DRAFT JNusbaumer:lcj May 1, 1973

PALM OIL - REVIEW AND OUTLOOK FCR BANK LENDING

SUMMARY AND CONCLUSIONS

1. Palm oil accounts for a relatively small share of the total foreign

exchange earnings for the major producing countries in Southeast Asia and

West Africa. Its share in the value of total exports of Malaysia in 1967-

1969 was 3.0 percent, for Indonesia it was 2.5 percent and for west African

exporters as follows: Dahomey 9.5 percent, Zaire 6.5 percent and Nigeria

0.2 percent. In absolute terms, exports from the principal countries in

1967-1969 averaged $43 million for Malaysia, $19 million for Indonesia,

$22 million for Zaire and $2 million each for Dahomey and Nigeria. However,

palm oil production is important for the economies of these countries both

from the point of view of diversification of their exports and to meet in-

creased domestic requirements.

2. The world supply of palm oil is expected to increase rapidly in

:.::e ;oe:::_ac. '-O 1980, matching the 12 percent average per annUl'll increase re-

corded since 1967-1969. This projection mainly reflects the expected out-

come of intensive development programs implemented in Malaysia since the

middle 1960's, which comprised extensive plantings and considerable improve-

ments in yields. New plantings under high-yielding varieties covered 290

thousand ha. of land between 1961-71, and Malaysia plans to bring another 140

thousand ha. under oil palm in 1972-76. A smaller but yet significant increase

in output is expected in Indonesia, where new plantations amounted to 25 thousand

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ha. in 1961-71, and in addition there are plans for extension to another 25

thousand ha. during 1972-76, with an equally important contribution to addi­

tional output from repantings and other forms of rejuvenation of old stands.

In West Africa, the Ivory Coast and Nigeria could also achieve considerable

progress in output, both in the subsistence and commercial sectors, by rehabil­

itating smallholdings and planting new areas. The prospect of rapidly increasing

supplies of palm oil on the world market raises the question of the likely market

conditions which they will encounter and of the possitle consequences for the

p~~:e o: palm oil.

3. The outlook for palm oil in the decade to 1980 must be viewed in

the context of world demand for and supply of all fats and oils and, partic­

ularly, of vegetable oils, in view of the high degree of substitution which

exists between different fats and oils in their end uses. World demand for

fats and oils in general is expected to grow rapidly enough to absorb the

prospective increase in output of these commodities in the decade ahead with­

out any persistent downward pressure on their market prices. Demand for all

vegetable oils will grow faster than for other fats and oils, but as a result

-~ ~e:·A~~ :onstraints affecting the supply of competing oils, a la~ger sba~e

of this demand than in the past will be met by palm oil and soybean oil. In

the case of soybean oil, increasing supplies will result partly from the fact

that soybean oil is a by-product of soybean crushings for meal, so that, con­

trary to what could be expected for an annual crop, the supply of soybean in

the form of oil cannot be readily adjusted to the demand for oil. Some down­

ward pressure on the prices of both palm oil and soybean oil may be needed to

facilitate their substitution for other vegetable oils, but given the overall

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supply/demand situation of the latter this pressure is expected to be moderate.

4. In the case of palm oil the demand is expected to be strong enough

to absorb rapidly increasing supplies without the need for a sharp downward

adjustment of prices. Due to the gradual shift of consump"c.ion in the devel­

oped countries towards products based on vegetable oils, including palm oil,

the foreign demand context appears a priori favorable. Palm oil consumption

is also projected to increase in developing countries due to rising incomes

and high income elasticities of demand for vegetable oils in these countries.

In addition, a number of factors make palm oil particularly suitable to meet

the growing consumer requirements in different end-uses. Though palm oil and

soybean oil supplies will both increase rapidly relative to supplies of other

competing vegetable oils, the market outlook for these two oils is fairly

similar and their relative prices are not expected to change markedly in the

decade ahead. Under these conditions, the projected price of palm oil will

continue to be high enough to warrant further investment in production, given

the high rates of return on palm oil projects. However, new investments in oil

palm plantings would generate additional output mainly after 1980.

5. The geographic distribution of world demand and the product composi-

tion of supply of vegetable oils after 1980 are likely to be less favorable

to exports of palm oil and more to production for domestic use. As a result,

there is a case for shifting the locus of future investment in palm oil ~­

duction to areas where the potential growth of internal demand is greatest,

provided they have a comparative advantage in production. This shift of

emphasis would be in conformity with the policy of encouraging the diversifica­

tion of output in the major palm oil exporting countries of Southeast Asia,

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while catering to the need for impro~ement in the productivity of palm oil

plantations in some other producing countries. The main area to be taken

into consideration in this respect is West Africa where, though the yields

and hence the rates of return on oil palm investments are lower than in

Southeast Asia, they are still high by comparison with production alter­

natives in the countries concerned. The particular conditions of production

of palm oil in West Africa call for directing new investments primarily

towards rehabilitation of existing plantings and processing. This assess­

ment is, of course, based on the present outlook for demand and supply of

vegetable oils. It should be pointed out, however, that the situation of

the vegetable oils market is changing rapidly and this calls for the neces­

sity to keep the supply/demand outlook for palm oil under review.

I. INTRODUCTION

1. The world supply of palm oil increased very rapidly in recent years

following a long period of slow growth (Table 1). From 1950-1952 to

1967-1969 world production rose at an annual average rate of 1.2 percent,

while from 1967-1969 to 1971 the annual growth rate has averaged more than

12 percent. In the earlier period, output stagnated and in parts of the

period decreased in the main African producing countries and in Indonesia

and this was only partly compensated by rising output in Malaysia and in the

smaller producing countries in Africa and Latin America. In the period after

1967-1969 output rose in all the producing areas. The planting programmes

started in west Malaysia (the main producer) in the early 1960's were accel­

erated in the second part of the decade and results began to show from the

mid-sixties onwards. Increased yields were obtained in Indonesia with the

operation of large-scale rehabilitation programmes, while extensive plantings

in the smaller African producing countries and the end of civil disorders in

Nigeria and Zaire led to a recovery of production in the African region.

