Palm Oil Investments
Why consider investing in palm oil? Palm oil is one of the most important food commodities in the world. It is used for cooking in many developing countries, and in food processing and production (of chocolate, biscuits, ice cream etc) across the developed world, and in a wide range of consumer goods including shampoo and cosmetics.
Indeed, because of its healthier qualities versus animal fats (palm oil contains Vitamin A and betacarotene), palm oil use for cooking and food manufacture is also increasing even in the United States – in the last decade US imports from Malaysia (the world’s biggest palm oil producer) jumped from less than 200,000 metric tonnes to over 1m tonnes by 2008.
The demand for palm oil has been continuing to increase, not only in the US and Europe, but also from large emerging market nations such as India and China. The increasingly popularity of palm oil has the potential side affect of putting environmental pressure on the areas where palm oil is produced and harvested. The issues include rain forest preservation, the rights of the local population and the need to protect water supplies.
Furthermore, with palm oil’s growing use in bio-fuel production, world demand looks set to accelerate further. Already, almost a quarter of global palm oil production is going to bio-fuel. Against that background, the scope for increased production is relatively limited, particularly in the equatorial regions of East Asia where commercial oil palm plantations were first established 100 years ago. There is widespread resistance in countries such as Malaysia and Indonesia to the idea of turning over yet more equatorial rainforest to palm.
As a result, big producers are returning to the region where the oil palm originated – equatorial Africa – where the trees grow in the wild and where there are old and neglected plantations, so that investment can boost yields and plantation efficiency without huge encroachment on the established ecology. There are also vast acreages of semi-cleared land and scrub where the oil palm will thrive. As a result, opportunities for palm oil investments in Africa are increasing.