LOCAL palm oil suppliers need to improve certain areas of its supply chain in order to cater to the global demand amid the COVID-19 pandemic.
According to the Malaysian Palm Oil Board regional manager for product development and advisory services Hisamuddin Mohamad Aspar, more competitive logistics systems need to be introduced in order to continue supplying oil products, especially in the Central Asia region.
“Importers expect Malaysian palm oil suppliers to conduct aggressive marketing and provide technical training in using palm oil products,” he said at the four-day Future-Proofed Palm Oil (FPPO) 2020 International Summit and Exhibition.
Hisamuddin also pointed out that importers are expecting to receive more flexible payment terms from suppliers.
Apart from that, the suppliers must find a way to offer more competitive prices for its products compared to local vegetable oils.
“The self-sufficiency levels for vegetable oils in Iran, Kyrgyzstan, Tajikistan and Uzbekistan are low (50% and below). The countries are depending on imported vegetable oils to fulfil their domestic demand.
“However, the major challenge for palm oil, especially in Iran, is that the unilateral sanctions imposed by the United States against the country has caused most of the palm oil suppliers to not want to be looked at as having connections with Iran,” he explained.
“Therefore, Iran’s LC (letter of credit) was not accepted by banks in palm oil-producing countries. Hence paying for imports through third countries is an extra cost for Iran,” he said.
Due to that, he said, Iran prefers a barter trade with Malaysia to eliminate the difficulties in monetary transactions.
Meanwhile, the palm oil market share in the Central Asia regions has been low (below 7%) and there seems to be no room for expansion, especially in the production of solid fat products and blended cooking oils.
Additionally, another speaker at the summit has called for more investments in plantations, refining, manufacturing, packing and branding of palm oil and palm oil products in countries like Nigeria, Ethiopia and Egypt, since the continent has the land, sea and appropriate weather conditions as well as a large labour force.
“This makes it the perfect ground for palm oil investments,” noted Association of Ghana Industries CEO for the agribusiness sector Fatima Alimohamed. – Dec 17, 2020
