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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Outlook for palm oil appears bright

Outlook for palm oil appears bright

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1Outlook for palm oil appears bright Empty Outlook for palm oil appears bright Sun Jun 17, 2012 4:00 am

CSE.SAS

CSE.SAS
Global Moderator
Written by Azhar Razak

Sri Lanka’s Watawala Plantations PLC (WATA), a subsidiary of Sunshine Holdings Plc is planning on enhancing productivity of palm oil from the present 3,156 Kg. of Oil per Ha to 3,500kg/ha, in the near future. According to the firm’s Chairman, Govindasamy Sathasivam, the outlook on the potential of the oil palm crop is buoyant as the crop’s productivity compared to other competing cooking oils, such as coconut, corn and soya bean, is significantly higher.

“Furthermore, harvesting is considerably less labour intensive compared to Tea and Rubber. These supply side factors combined with an increasing demand for the product’s value as a cooking oil, and as a raw material input in soaps, detergents, cosmetics and pharmaceuticals as well as a source for biofuel, underscore the viability and the immense potential for expansion of this crop stream,” the Chairman of WATA, manufacturers and marketers of renowned ‘Zesta Pure Ceylon Tea’ said addressing shareholders at the release of WATA Annual Report 2011/2012.

During the year, WATA’s palm oil production rose significantly by 30% to 6.5 Mn Kgs of CPO from 5 Mn. Kg in the previous year. This, the Chairman said was attributable to an increase in the land extent as well as an increase in land/crop productivity.

“An output of 2,858 Ha. by your company amounted to a productivity level in the region of 3,156 Kg. of Oil per Ha; and this was a very commendable achievement surpassing last year’s yield by 32.2%,” Sathasivam pointed out.

He further noted that although around 80% of the global palm oil output at present is used by the food sector, its use in the above non food areas is increasing and would contribute to a higher demand and prices worldwide in the next few years.

“This year the Oil Palm crop became the main stay of your company - the pioneers of this crop in Sri Lanka. Crop diversification has proven to be a valuable measure for regional plantation companies to improve profitability when exogenous factors have impacted profitability of the traditional crops,” he said.

Sathasivam added that it is also important that the government encourages practices such crop diversification; and where traditional crops cannot be cultivated- diversification into areas such as forestry cultivation in order to maximize plantation land productivity and facilitate sustainability.

Palm Oil - seen as a humble source of edible oil, and heavily criticized for being unhealthy and un-fit for human consumption merely a few years ago has transformed markets and its image at a pace few would’ve foreseen, and is today substantiated to be one of the most nutritious edible oils in the world.

Furthermore, Palm oil is also the least expensive in the vegetable oil market whilst its value also extends beyond the use as a cooking oil, as one of the few sources of Bio-diesel – a renewable substitute for Petroleum driven diesel. This is in addition to the demand for Palm Oil as a raw material for soaps, detergents, Pharmaceuticals and Nutraceutical products.

According to Global Industry Analysts, world trade in Palm Oil has seen a sharp increase over the last two decades and the world market for Palm Oil is expected to increase to 100 Mn. Tonnes by 2015. World production volumes have been on the rise over the past few years as a result of increases in extent of land cultivated, as well as higher yields resulting from increased investments in research and development.

Moreover, the countries which are at present the highest consumers of Palm Oil such as India and China are not its key producers and hence largely dependent on imports.
http://www.nation.lk/edition/business/item/7181-outlook-for-palm-oil-appears-bright.html

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