KUALA LUMPUR, May 12 -- As world’s edible oil demand has and will drop by about 25 per cent due to COVID-19 amid higher production and lower prices, Malaysian palm oil experts have underlined ways for the local industrial players to mitigate the pandemic impact.
Companies are told to manage their costs during this difficult period and adapt to digitalisation in doing business to further enhance their branding and sustainability.
“The key to survival for us is to manage costs and at the same time not to disappoint our customers. Palm oil is the best cooking oil in the world by far and we should do our very best to market it for the benefit of the crop,” Sime Darby Oils managing director Mohd Haris Mohd Arshad said.

He said while full recovery would only happen in the fourth quarter of 2021 (according to a survey), the plantation industry is still considered fortunate since the demand on global food supply chain continues during this time, unlike other industries such as aviation and tourism.
Malaysia can still continue to sell palm oil although at a much lower numbers, he added.
“We need to manage our sales in order to maintain our cash. No doubt we want to remain profitable but right now cash flow is more important,” he said during the Malaysian Palm Oil Council (MPOC) dialogue on the MPOC Facebook live session today.
Another panellist, Malaysian Palm Oil Association chief executive officer Datuk Mohamad Nageeb Wahab said the government needs to assist the plantation industry by allowing more Bangladeshi workers to work in the plantations to help the industry retains its yields.
“The government needs to assist us overcome the shortage of workers in this industry. Currently it is difficult to get Indonesians to work here.
“(Thus) We hope the government will allow more Bangladeshis to come here. This needs to be addressed although it’s not during the MCO (movement control order) but shortly after that,” he asserted.
Mohamad Nageeb said it is vital for the country to come out with a radical change as it enters the new norms, and this includes addressing the tax issue faced by the industry.
He said the tax structure in the industry is not responsive to how it performs, instead it is responsive to the government needs.
“The industry is paying about 40 per cent total tax to the government and it is not purely on the basis of profit. Imagine when you are losing so much money you still have to pay tax to the government.
“We need to sit down with the government and address this. If not, a lot of us, especially smallholders, will not have food on the table,” he said.
Commenting on the B20 implementation, he said the government might need to pause the implementation of the fuel mix of 20 per cent biodiesel and 80 per cent diesel.
Indonesia has already mentioned that B40 is not going to happen so soon and even B30 is going to be affected.
The demand for palm oil is going to be bad while production for both world’s largest palm oil producers (Indonesia and Malaysia) is going to increase between five and 10 per cent this year due to falling demand, he added.
Malaysia’s palm oil stocks declined from 1.75 million tonnes in January to 1.7 million tonnes in February-March before rising to 2.0 million tonnes in April.
Meanwhile, Sumwim Global chief executive officer UR Unnithan said the challenges facing the palm oil industry post COVID-19 is demand destruction, especially in the food service and hotel industry (Horeca), accounting for 30-40 per cent of major consuming markets, namely India, China and the European Union (EU).
He said as the overall fuel consumption in the transportation sector has reduced, it will also dampen the demand for biodiesel.
“But on the opportunity side of the industry post COVID-19, we could move quickly to meet the EU 3MCPDE/GE norms of 1.25 PPM/1PPM in line with other vegetable oils to improve food safety image,” he said.
Unnithan called on the industry to invest in research and development to increase palm olein in blends with soft oils for household consumption and bring smallholders to the sustainability platform in line with the United Nations’ Sustainable Development Goals (UNSDGs).
He said that there is a need to re-strategise new demand creation in a de-globalised world by increasing domestic and regional (ASEAN) consumption in both food and fuel.
On price outlook for this year, he said it is going to hover between RM1,800 and RM2,300 per tonne.
Moderator Datuk Dr Kalyana Sundram, who is MPOC chief executive officer, said palm oil is not the only edible oil reeling under pressure, as the scenario is also faced by other oils such as soybean, rapeseed and sunflower oil.
“The discounted in demand, as well as prices all over the world is going to be universal in all the competing edible oils,” he said.
-- BERNAMA

https://www.bernama.com/en/business/news.php?id=1840973
Source: bernama.com