2. World exports of palm oil also practically stagnated throughout the

1950's and early 196o's and began to increase at a 15 percent average annual

rate after 1967-1969 (Table 2). B,y 1972 the share of palm oil in

exports of all fats and oils had nearly reached the level at which it stood

in the early 19S0 1 s. However, of the major producing countries only Malaysia

and Indonesia recorded rising exports in the 1967-1972 period. In the main

countries of Africa most of the increase in output was absorbed domestically.

This was especially true of Nigeria, which became a marginal exporter after

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1967, whereas it previously accounted for a major share of African exports

of palm oil.

3. As will be shown below, world output of palm oil is expected to

continue to increase rapidly in the coming decade as a result of new plantings

coming to maturity, improved yields and the coming into operation of Bank pro­

jects presently being implemented. Oil palm projects financed by the Bank

Group will contribute an estimated 14 percent of the total increment in out­

put from 1970 to 1980 (Table 3). WOrld exports of palm oil are expected to

grow faster than output. Although the rate of domestic absorption of out­

put will decrease in the producing developing countries as a group, largely

due to the slow rise of consumption relative to output in Malaysia and

Indonesia, consumption is expected to grow more rapidly in the 1970's than

in the 1960•s both in the developed and in the developing countries (Table

7).

4. The projections to 1980 presented in Section III indicate that

palm oil will represent a larger share of the total output of all fats and

oils than at present, and that the increase in the share of soybean oil will

be even larger. The relevance of output prospects for soybean oil and for

other vegetable oils to the future price of palm oil derives from the high

degree of substitutability of these commodities in consumption. Only insofar

as palm oil is specific to certain end-uses can the demand for the oil be

directly derived from the demand for the final productsin which it is incor­

porated. In fact, however, most of the products made from palm oil can also

be (and are currently) manufactured from other vegetable oils and though the

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interchangeability of these inputs is far from absolute, it does mean that

the relative prices of different vegetable oils are very largely influenced

by the relative abundance of supplies. In addition, substitution for palm

oil in consumption extends to a number of animal fats and oils, so that changes

in demand for fats and oils in general affects a wide spectrum of commodities

of which palm oil is only one. The problem at hand is therefore to determine

what influence the future world demand for oils and fats is likely to exert

on the prices of these commodities as a group, given total projected supply,

and in this context to find out how the growth of supply of palm oil compared

with competing commodities is going to affect its price. This is the object

of Section II, which deals with demand and supply prospects for all fats and

oils, and Section III, which deals with the outlook for palm oil in particular.

5. The growth of demand for all fats and oils in the period to 1980 is

expected to be sufficient to absorb the increased marketed quantities of these

commodities without the need for severe price adjustments and the projected

faster growth of output of palm oil relative to other fats and oils will

probably not result in excessive pressure on the future price of palm oil

relative to other fats and oils. However, some downward pressure on real

palm oil prices may be expected and this raises the issue, discussed below

in Section I~ of the contribution which Bank lending can make to the economies

of developing countries in terms of economic growth and the balance of payments

by supporting plans for further expansion of output of palm oil in these

countries.

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II. FATS AND OILS - PAST TRENDS AND FUTURE PROSPECTS OF DEMAND AND SUPPLY

6. Total estimated consumption of fats and oils expanded steadily at

a trend rate of 2.9 percent from 1960 to 1970 (Table 4), but both the geo-

graphic and the product composition of demand changed during this period.

While total consumption in the developed and the developing groups of coun-

tries rose at the same trend rate of 3.2 percent, in centrally planned econ-

omies the trend rate of growth was only 1.8 percent. ,.,,ithin the developed

group, which in 1970 accounted for one-half of total world consumption and

which is the main export market for fats and oils produced in the LDC 1 s, the

most rapid increase in demand was recorded in Oceania, Japan and South Africa

combined (7. 0 per cent per annum), followed by Western Europe (3. 0 per cent per

annum) and the United States and Canada (2.6~ cent per annum). Among the

developing regions, Latin America recorded the greatest trend rate of growth

in consumption (4.3 percent) followed by Africa and Asia.

7. The product composition of demand also changed fairly rapidly during

the past decade or so. Consumption of animal fats and marine oils rose much more

s::nrly ":.!:an consumption of vegetable oils.!/ Within the vegetable oi1s grcq:-

1/ Data on world consumption by types of fats and oils is not readily avail­able. In a recent USDA study, ''World Supply and Demand Prospects for Oil­seeds and Oilseed Products in 1980 11 , Report No. 71, USDA, Washington, March 1971, total availability of animal fats and marine oils is shown to have increased by 1.9 per cent per annum from 1955-57 to 1963-65, against 3.7 per cent per annum for total availability of vegetable oils (oil equivalent basis).

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the composition of demand also changed in response to availabilities of the

different oils (see below) and to a number of economic and non-

economic factors affecting the use of the oils.

8. Though most fats and oils are highly substitutable in consumption,

the substitutability is low between industrial fats and oils as a group and

edible fats and oils. MOst of the oils in the latter group also have indus-

trial uses, mainly in the manufacture of soap, but the rise in consumption

c!' th€se oils mainly renected growing demand for them in hUll\8.ll cons'll.!!lpt.ion.

in fact as substitutes for animal fats.

Higher human consumption of vegetable oils in the form of margarine, short-

ening and other cooking oils as against animal fats reflect the growing con-

cern of consumers in developed countries with excessive cholesterol intake,

which is believed to be partly responsible for coronary heart diseases. This

concern has been particularly prominent in North America over the last decade in

and as a result consumption per head of vegetable oils /margarine and short-

ening has risen rapidly while consumption of butter fell (Table 5). The data

for the other major developed consuming area, i.e. the enlarged EC, show a slower

rise in the consumption per head of butter than of vegetable oils, though

margarine consumption per head fell on average from 1960 to 1968. In the EC

countries the evidence of a change in consumer preferences is thus less marked

and the replacement of butter by vegetable oil substitutes may be linked more

to the maintenance of artificially high support prices for the dairy product,

particularly in the countries constituting the old EEC.

