Effect of COVID 19 on edible oil industry and Palm oil

 

The Corona pandemic has caused a havoc on the global economy. Some countries have been more affected than others. I however would like to focus on the effect of the pandemic on the edible oil industry and Malaysian Palm oil especially. Last week I attended a webinar hosted by the Malaysian Palm Oil Council with Dr Bhavna Shah, country representative of India/Sri Lanka as the speaker and what she said about the palm oil industry right now is really food for thought.

How has COVID 19 affected the edible oil industry? 

The pandemic caused shutting down of restaurants and catering businesses and hence a drastic reduction in the  import of edible oils.

People have reduced eating outside to a very large extent and also takeaway orders have declined. This situation was particularly grave during the lockdown period. The production of cooking oil comes under Essential goods services but the production of containers isn't. Labours migrated back to their villages from the cities in huge numbers during this period and hence a massive shortage of labour was created. Also the import of edible oils like palm oil was reduced to a large extent. Malaysia and Indonesia are the biggest producers of palm oil in the world and Malaysia is the largest importer of palm oil to India. With the international borders restricted, the FMCG industry had to suffer. The less privileged people of the society, who thrive on palm oil for cooking faced a difficult time. Prices shot up as demands were high and supply was low. 

Now what role does palm oil have in the FMCG industry? 

Palm oil is an integral part of hundreds of things that we use on a daily basis. 

Chocolates

Malaysian palm oil is an integral part of chocolates as it's an affordable alternative to cocoa butter. MPO enhances the fat stability of chocolates. Chocolates made with MPO do not require tempering (which is needed for the smooth and glossy finish of the chocolates) while the ones made with cocoa butter does. Chocolate biggies like Nestle, Kinder and Mars proudly use Malaysian Palm oil in their products. 

Instant noodles: Also called Ramen in Japan, instant noodles have been revolutionary in the food industry. With just the requirement of boiling water to make a complete meal, especially for youngsters and the culinary challenged people, instant noodles have become a household favorite. Malaysian palm oil helps in the stability and texture of the product and since it's neutral in taste, the oil doesn't affect the flavour of the food that it's used in.

Baked goods: Palm oil is used in innumerable baking goods as it is a healthier substitute to hydrogenated vegetable oil and margarine; as it naturally becomes solid at room temperature. Malaysian palm oil adds and retains moisture in baked goods.

The number of  items in our daily life which contain palm oil is countless. From lipstick to toothpaste, soaps to cleaning products,bio diesel to hundreds of other items. Not to forget it's a major cooking medium in many households and an integral ingredient in cakes, bread, chocolates, pastries, icecreams, etc.

So how has COVID19 affected the Malaysian Palm Oil scenario?

About 40% of palm oil demand has been destroyed; especially in the HORECA sector which is a major palm oil consumer. International crude palm oil prices dropped by more than 20 % because of the Corona virus restrictions enforced by India and other countries. India is the largest importer of Malaysian Palm oil followed by China.

In India, palm oil is used in Southern states as a major cooking medium. Although the demands have dropped significantly. The bakeries and restaurants have been on a break during the lockdown. The  import of Malaysian Palm oil has plummeted because of reduced demand and this may cause negative impact on the economy. The crude palm oil prices have crashed in Malaysia and Indonesia due to stalling of imports. The pandemic needs to get controlled soon otherwise even the edible oil industry is going to suffer a serious blow.

Dr Bhavna Shah

Let's not spread any false news about any industry and let's take all precautions to control this pandemic. Let's hope for a better economy and healthier future.

For more information, visit mpoc.org.my  Facebook, Twitter, Instagram