EU diminishing in importance as market for Indonesian palm oil
The Council of Palm Oil Producing Countries (CPOPC) partnered with a leading Indonesian newspaper, Kompas, and organized a one-day seminar in mid-May 2018. The event gathered Indonesia palm oil multi-stakeholders and European Commission to garner insights on recent European Union (EU) Renewable Energy Directive II.
Entitled ‘’Addressing Trade Barriers of Palm Oil Export in Global Market’’, the seminar brought multi-perspectives on board, of the business, government, academician as well as civil society organization, and presented Coordinating Minister for Maritime Affairs of the Republic of Indonesia, H.E Luhut Binsar Pandjaitan as the keynote speaker.
The Minister underlined that Indonesia shall apply offensive trade diplomacy against the EU, as palm oil ban is discriminatory while keeping room for fruitful dialogue. Indonesia is increasingly balancing out dependency to EU market by, among other, deepening and widening palm oil trade agreement with China.
CPOPC Executive Director, Mahendra Siregar, suggested the diminishing importance of EU as Indonesia top palm oil export destination. From having 75 percent of share of Indonesia palm oil export share in 1990, EU’s share has decreased to 14 percent last year (2017) and is forecasted to continue falling-off until taken over by China in 2025.
Palm oil demand in the non-EU market has been soaring up to 30 times since the 1990s while the EU has been experiencing a slow pace increase of 6 times during the period. Emerging economies in the region of so-called ‘’Indo Pacific’’ such as India, China, and Pakistan are undergoing a sizable population and economic growth, while EU tends to be stagnant.
In the closing statement of the seminar, Mahendra Siregar said that palm oil producers, in Indonesia particularly, need to build an equal and straightforward communication with the EU given that palm oil issue is now a global, common concern.
Looking just three decades ahead, global vegetable oil demand is projected to surge to 400 million tonnes. It will require land expansion, how much depends on the oil crop and its productivity. 200-300 million hectares (ha) of soybean, compared to just 20 million ha of palm oil, thanks to its high productivity.
Palm oil is the only viable option. Otherwise, there shall never be a sustainable way to meet the demand, said Mahendra Siregar