
InfoSAWIT, KARACHI – The 7th Pakistan Edible Oils Conference (PEOC), held on January 10-11 in Karachi, delivered a crucial message to the global palm oil industry, particularly to Indonesia and Malaysia. The conference highlighted the soaring prices of palm oil, which have reached premium levels, necessitating policies that can maintain a balance between demand and supply.
Market analysts and industry players at the conference cautioned that the dominance of palm oil in the global market should not lead producers to become complacent. They pointed out the potential of other vegetable oils, such as soybean and canola, which are ready to compete if palm oil prices become uncompetitive.
With a population exceeding 240 million, Pakistan is a significant market for palm oil from Indonesia and Malaysia. Currently, Pakistan's domestic cooking oil requirement stands at 4.5 million tons per year, while local production is only about 0.5 million tons. To meet this demand, Pakistan imports approximately 3 million tons of cooking oil, with palm oil accounting for 2.9 million tons in 2023.
Pakistan's reliance on palm oil makes Indonesian policies highly influential in their market. One notable policy is the transition from the B35 to B40 program, which could affect the global palm oil supply.
In information obtained by InfoSAWIT on January 30, 2025, Abdul Rasheed Jan Mohammad, Chairman of the Pakistan Edible Oil Refiners Association (PEORA), also discussed the recent policy by the Pakistani government allowing the import of genetically modified (GMO) soybeans. This policy is expected to increase soybean supply in the coming months as an effort to offset rising palm oil prices.
From Indonesia's perspective, Moh. Fadhil Hasan, Head of Foreign Affairs at the Indonesian Palm Oil Entrepreneurs Association (GAPKI), revealed that stagnation and declining palm oil production are due to slow replanting programs, limited land expansion, and decreasing productivity. GAPKI noted that the highest productivity of Indonesian palm oil occurred between 2006 and 2011, averaging nearly 4 tons of crude palm oil (CPO) per hectare per year. However, this figure has declined to 3.4 tons in 2023.
Meanwhile, despite holding only 10% of the palm oil market in Pakistan, Malaysia is serious about maintaining trade relations with the country. Malaysian Minister of Plantation and Commodities, Datuk Seri Johari Bin Abdul Ghani, who attended the PEOC, acknowledged Indonesia's current dominance in the Pakistani palm oil market. This is largely due to the signing of the Preferential Trade Agreement (PTA) between Indonesia and Pakistan in 2013, which has provided trade advantages for Indonesia.
However, Malaysia is not standing still. The Malaysian government is working to enhance trade cooperation through a revision of the Malaysian-Pakistan Closer Economic Partnership Agreement (MPCEPA) to benefit both countries. Additionally, Malaysia is committed to maintaining palm oil supply stability by increasing land productivity, evidenced by a 12% rise in exports last year without land expansion.
The conference emphasized that global palm oil prices and supply will remain strategic issues for both producing and consuming countries. Adaptive policies and strong trade strategies will be key to maintaining palm oil's position in the global market. (T2)