Fadillah: CPO prices to stay strong this year as past crises proof palm oil plays crucial role in food security, energy supply

KUALA LUMPUR (May 17): Deputy Prime Minister Datuk Seri Fadillah Yusof said the past global crises have revealed that palm oil, as an affordable vegetable oil, is crucial for food security and energy production.

Fadillah, who is also plantation and commodities minister, said on Wednesday (May 17) that it is for this reason price and demand of crude palm oil (CPO) will remain strong in 2023.

“If we look into the current palm oil market, the CPO is trading at a good price point. CPO futures (are) certainly expected to remain strong for the remainder of the year,” he said during the opening remarks of the 11th Ministerial Meeting of the Council of Palm Oil Producing Countries (CPOPC).

“Moreover, the unprecedented global crisis due to the Covid-19 global pandemic, supply chain disruptions and geopolitical crises since the past few years have demonstrated the need for palm oil as a source of affordable vegetable oil.

“These crises revealed the volatility of markets in terms of supply and demand, and more importantly, that palm oil is crucial for food security and energy production. As such, we can safely anticipate that the demand for palm oil will only grow,” he said.

Malaysia holds the CPOPC chairmanship for 2023. CPOPC is an inter-governmental organisation established by Malaysia and Indonesia on Nov 21, 2015 to promote, develop and strengthen palm cultivation and industry cooperation among palm oil-producing countries.

CPOPC is holding the 25th Senior Officials Meeting and 11th Ministerial Meeting for two days starting Tuesday at the InterContinental Hotel Kuala Lumpur, attended by representatives of member countries from Malaysia, Indonesia and Honduras. Honduras is CPOPC's newest council member.

Representatives from observer countries Colombia, Ghana and Papua New Guinea, as well as guest country Nigeria were also present for the meetings, either physically or virtually.

During the opening remark, Fadillah also stated his hope for the CPOPC to be seen as the primary global body that champions palm industry related issues.

“The fact of the matter is that inevitably, we will keep facing multiple challenges as we move forward, just like the challenge we face now with the EUDR (European Union Deforestation-free Regulation),” he said.

“We need to continuously counter misinformation effectively and educate consumers. As such, CPOPC needs to have the capacity to elevate the positive perception of palm oil and its crucial role in global food security and economic development.”

The European Parliament approved a landmark deforestation law recently to ban imports into the EU of coffee, beef, soy and other commodities if they are linked to the destruction of the world's forests.

The law concerns especially palm oil smallholders who warn that they cannot comply with its requirement to prove where goods were produced, using geolocation data.

CPOPC is spearheading a joint mission by Malaysia and Indonesia to meet EU legislators and officials as well as industry players to bring forth the palm oil producing countries’ views on the adoption of the regulation.

In Malaysia alone, there are around 450,000 smallholders, and smallholders produce about 40% of global palm oil production.

The EU accounts for 9.4% of Malaysia’s export volume or 1.47 million tonnes of palm oil.

“It is a significant number with some companies having established refineries in Europe, thus the EUDR which can be considered as a trade barrier will directly impact operations and businesses in the long run,” Fadillah said.