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9. The shift of demand away from animal fats and oils and to vegetable

oils opens opportunities for virtually any of these oils in view of the high

degree of substitution between them, although for each individual oil the

relative rate of growth of supplies will influence the price of each oil

relative to its competitors.

10. According to Bank staff projections, world demand for all fats and oils

at 1972 prices will rise to 56 million tons in 1980. This is 31.5 percent

more than in 1970 (42.6 million tons) and represents a somewhat slower rate

of increase than in the preceding decade (33.1 percent). If the increase in

the share of vegetable oils in total demand for fats and oils for food uses

implied by recent FAO projections11is applied to the above figure, world

consumption of vegetable oils in 1980 would amount to about 39 million tons

(69.5 per cent of the total), an increase of 41 percent over 1970. In this

paper it has been assumed that the factors which have stimulated a more rapid

growth of consumption of vegetable oils than of other fats and oils in the

last decade will continue to operate in the period to 1980, namely: a con-

tinuing shift in consumer preferences away from animal fats and oils (and

from en-products based on these commodities), a growing demand for vegetable

~~:~~es and meal for livestock feeding, and a possible return to vegetable-

oil based manufacture of soaps and detergents in response to a slower growth

in demand for synthetic substitutes. The impact of these factors is likely

to be felt more in developed than in developing countries. However, future

Cf. FAO, "Agricultural Commodity Projections, 1970-1980 11 , Rome 1971. The FAO projects a total~rease in consumption of fats and oils to 53.6 million by 1980, and an increase in the Share of vegetable oils in demand for food uses from 66.6 percent in 1970 to 69.5 percent in 1980, using FAO's 11high11

projection which assumes the growth of income in developing countries will be in line with the targets of the UN Second Development Decade.

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demand for vegetable oils in developing countries is also expected to increase

considerably faster in the period to 1980 than in the previous decade, reflecting

the rise in incomes in these countries and the fact that the income elasticity

of demand for the oils tends to be relatively high at low income levels. The

assumed rate of increase of demand in developing countries is about 45 percent

from 1970 to 1980 against 38 percent from 1960 to 1970. On the assumption that

the rate of increase of consumption in Socialist countries will remain at

around 20 percent as in 1960-1970, total consumption of fats and oils in devel­

oping and Socialist countries combined would reach 29 million tons in 1980.

Table 6 presents the estimated 1980 consumption for major consuming areas

and compares them with actual consumption in 1971.

11. The changing distribution of world demand between different fats

and oils as a result of shifts in consumer preferences over the last decade

or so has been reinforced by the supply availabilities of the different

commodities. Wbrld production of animal fats and oils has increased slowly

compared to vegetable oils (Table 7 and Chart I). The production of butter

has on the whole remained almost stagnant, though there were increases in

particular areas like the EC under the stimulus of high support prices which

merely led to stock accumulation and the need to subsidize consumption. The

growth of lard has also been very slow partly as a result of production prac­

tices characterized by the emphasis on high-protein meal in feeding, which

has led to a decline in fat per animal. The output of marine products increased

rapidly in recent years, but these are mainly consumed as animal feeds. As to

the future, the rise in production of output of marine products and animal

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1/ fats and oils is expected to be slow in the decade to 1980.- For butter,

lard and marine oils combined, production is expected togrow at the rate of

1.9 percent per year.S/ Consequently, these products are not likely to exert

considerable pressure on the prices of vegetable oils with which they compete.

On the basis of past production trends, world supply of all fats and oils

combined in 1980 is expected to be roughly in balance with world demand at

the level of 56 million tons oil or fat equivalent. This in turn implies

that increased supplied of fats and oils will be absorbed in the market with-

o~t any peTsiatent downward pressure on the prices of these commodities as a

group.

12. Within the vegetable oil group the growth of production has been

comparatively slow except for sunflowerseed oil, rapeseed oil, soybean oil

and palm oil (Table 7). WOrld output of groundnuts increased at a diminishing

rate in the last decade, particularly after 1967, when the expansion in the

United States and in some smaller producing countries was offset by declines

in the major producing countries of west Africa. WOrld exports of groundnut

oil have been stagnant since 1955, except for an increase in the triennium

1966-68. Production is not expected to rise again at rates comparable to those

~ ~~e :95G's in the coming decade. World coconut production reaained stagnan~

from the middle of the 1950's to 1970, and the improvement noted in the last

two years, which was attributable to favorable weather conditions, is expected

to be short-lived. The development and use of high-yield hybrid varieties could

1/ Significant increases in the availability and catch of fish in the coming years are discounted by moat fishery experts.

gj Cf. USDA, op. cit. p. 98, where a summary of projections made by FAO and OECD is presented.

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increase production but the effect will not be felt until after 1980. The

production of cottonseed oil has grown slowly mthe past decade at the rate

of less than 1 percent a year. Though a rise in supply occurred in 1972 and

is expected to continue into 1973 due to favorable weather conditions and to

the diversion of cottonseed from direct feeding to oil extraction in some

countries, the long-term expected growth, which is linked to the growth of

output of cotton, is not expected to exceed 1.7 percent per annum. Sunflower­

seed is produced mainly in centrally planned economies and the rate of growth

of output has tended to fall in the last decade. The reverse tendency was

shown by output of rapeseed, which originates mainly in Eastern Europe,

centrally planned economies in Asia, Southeast Asia and western Europe.

These recent trends in output are expected to continue in the period to 1980.

