that supervises the palm oil trade in Malaysia. The Malaysian Palm Oil Council is a corporation that seeks to promote the Malaysian palm oil market.
According to Business Insider, which has published an analysis of Malaysian palm oil prices in the period from October 2017 to the end of September 2018, Malaysian palm oil prices have steadily decreased. Palm oil prices have decreased from approximately 2,750 MYR (Malaysian Ringgit) per metric ton in fall 2017 to approximately 2,100 MYR per metric ton in 2018. In USD, this represents a price decrease of about $150 USD, from approximately $663 USD per metric ton in 2017 to $506.89 USD in 2018.
According to The Economic Times, the decrease in price may have something to do with the decrease in palm oil sales around the globe. Both Indonesia and Malaysia have a surplus of palm oil, as palm oil imports are down over the last year. In addition to the decrease in palm oil stocks, import of other oils such as rapeseed and sunflower have increased. The surplus of palm oil has lowered palm oil prices overall, making it an ideal time to import palm oil.
Resources for Palm Oil Imports and Exports
If you are planning to import palm oil, joining or subscribing to information from a palm oil association or council is a great way to stay abreast of current trends and information in the market. In addition to publishing data about the palm oil trade such as prices, associations and councils report on trends and news in the international market. The following are a list of organizations dedicated to providing information about the palm oil trade:
- Malaysian Palm Oil Council (MPOC) – http://www.mpoc.org.my
- Indonesian Palm Oil Association (GAPKI IPOA) – https://gapki.id
- Roundtable on Sustainable Palm Oil – https://rspo.org/about
Ways to Cap Can Help You Import Palm Oil
Ways to Cap is an African B2B platform dedicated to international trade. Ways to Cap offers a variety of services to simplify the process of exporting and importing palm oil and other products. Our platform facilitates the trade process by making it easier to meet partners in the palm oil trade. Not only do we connect you to viable trade partners, but we also assist in vetting these partners to ensure your company does not fall victim to trade fraud.
In addition to vetting partners, Ways to Cap provides assistance at other stages of the trade process including determining fair prices, accessing and complying with local trade requirements in African countries, and coordinating logistics to ship products. Ways to Cap has a wealth of experience in the African market and works with both beginners and seasoned experts conducting trade in Africa. Sign up on the Ways to Cap platform today to enjoy the benefits of international trade and minimize risk to your company.