Context:
Edible oil trade associations from five palm oil importing countries in South Asia – India, Pakistan, Sri Lanka, Bangladesh and Nepal – announced the setting up of Asian Palm Oil Alliance (APOA).
Relevance:
GS II: International Relations
Dimensions of the Article:
- What is Palm oil?
- How important is palm oil to global supply chains?
- What is APOA?
- Why such move?
What is Palm oil?
- Palm oil is an edible vegetable oil derived from the mesocarp of the fruit of the oil palms.
- The oil is used in food manufacturing, in beauty products, and as biofuel.
How important is palm oil to global supply chains?
- Palm oil is the world’s most widely used vegetable oil with its global production in crop year 2020 exceeding 73 million tonnes (MT), according to the United States Department of Agriculture (USDA).
- Output is estimated to be 77 MT for the current year.
- Made from the African oil palm, it is used as cooking oil, and in everything from cosmetics to processed food to cleaning products.
- Indonesia and Malaysia together account for almost 90% of the global palm oil production, with Indonesia producing the largest quantity at over 43 MT in the 2021 crop year.
- According to Reuters, palm oil makes up 40% of the global supply of the four most widely used edible oils: palm, soybean, rapeseed (canola), and sunflower oil.
- Indonesia is responsible for 60% of the global supply of palm oil.
Criticism of Oil palm industry:
- Unsustainable production practices leading to deforestation,
- Exploitative labour practices carried forward from the colonial era.
Advantages:
- Palm oil is preferred by many as it is inexpensive
- Oil palms produce more oil per hectare than other vegetable oil plants.
What is APOA?
- Through APOA, the nations seek to protect the economic and commercial interests of palm oil-consuming nations and will fight to boost member nations’ use of palm oil.
- The idea is to gain collecting bargaining power and make imports sustainable.
- On the sidelines of the Globoil Summit, APOA had its inaugural general body meeting.
- Contrary to their counterparts in Europe, the industry groups of the nations that buy palm oil from Asia are not actively pushing the global conversation about sustainable palm oil.
- The coalition would aim to change the stigma associated with palm oil and promote it as a premium, affordable, and healthful vegetable oil.
Why such move?
- India’s annual imports of edible oil is around 13-14 million tonne (MT).
- Around 8 MT of palm oil is imported from Indonesia and Malaysia, while other oils, such as soya and sunflower, come from Argentina, Brazil, Ukraine and Russia.
- Asia accounts for around 40% of the global palm oil consumption while Europe accounts for 12% of palm oil trade.
- Indonesia and Malaysia are the biggest palm oil exporters in the world.
- India is the largest importer of palm oil in Asia, accounting for 15% of global imports, followed by China (9%), Pakistan (4%) and Bangladesh (2%).
-Source: The Hindu
