Future of the Most Versatile Food Oil May Lie in Latin America
(Bloomberg) — The world is facing a growing shortage of its most versatile edible oil. The solution may lie with emerging producers half a world away from Southeast Asia’s vast palm oil plantations.
In Malaysia and Indonesia, which today account for the lion’s share of output, the aging trees carpeting much of the region are becoming less productive. Meanwhile, laborers are increasingly scarce and controls on land clearing have tightened, making it harder to replant.
rules to ban imports of crops from newly deforested land, growers are already intensely focused on satellite and geo-location technology to ensure supply chains are fully traceable.
With elevated yields and the capacity to appeal to a wide customer base, free from deforestation concerns, Latin America is emerging as a new frontier for palm oil, increasing competition particularly in Europe.
Farmers in Latin America “have learned from mistakes made by Indonesia and Malaysia when it comes to deforestation,” said Khor Yu Leng, an economist at Segi Enam Advisors, a consultancy in Singapore. “Short, simple, visible and low-emission supply chains should win in the long game.”
Palm oil exports from Central and South America are climbing. They jumped about 70% in the past decade, compared with an increase of just 14% in global shipments, according to US Department of Agriculture data — a sharp rise even if exports from those regions still make up only 5% of the world total, compared with almost 90% from Indonesia and Malaysia.
Supplying Europe
Colombia is already the world’s fourth-largest producer and has “lots of room” to develop its 600,000 hectares of plantations, according to Nicolás Pérez Marulanda, executive president of the National Federation of Oil Palm Growers known as Fedepalma.
The government has identified some 5 million hectares that are highly suitable for palm without the need for deforestation, Pérez said. An expansion of that size would put the country on a par with Malaysia in area.
Producers in Colombia are preparing to meet new requirements from the European deforestation rules, and both the country and Latin America have the opportunity to become reliable sources of sustainable palm oil for high-standard markets like Europe, Pérez said.
Meanwhile, farmers in Guatemala, the largest palm oil exporter in Latin America, are also seeing an increase in European demand because the country can show its production is free of deforestation through third-party satellite monitoring and sustainable certification, said Karen Rosales, former executive director of the Palm Grower Association of Guatemala.
“The problem is not palm oil itself, it’s the business model,” Rosales said. “You can produce palm oil very well or you can produce palm oil with a lot of environmental and social impacts.”
The edible oil is Guatemala’s third-biggest export, after textiles and coffee, Rosales said. The Central American country ships 80% of the oil it produces and its biggest market is Europe, with about 60% of the palm going there.
Read more: https://www.bnnbloomberg.ca/future-of-the-most-versatile-food-oil-may-lie-in-latin-america-1.2058750
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