13. In contrast, the output of both palm oil and soybean oil, which has

grown rapidly in the 1960's is expected to follow a strong upward trend in

the coming decade. As will be shown in Section III, most of the important

producing countries planted large areas to oil palm in 1960's and have cur­

rently on hand plans, supported in most cases by the necessary financial

arrangements, to plant more areas in the next few years, in addition to

carrying out other forms of rehabilitation of the oil palm industry. WOrld

soybean output has risen from 26.5 million tons in 1956-60 to 43 million tons

in 1966-70, a rise of 65 percent. The largest quantity increase was recorded

in the United States where production doubled, rising from 14.2 million tons

in 1956-60 to 28.7 million tons in 1966-70. Brazil's output of soybean rose

fastest in percentage terms during the same period (+521 percent), but this

country's total output in 1966-70 was still less than a million tons.

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The United States' soybean output is scheduled to rise to about 48 million 1/

tons- in 1980 and it is also expected that Brazilian output will continue

to increase sharply, reaching around 10 million tons in 1980. These produc-

tion increases are mainly in response to demand for animal feeds both in the

producing countries and in overseas markets, but they also result in a large

output of soybean oil as a by-product of bean crushing for cake manufacture.

The production of soybeans in China has remained at about the same level of

9 to 10 million tons throughout the last two decades and the expectation is that

future changes in output will be tailored to domestic needs:if this is so,

China will not become a net exporter or an irnpor tant net importer of soybeans

or soybean cake and oil in the next decade. Total world output including

that of China is forecast to reach roughly 70 to 75 million tons of soybeans

by 1980, or 11 millions tons oil equivalent.

14. As a result of these developments, it is clear that the greater part

of the increase in world demand for vegetable oils in the next decade will be

met by increased supplies of palm oil and soybean oil. The present (1971) and

projected shares of the different oils in world output of fats and oils in

1980 are shown in Table 8. To a large extent, therefore, the outlook for

palm oil prices on the world market depends on the relative demand/supply

situation for these two oils.

Cf. George W. Kromer, "An Economic View of Soybeans and Food Fats in the 1980 1 s", Speech delivered before the Institute of Shortening and Edible Oils, Inc., Scottsdale, Arizona, March 16, 1973. Figures given in bushels were converted into metric tons at the rate of 36.7 bushels = 1 metric ton.

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III. PALM OIL: PAST TRENDS AND FUTURE FROSPECTS OF DEMAND AND SUPPLY

15. As in the case of the other vegetable oils, there was a rapid

expansion of the demand for palm oil in the major consuming countries in

recent years. This was particularly noteworthy in the United States where

total consumption rose sixfold in the last five years after stagnating at

a very low level during the preceding two decades. In the other major

developed countries consumption of palm oil increased less rapidly on the

whole, though there was also a marked upswing in demand in the three main

consuming countries: the United Kingdom, Germany and the Netherlands. The

rise in demand for palm oil reflected both the general trend towards greater

proportional use of vegetable oils in consumer products and the fall in the

price of palm oil relative to competing vegetable oils.

16. Developments in the United States are symptomatic of the change

which has occurred in the end-use of palm oil. Until about the middle of the

1960's consumption of palm oil in the United States was mostly in non-food

uses and never exceeded 23 thousand metric tons a year. Since the mid-sixties,

however, the use of palm oil in shortening manufacture increased sharply, from

about 6 thousand tons in 1965 to 64 thousand tons in 1971 and an estimated 98 thousand

tonsin 1972. Non-food uses include the manufacture of soap and certain types

of lubricants. The main factor which has prevented a rapid growth of palm

oil in non-food uses in the past two decades has been the dynamic rise in

sales of syntehtic detergents and the concomitant fall in consumption of soap

in its traditional forms. This has occurred in all developed countries though

the switch to synthetic detergents probably took place earlier in the United

States.

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17. The price of palm oil relative to a weighted average of the prices

of competing vegetable oils has fallen markedly since 1967, after increasing

fairly steadily during the preceding ten years (Table 9, column 1). Given

price elasticities of demand close to 1 or higher in the main export markets

for the oil, the recent price behavior appears to be responsible for a large

part of the rapid rise in consumption in recent years.1/

18. Estimates of the future effective demand for palm oil are necessarily

based on assumptions concerning the demand for fats and oils and for vegetable

oils in general as well as the demand for palm oil in particular in its different

end-uses. As stated above, world demand for fats and oils is projected to con-

tinue growing steadily in the decade to 1980 and the gradual shift of consump-

tion in the developed countries away from animal fats and oils and towards

vegetable oils is also expected to endure. The foreign demand context thus

appears a priori favorable to palm oil. To this should be added the general

expectation of rising incomes in developing countries which would en-

tail a proportionally greater rise in demand for vegetable oils in view of the

high income elasticities involved.~ On the basis of these expected develop-

ments, projections of consumption of palm oil in 1980 have been calculated by

the Bank staff for the four major consuming areas, namely developed countries

as a group, socialist countries, non-producing developing countries and pro-

ducing countries (all LDC's) /Table 1Q7. Estimates of subsistence production

!I Roughly speaking, the price elasticity is higher than 1 in the United States, Canada and the United Kingdom, around 1 in Japan, Italy and the Netherlands and below one in other importing countries.

V Both the FAO in "Agriculture Commodity Projections, 1970-1980 11 , Rome 1971, and the USDA, op. cit., project a rapid growth of demand for vegetable oils in the LDC' s on grounds of income elasticity. Under one set of USDA pro­jections the demand/output ratio for all LDC 1 s combined is expected to rise to about 92 percent compared with 75.7 percent in 1963-65.

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(which is equivalent to subsistence consumption by definition) have also been

made but in view of the uncertainties involved in this type of projection,

the corresponding 1980 figures are given separately in brackets. The table

shows that total demand for palm oil would reach 4,130 thousand tons in

1980 compared with 2,078 thousand tons in 1971 if the current 1980 price

stood at the same level as in 1972, i.e. $212 per ton, which assumes a 17

percent fall in the 11real 11 price of palm oil during the present decade!/ (see

below). At a current 1980 price of $200 per ton (see paragraph 26 below)

projected 1980 consumption of palm oil works out at 4,280 thousand tons. Of

this total, a little more than one half will take place in developed countries,

against 42 percent in 1971 and 35 percent in 1967. Total exports of palm oil,

at 2,660 thousand tons, will account for 62 percent of total output and 71 per-

cent of total commercial (i.e. non-subsistence) output, compared with 46 per-

cent and 81 percent respectively in 1971, 49 percent and 91 percent in 1967-69.

