Palm oil losing market to soybean for price, perception: Speakers

The market share of palm oil is declining in Bangladesh due to minimal price gaps with soybean oil while perceptions, too, play a vital role, speakers at a webinar said on Wednesday.

The webinar titled “Palm Oil and Future Market Trends in Bangladesh” was organised by the Council of Palm Oil Producing Countries.

Tariq Ahmed, senior director of TK Group of Industries, presented the keynote and said palm oil occupied 71 per cent of the market share in 2013 while the country consumed 12.6 lakh tonnes of palm oil against 5.15 lakh tonnes of soybean oil that year.

“After eight years, palm oil’s market share reduced to 53.7 per cent in 2021 while that of soybean oil increased to 46.3 per cent. Soybean oil consumption more than doubled to 11.65 lakh tonnes that year against 13.5 lakh tonnes of palm oil,” he said.

He also said poultry, dairy, and meat industries had grown a lot in Bangladesh after 2000, adding soymeal had become an important ingredient of these industries.

“The projected import of soybean this year is three million tonnes while the country’s extraction capacity stands at five million tonnes.”

The current price of crude palm oil in the international market is $1,355 per tonne, and soybean oil $1,527 per tonne.

“Soybean is exempted from 15 per cent VAT, and the oil extracted from the bean is also exempted. Thus, the real price difference between soybean and palm oil for consumers is 2 per cent. This minimal difference will not draw low-income people to consume palm oil,” AKM Fakhrul Alam, former regional manager (Bangladesh and Nepal) of the Malaysian Palm Oil Council, said.

“If you keep the price difference between $100 and $150 per tonne, the market share of palm oil will definitely rise. But if it is $50, soybean will see an increase in its market share,” he said.

The second issue is perception and promotional activities should continue, he remarked.

“It is not like you do promotional activities for two or three years. It is a continuous process. For example, the Malaysian Palm Oil Council stopped its activities in Bangladesh in July last year,” Fakhrul explained.

He further said, “There is no report on palm oil in newspapers. We are now seeing some anti-palm oil reports. Some reports were produced targeting the fast food industry. If this industry stops, the market of palm oil will further reduce by three to four lakh tonnes as this sector depends on this oil.”

Speakers also said palm oil producing countries were facing some challenges in cultivation on farmers’ end. Dr Sachnaz Desta Oktarina, a researcher from the Indonesian Oil Palm Research Institute, pointed out the challenges in her country.

She described an increase in temperature, the Smallholders Replanting Programme, and economic shock and carbon emission reduction commitment in COP26 as challenges for palm cultivation and oil production.