Lee Yeow Chor, the Chairman of the Malaysian Palm Palm Oil Association (MPOA) addressed three strategies for the palm oil industry at the Palm Oil Trade Fair and Seminar (POTS Digital) 2021.
The 3-day event that started on January 5 is an international virtual conference bringing together world-renowned oils and fats industry leaders and experts to deliberate on the latest market developments and opportunities.
According to Lee, the first strategy is to collaborate with competing seed oil producers. He reckoned that one of the ways to grow is to offer multi-oils solution and not compete with each other.
“By offering multi-oils solution, the industry will be able to navigate the nationalistic sentiment against imported oils, and market different fractions according to use and purpose,” he said.
The second strategy he mentioned was the regionalisation of commodity-based palm oil trade, as the pandemic has highlighted the risk of long supply chain and implication on food security.
Furthermore, he described that it is not feasible economically and logistically to ship massive volume of palm oil across continents and to the inlands because the temperature change during shipping can be value destroying as it can damage the quality of oil.
“This strategy also fits with the population distribution between the under developed/emerging countries, and the developed countries,” he added. He also reaffirmed that although processed oils are refined, it is still commodity-based.
The final strategy mentioned by Lee was to develop special applications and purposes for smaller volumes of palm oil.
According to him, smaller volumes of palm oil will incur lesser cost for total logistics. Nevertheless, he emphasised that the oil produced needs to be of high value despite coming in smaller volumes.
Despite the anti-palm oil campaigns, Lee is still optimistic about the outlook for palm oil because he feels the fundamental factor falls back to the supply and demand.
“In order to see more growth, incentives for downstream companies should be given,” he concluded referring to those incentives given previously by the Performance Management and Delivery Unit (Pemandu).