Malaysia will be the dominant exporter and Indonesia will take second place;

Zaire will be the only impor~ exporter in west Africa, although the Ivory Coast,

Nigeria and Dahomey will expand their markets further (Table 11). The share of

LDC's in total consumption will fall from 58 percent in 1971 to 46 percent in

1980, but the share of intra-LDC trade in total exports will increase from 9

to 14 percent.

19. In projecting the demand for palm oil in the context of expected

demand for vegetable oils as a group, account has been taken of the particular

factors which make the commodity suitable to meet the growing consumer require-

ments and would thus tend to facilitate the absorption of rapidly increasing

supplies. Palm oil possesses a triglyceride structure and as such it requires

less hydrogenation than other vegatable oils for the manufacture of margarine,

!( This calculation is based on the assumption of a 2 percent average annual rate of inflation in the prices of goods.

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shortening and other cooking fats. The price differential between hardened

and un-hardened oil, which reflects the cost of hardening, is lower by $7-10

per metric ton for palm oil than for other commonly used vegetable oils: this

is a considerable cost saving for the margarine and shortening industries.

Palm oil is also rich in vitamin A and its use in these two industries saves

the cost of adding synthetic vitamins. Further, "Palm oil has good non-foam-

ing properties and good oxidative stability. Both these properties result in

an oil which is highly suitable for use in commercial deep frying.'J/

20. Public sentiment against water pollution caused by the use of phos-

phates in detergents has been growing in developed countries, notably the

United States, where several states have passed laws prohibiting the use of

phosphates in washing materials in excess of certain prescribed percentages.

A change in consumer preference from phosphate detergents to fat-based soap

compounds will, if it is not reversed, increase the demand for palm oil, which

in the past was largely used in soap manufacture and whose good lathering

properties make it a suitable material for use in products competing with syn-

thetic detergents.

2:. Significant improvements in the quality of palm oil have taken pla~e

in recent years and are expected to continue in the future. The proportion

of free fatty acids, which is an important quality characteristic, has been

substantially reduced, and oil with 3 percent or less free fatty acid content

is now commonly available. Special quality oil with 1-2 percent free fatty

acid content can also be produced for a small price premium. As these and

Technical Bulletin No. 1 of Palm Oil Producers Association, Kuala Lumpur, 1973.

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other quality improvements become more widespread, the acceptability of palm

oil in different uses is likely to be greatly enhanced.

22. The rapid increase in the supply of palm oil since the middle 1960's

was overwhelmingly determined by the intensive development programmes implemented

in Malaysia, which comprised extensive plantings and considerable improvements

in yields. This country accounted for only 7 percent of world output of palm

oil in 1959-61 but its share rose to 13.8 percent in 1965-67 and 24 percent

in 1969-71. Of the total increase in world output of 788 thousand tons between

1960 and 1971, 496 thousand tons, or 63 percent, took place in Malaysia. The

long productive life of the plantings carried out in Malaysia and elsewhere

leads one to expect that total world output of palm oil will continue to rise

at a rate close to the one realized in recent years rather than along the lower

long-term trend. A major part of the future increase in output is, in fact,

expected to take place in Malaysia, because of its extensive new plantings

under high-yielding varieties, covering 290 thousand ha. of land between

1961-71, and its plans to bring another 140 thousand ha. under oil palm in

1972-76. A smaller but yet significant increase in output is expected in

Indonesia, where new plantations amounted to 25thousand ha. in 1961-7~ in addi­

tion there are plans for extension to another 25 thousand ha. during 1972-76,

with an equally important contribution to additional output from replantings

and other forms of rejuvenation of old stands. In West Africa, the Ivory Coast

has planted 60 thousand ha. in 1961-71 and has plans covering another 10 thousand

ha. in 1972-76, thereby increasing its relative importance as a producer by 1980.

Nigeria could also achieve considerable progress in output, both in the sub­

sistence and commercial sectors, by rehabilitating its smallholdings and by

- 16 -

planting new areas. On the whole, however, Southeast Asia is expected to

increase its total share of world output at the expense of the traditional

African producers on account of more extensive plantings and higher yields.!/

The expected output of individual countries in 1980 is shown in Table 12, together

with present and past production. Total output in 1980 is projected at 4.3

million tons, representing a growth rate of 12 percent in 1971-80, as against

14 percent a year between 1967 and 1971. Of this total, about 3.2 million

tons would be commercial output representing an increase of 20 percent, or 225

thousand tons, per year in 1971-80 period, compared with 21 percent or 130

thousand tons per year in 1967-71. The proportion of total palm oil output

to the expected production of all fats and oils (by weight, oil or fat equiv-

alent basis), which declined from 4.6 percent in 1950 to 3.2 percent in 1967

and recovered fully in 1972, would increase to 7.8 percent by 1980.

23. As discussed earlier, the price prospects for palm oil in the period

to 1980 will be influenced by the relative abundance of the oil in relation to

other vegetable oils with which it.is substitutable in consumption. Since palm

oil and soybean oil are expected to compete closely in the period ahead to meet

the demand for vegetable oils,~ the different conditions surrounding the supply

1/ The 1980 forecast figure for many countries like Malaysia, Indonesia, Ivory Coast, Dahomey and Cameroon are arrived at by estimating the oil palm areas by age distribution and multiplying them with yields for the corresponding ages. The yields used are mostly those available from selected areas, which could be higher than the average yields for the general run of the stands. The 1980 estimates would, therefore, seem to represent the upper limit of the likely output for most of the major producers including Malaysia, Indonesia, Ivory Coast, Dahomey and Cameroon, unless either the areas planted or the yields increase far beyond present expectations.

