Summary
As of 2020, the global palm oil market has been experiencing a slowdown in growth, particularly due to reduced production in major producers such as Malaysia and Indonesia, which together account for over 80% of the global output. Despite the controversies surrounding its environmental and health impacts, palm oil remains the most consumed vegetable oil worldwide, with over 3 billion consumers. The European Union has taken steps to phase out palm oil in biofuels by 2030 through the RED II directive, affecting producers and markets like France, which uses 75% of its palm oil imports for biofuel production. Consumer awareness remains low, with many unaware of palm oil's presence in products and fuels.
The industry aims to improve its sustainability image through RSPO certification, yet only 19% of palm oil is certified as such, and debates over the certification's effectiveness continue. Price fluctuations have been observed, with a tonne of palm oil valued at around 604.75 euros in July 2020, maintaining its position as the cheapest vegetable oil globally. Major players in the market include Wilmar with a turnover of $62.6 billion in 2019 and Sime Darby Plantation Berhad with $2.8 billion in the same year. The market is segmented among producers, refiners, importers, and processors, with entities like Total and L'Oréal among the key importers and users of palm oil in their operations
Navigating the Contested Waters of Palm Oil Consumption in France
In recent years, the French palm oil market has navigated through a sea of controversy and regulatory challenges, even as consumption remains significant. France's reliance on imports for its palm oil needs is substantial, with over 400,000 tonnes, valued at around 250 million euros, entering the country. Agriculture remains at the heart of this market, with the oil palm fruit serving as the critical raw material for this thriving industry. The demand for palm oil in France has maintained its momentum despite increasing public scrutiny over environmental and health concerns.
This resilience in consumption can be attributed to a lack of awareness among consumers, many of whom inadvertently consume palm oil hidden in over half of industrial products, including common food items and fuels. The debate was notably ignited when a majority of Europeans, especially the French, expressed support for ending fiscal advantages that promote palm oil use in fuels.
Europe's role as a key player in the palm oil market is evident; as the second-largest importer globally, the region consumed over 6.5 million tonnes. The distribution channels of palm oil in France include large and medium-sized supermarkets, traditional fuel service stations, and specialized stores for cosmetics and food products.
The distribution network creates a direct link between the product's varying applications and the consumer market. On the production side, more than 80% of global palm oil comes from Malaysia and Indonesia. This concentration of production affects the distribution across the globe, and France feels this concentration keenly in its import needs.
France's domestic palm oil consumption represents a considerable market, with over 400,000 tonnes circulating within the country's borders. Despite the attractiveness of palm oil due to its high yield per hectare and versatility for industrial use, the market faces criticism over deforestation and biodiversity threats, tarnishing its image. In response, France has seen a move toward sustainable models of palm oil production, with certification schemes attempting to mitigate the adverse ecological impacts.
Price dynamics play a crucial role in market behaviors. Palm oil prices saw an uptick but faced a downturn as the Covid-19 pandemic unfolded before recovering again. Notably, in July 2020, the price was about 600 euros per tonne, cementing palm oil's status as one of the most economical vegetable oils available.
Major regulation efforts in the European realm, such as the Red II directive, have aimed to exclude palm oil from renewable energy targets.
Key Players Shaping the Global Palm Oil Market Landscape
The global palm oil market is influenced by a conglomerate of diverse players, each contributing to the industry's complex dynamics. These stakeholders range from large-scale plantation firms to multinational consumer goods corporations, each playing a distinct but interconnected role in the palm oil value chain.
- Wilmar International stands as a titan among palm oil producers. This agribusiness group is not just a market leader but also infamous for its expansive global influence, which by virtue of its sheer scale, has a significant sway over the global supply and pricing of palm oil.
- Sime Darby Plantation Berhad represents another key plantation giant. It's one of Malaysia’s leading producers, with vast plantations that span across the country. Sime Darby's practices and policies have consequential impacts on market trends, sustainability efforts, and labor issues within the industry.
- AAK AB hails from Sweden and specializes in vegetable oils and fats, including palm oil. Its role in the market is focused on the refining and supplying of specialized products that meet the needs of a range of industries, from food to cosmetics.
- Saipol, a subsidiary of the Avril Group, is a European refiner with significant capacities for processing oilseeds, including palm oil. They place emphasis on the production of biodiesel and the supply of vegetable oil for food applications, further contributing to the demand for palm oil in Europe.
- Total, primarily known as an energy giant, has branched into biofuels and integrates palm oil in its production of renewable fuels. Its bio-refinery at La Mède exemplifies the intersection of the energy sector with the palm oil market.
- L'Oréal is a prominent player in the cosmetics industry that utilizes palm oil in various products. Their demand for palm oil contributes to the oleochemical side of the market, placing importance on sustainability and ethical sourcing due to consumer scrutiny and environmental concerns.
- Carrefour, as one of the world’s leading supermarket chains, affects the palm oil market significantly through its sourcing policies for owned-brand products, as well as influencing the industry through consumer demand and sustainability practices.
- Danone, a multinational food-products corporation, makes use of palm oil in various food products. They have a vested interest in the supply of responsibly-sourced palm oil, considering their global brand identity and commitment to sustainability.
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Summary and extracts
1 Market overview
1.1 Definition and scope of the study
L' palm oil is a vegetable oil extracted by hot pressing from the pulp of the fruit of the oil palm. Worldwide, palm oil is mainly used for human food, then in the oleochemical industry (cosmetics, pharmaceuticals, etc.) and increasingly, but still in a minority, in the bio-energy sector
The palm oil value chain consists of several stages: production of the basic raw material (crude palm oil), transportation to the processing site, obtaining the final product (often refined oil), sale to the end user, marketing and sale to consumers.
There are two main reasons for the success of palm oil: its high profitability and low cost on the one hand, and its special physico-chemical properties on the other Palm oil is thus the most widely consumed vegetable oil in the world (35%). [ OECD ]
Malaysia and Indonesia dominate the palm oil market as they share between them more than 80% of production . On the demand side, on the other hand, the European Union is the world's second largest importer behind India. Moreover, Spain, the Netherlands and Italy together accounted for 81.5% of the EU's palm oil diesel production in 2019
France, for its part, uses 75% of its palm oil imports in biofuel production . Thus, in December 2018, the publication by the European Union of the Red II directive, which represents a first step towards banning palm oil in fuels by 2030, is weighing heavily on the French market. In Europe, and particularly in France, the opposition between oil groups, industries and producing countries, particularly Indonesia, governments and NGOs has since continued the debate on palm oil, as the European Union is the world's second largest importer of palm oil.
For several years, the world palm oil market are betting on the durable development and the traceability of production to get rid of the negative image of this edible oil conveyed by the multiple awareness campaigns conducted by NGOs. L' palm oil is indeed accused of being unhealthy but above all for the environment in producing countries.
In response to these dangers, the emergence in 2004 of "certified sustainable" palm oil aims to promote the sustainable development of the palm oil industry. However, it is still criticised by NGOs because it is considered inefficient.
List of charts
- Production mondiale d'huile de palme
- Consommation mondiale d'huile de palme
- Pays producteurs d'huile de palme
- Importations d'huile de palme
- Exportations d'huile de palme
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