~/ Of the total increase in consumption of fats and oils (oil or fat equiv­alent) in the period to 1980, palm oil will account for about 17 percent and soybean oil for 30 percent.

- 17 -

of these oils must be given particular attention in evaluating the likely impact

of this competition on their projected prices. A certain degree of inflexibility

characterizes the supply of both oils, though for different reasons. In the ca~e of

palm oil the low supply elasticity is due to the perennial nature of the crop, while in the case of

/soybean oil it is a consequence of the fact that soybean oil is a by-product

of soybean crushings for meal, so that, contrary to what could be expected for

an annual crop, the supply of soybean in the form of oil cannot be readily

adjusted to the demand for oil because the demand for meal is considerably

larger and growing at a more rapid rate. The form in which the two competing

commodities are traded also differ. While palm products are mainly exported in

the form of oil, soybean trade takes place mainly in the form of beans for

crushing into oilcakes in the importing countries.

2h. In recent years, US exports of soybean have increased rapidly to

Europe and to newly emerging markets in the Soviet Union, Japan and Taiwan,

partly in response to growing needs for high-protein content animal feeds

linked to the growth of livestock production. One aspect of this development

has been the rapid expansion of crushing capacity in Europe. According to USDA

estimates,!! Us exports of soybean will increase by about 1 million metric ton

a year in the next 12 to 15 years, reaching about 22 million tons in 1980. In

the United States themselves, soybean crushings are projected to rise on average

by 750,000 tons per year, to reach about 26 million tons by 1980. US exports

of soybean oil are expected to increase relatively slowly, i.e. to 900,000 tons

(1971:800,000), in view of rising domestic demand for the oil. But the expansion

of crushing capacity in Brazil and especially in Western Europe is expected to

1/ See George W. Kromer, op.cit.

- 18 -

result in large soybean oil supplies to the world market from these sources.

European countries have recently appeared as net exporters of soybean oil,

indicating the possibility of saturation of the soybean oil market in these

countries if the trend in soybean crushings continues.

25. Given increased supplies of both palm oil and soybean oil in the

coming decade and the fact that, though highly substitutable, these oils are

not perfect substitutes either with each other or with other vegetable oils,

some pressure on their market prices will be exerted.l/ However, this is

likely to be moderate as the supplies of other vegetable oils are not expected

to react to any great extent to a favorable price differential in the period

to 1980 and, as stated earlier, world demand &nd supply for all fats and oils

are projected to be in balance by 1980, which excludes any serious risk of a

fall of the prices of fats and oils in general. The market outlook for both

palm oil and soybean oil is fairly similar, rapidly increasing supplies being

in line with prospective increases in demand with a likelihood of small and

temporary excess supplies developing in the period to 1980. Therefore, there

is no reason to suppose that the price ratio of palm oil to soybean oil will

change markedly in the decade ahead. On this assumption the projected prices

of the two oils are shown in Table 13 where prices of other competing oils and

corresponding price ratios are also given.

1/ Chart 2 shows that there is a fairly close relationship between the relative price of palm oil and the share of palm oil in exports of competing vegetable oils. The correlation coefficient between the two aeries is -.704 in the 1955-1967 period and -.491 in the 1955-1971 period. The fall in the correla­tion is an indication that the pressure on the price of palm oil is less in periods of greater scarcity of competing vegetable oils (in this case, 1968-71 was such a period).

- 19 -

26. With regard to the future price of palm oil the following factors

are relevant. The projected total world consumption of palnoil of 4,130

thousand tons in 1980 (at the 1972 average price of $212 per metric ton,

c.i.f. Europe) which includes 3,030 thousand tons in the commercial sector

and 1,100 thousand tons in the subsistence sector in the producing countries,

falls short of the 1980 forecast production of 4,280 thousand tons (3,180 +

1,100). With a projected excess of 150 thousand tons of "real" commercial

de~~nd over marketable supply, a fall in price of about $12 a metric ton

is deemed necessary to ba2nce demand and supply in 1980. The 1980 market

price would, therefore, be about $200 per metric ton, c.i.f. Europe.!/

1/ This is the projected nominal price. The "real" price, i.e. the price in 1972 dollars would be $160 a metric ton, using the projected United States wholesale price index as the deflator.

- 20 -

IV. IMPLICATIONS FOR BANK GROUP INVESTMENT POLICY

2 7. Oil palm is one of the areas in which IBRD investment has been very

active. The Bank Group has participated in the financing of plantations of

oil palm in Malaysia, Indonesia, the Ivory Coast, Dahomey, Cameroon and Papua

and New Guinea. Total loans sanctioned by the Bank Group on oil palm projects

(including the oil palm fraction of mixed projects) in the last 5 years or so

has amounted to US$ 100 million. In addition, the appraisal of a small project

in Ghana covering 5,000 ha. has been completed and a number of projects are

under consideration in Malaysia and Indonesia.

28. The economic rate of return on the Bank Group projects appraised in

the past 4 years or so has ranged from 7 to 13 percent in the West African

countries to 16 to 18 percent in Malaysia and over 20 percent in Indonesia.

These calculations were based on a projected palm oil price of $160/ton c.i.f.

Europe. According to the projections presented here; the price is expected to ~$160 in 1972 dollars)

be about $200 per ton c.i.f. Europe in 1980 dollars! i.e. higher in real terms

than the projected price previously used (which would be $128 per ton c.i.f.

~Jr~e). Moreover, yield rates on newer varieties of oil palm could possibly

be raised.l/ If this were so, the economic rate of return an future oil palm pro-

jects would be higher than calculated in previous appraisals, even allowing for

some increase in costs. Consequently, the price projection for 1980 is such

as to encourage further investment in oil palm production on the basis of rate

of return alone. MOreover, should the price behave less favorably than pro-

jected, the margin of maneuver is sufficiently wide to reduce the probability

of losses on new investments to a minimum.

1/ In Malaysia, for example, the yield rates on newer varieties are expected to be 6-7 tons of oil per ha. or even higher as compared with the average yield rates of 5 tons per ha. on the present generation of varieties.

- 21 -

29. New investments in oil palm plantings would generate additional

output mainly after 1980. The peak yield period of palm trees occurs around

the lOth year following planting, gradually diminishes until the 20th year

and falls further with aging stands.!/ The total production life of the tree

is more than 30 years. Given the present age distribution of trees, a large

proportion of the increase in world output after 1980 would come from new

plantings.

30 • Prospects of demand for palm oil after 1980 depend partly on the

future growth of total demand for fats and oils and partly on the growth

potential of competing commodities. Though it may be assumed that world

demand for all fats and oils will continue to increase at the same rate as

in the 1970-1980 decade, demand for vegetable oils and oilcakes will probably

grow less in the developed than in the developing countries,g/in particular

the major producing countries. Total import demand may thus represent a

diminishing share of world demand for vegetable oils and oilcakes in the 1980

to 1985 period. On the other hand, some recovery of output of competing vege-

table oilseeds, notably groundnut which is mainly a cash crop, may reasonably

be expected in the major producing regions in response to high prices and the

prospects of higher export earnings.

!/ For example, in Malaysia the yield rate per ha. on high-yielding varieties has been found to increase from 3,500 kgs. in the 6th year to 5,150 kgs. in the lOth year; thereafter there vas a gradual decline in yields to 4,350 kgs. per ha. in the 20th year and to even loweT levels later.

gj In a tentative USDA projection, demand for oilseed meal and fishmeal is scheduled to grow by 3.6 percent annually in ~stern developed countries in 1980-1985 against 3.8 percent in the period to 1980. In developing countries as a group the corresponding rates of growth are 3.4 against 2.8.

- 22 -

31. In total, therefore, the expectation of a slower rise in import

demand for vegetable oils and increasing export supplies of commodities

competing with palm oil after 1980 point to the need for shifting the locus

of future investment in palm oil production away from major export-oriented

countries to areas where the potential growth of internal demand is greatest.

Such a shift of emphasis would be in conformity with the policy of encouraging

the diversification of output in the major oil palm producers of Southeast

Asia. Although it would also entail the use of Bank funds in areas (mainly

West Africa) where yields and hence rates of return on investment are lowest,!!

nevertheless, taking into account the production alternatives in West African

countries, the case for expansion of palm oil output in these countries is,

on balance, stronger than for similar ventures in Southeast Asia. The main

benefits to be derived from increased investment in palm oil in the West

African countries would be a saving in import outlays in the longer run (as­

suming continuing rapid growth of domestic demand) and a possible rise in

export earnings OI-ling to the diversion of competing local crops, notably

groundnuts, for export.

32 . The particular conditions of production of palm oil in ~st Africa

indicate the need to direct new investment primarily towards rehabilitation

of existing plantings and processing. Many countries in West Africa produce

considerable quantities of palm oil from wild groves. The oil is extracted

In Malaysia and Indonesia, the yield of modern stands at full bearing is almost 5 tons of palm oil per ha. (or over 2 tons per acre). In the West African countries, yields from plantations under modern varieties range from over 3 tons per ha. in Ivory Coast and certain parts of Zaire (upper reaches of the Zaire river in Equator and Haut-Zai:re Provinces) to about 1.8 tons per ha. in the remaining partsof Zaire, Nigeria, Dahomey, Cameroon and other countries (yields may of course vary consider~ within each country). lower yields in West Africa are due to inadequate rainfall and its uneven distribution over the year, and inadequate sunlight.

- 23 -

by hanipressing, boiling and other traditional methods. The extraction rate

by these methods is low and the free fatty acid content of the oil is high.

An oil mill can extract from the fruit much more oil than a hydraulic hand

press, which in turn is much more efficient than traditional methods. MOre­

over, households in the area tend to harvest fruit only to meet their direct

requirements, because the transport of the fruit to distant factories is dif­

ficult in the absence of good roads and the time taken in transporting it makes

it too stale to be used by the oil mills. The extraction rate and the quality

of the oil could presumably be greatly improved by establishing mills within or close

to the areas with thick wild groves. Cash payment for the palm fruit by the oil

factories m:iglt induce households to harvest the groves as fully as possible,

and to try to rehabilitate them. These factories could have some commercial

plantation of their own to ensure regular supplies of fresh fruit, but most of

their requirements should be met by stimulating a fuller harvesting of wild

groves. Such a system would permit the utilization of resources which are

partly going waste at present. MOreover, it would contribute to bringing the

subsistence sector of the countries concerned into the monetary system. Nigeria

is a particularly good example of a country where this type of encouragement

would be useful. In Nigeria, wild groves cover an estimated 2 million ha.,

accounting for 95 percent of the national output of palm oil.

As of now, the Bank's proposed palm oil projects and projects with

a palm oil component involve about 114 thousand ha. of pRntings, most of which

to be carried out in the second half of the decade (Table 14). Of this total,

close to 30 thousand ha. would be planted in Indonesia, about 5 thousand ha.

in Ghana and 2 thousand ha. in Costa Rica; about 77 thousand ha. would also be

- 24 -

planted in Malaysia. By far the greater part of the output from all these

projects would be available only in the first half of the next decade.

··- --- ~:.

:. ::...::.

-, )'

) ..

)<

~: WORLD PRO!JUCTIO:\ o~· t'AT3 A$ OILS, lYS:-::.~71

/ /

/ ./

/ s~ -/-~, ---

~~:

~

/...(

.:;::

•.(

;<

;~

Lt:

2[.~

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?ota: fat,:; and oi 1.8

/

,/ /

/ ./

/

Ard.m&.l r~ts fird marine ci ls

/ /

/ ·:/./

. . I . ! . j . i l·-~.!~. . '/ .... ,.

~·:.

'

• . I . • .

.

. / To~l veretable oics / ............. , 7----~-~ ·;··-·

18 ' ../i'' 2;.

" . ~,! ~~-.:

/ /

/

/ /

/. (56) /

18.1

/. (39)

/

11.9

(15.J)~

.,. ~(::;~1 ~..:......:....:-1

rf....~ t.r:.C:.:.U ::...:: of •c..::C. p::.C...:.c '"~..._~:l (:..:-. p:;;-::c:;.:.)

.:wdt· :-, ;:.-:l' l:. 67 -l ,--. ,·r4

£:1iJ'lfJ(-J~~· r-- •I \ /;.

7 :

\\. i ·' '. L \ , /

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"--......__} I .-/'/

7.'/ ~.j-- s.-;

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,.......-, E ~-; ~-3· z-~~ ~f:.- ; 71 I I I j_j_j ,...-

Anic:.;l Othar vegetable cd ls - :-:t-.;--i:le YCt:;e-: • .:-=:..e ~::.s

6 '

+1-~L~~-·--~-~--~-:-~~~~-r~~L.... : . 1 • • ..--. I . ' .. , + .. , ______ 1 ___ - . ..- _., . , < I , .. : i t_,- :-:---·--'·-··

' /"';-···! ~=--~~------ i .

i : I

--12' J~a"t.s

10 ~--- -----~--- -·!---· -- _.;._

6 i I

Soybean Oil 1

I . . • I 2 I ! ·: 1 . ! • · ---1--~ ---- ·-------- . . .---~---·. .... - . ___ j_;__. _ .. ___ :c;-,-iJ'a'f o~r ! • -~~--" ... ;sl 52 53 54 55 56 ~·1 '·" ;;1 6o 61 62 63 64 65 66 67 68 69 10 11 12 73 74 75 76 77 78 79 so

(-··--······--···············---~~···•··········Actual·-·····-··-·········--·······················)( ••••••••••••••• projected-·····-·--·--···)

4' ·-···• ·----r-~~~:~ ,_ -- .,-I--------·

i

(4.J)

:;ow: For projected "out[!J.t" ;,, l'i~~'•, proJections of 1980 consumption were used (assuming balance between supp],y and demand).

~ce: Unilever, Ltd., '"<lor-.., i'••·~ •r~l Oils Statistics".

oils l. 2. J.

·4.-· $. 6. 7·

.:;::.-"::n;:::.r. c:=..._ 3'~·.:~:::_,::,•,.; .::- c.:...: groundr.ut .Jil cottcnseed oil· r.:>.pesee.:i o~l p.;.l.""l oi"l. ct..>er cils

Percent

1'20

110

100

90 '-'· ' t-+ -~· r !

-•-t-·7-t"

'"' ~\1 111 DIITZG£"""1 Gf•'AJ'HF-'.4P£~ EUOfNE Olfil(H.-. CU. '' 0. ll, ~Lr..' INCH MAD£ IN U ., •

Char l.i!, I ReLATIVE ffiiCES OF PALM OIL AND SOYBEAN OIL AND SHARE Of PALM OIL IN EXPORTS OF COMPETING VEGETABLE OILS L!,

I I IiI

I I ,

I I 'I

Percent

e)

BO r-: ·- :- i-! 4

70 ~+----~30

60

50

40

30

20

10 ' i :!.5 =:::tn:r=t=t-:-r:=J--1t;++--r'·

1 ,, +--;

1 70 71 Ll The set of "competing oil•" 1ncludee palm, soybean, palm kernel, rapeseed, 1unnower, groundnut and cottonseed. Relative

prices are the ratio of individual oil prices to a weighted average price tor the competing set, using current export shares as weights.

Source: Table 9.

,:

Percent

rHJ :14l·lr. OlfTlCifN r;r~APH PAPf~

;;, o, ll, o'l J..<' dd.;H (lJOtNr OltT7U.

........ (J! 114 u. l; "· Chart 2: RELATIVE ffiiCES OF PAL'! OIL A!ID SOYSEAN OIL AND SEARE

OF PA!.:1 OIL IN EXPORTS OF COMPETING VEGETABLE OILS /1 Percent

lSi. · : : : : I r

1

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1 • • ' I I 0

1 # ' " 00 ' " ' +1

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110

~~il;-~~ :·t! ··:; \ ~~~~ ~~~-~r;. /-: 1

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50 ~::;:)t-.~7~"":-I~[;A-++ i-~-~--:-~t++:-t--t-+++-r+-r+-r-:: I ITt l ~__:-t+;i+,:i;L;:ih "-+-·:r~'+ rJ.~h:.3;Cb 125 .. ~·-· ·r-r....._ -THt•+-+-J~--.;.., r•-\ ·-~1+~"-~-t·· o---t--r-:w· 1:i_+- rr-~±±i+ ·r· ··Qt1 1

_,, ····-•" • • r·~---+--·-•~t··--·r~~-j t~=r~~L1·+~-.~. ~:rtt-t--nii~t±+-;~.+~~:~- K -~;=-=-+--~tt~ -1-i-':~.+ +-~·~t-: ~-~-trtt-~=~~~ ~-=--~~~-:~ -2r1~ ~ -: ~--r:_t-~L~~:-1~::--f==~~_w-~=t=~~

40 t:·• H· · '----:--• -~,.--t;~.,..-f rirrT" :--, .. , f·r'\-·"7t-:-t-:-+ ·--~r--~L-:+;+-'-rt---+ ~1'--'>·;--•---- ... '"-:r ·--·-t~--,....,...r-:--..,.---·--h··r~,-t"T"----:--j +~t+n-r+' --r··:. tr;t---'- gmr-. ,· i H+ Lt-~. Lr :--t--:+ . .;.. ;....0--t-r•;-; ·'+~--i-++~+ i;ft·[-~-c;~-~-·. -. :. ; r: , ... ,_.L!-'~--:---l·;·T ·----+ ,, G l ....._.__t-t·, +-----·--+ ·- -.- ·--t H--r-r~~-- ---rf-t--+- 1'+1- -+--t·+ ,__ -rrr~·r-t---;---,-_._ _ ... __ ___._,_t_J.___._rt -t-_.·---t-- t-·•-·- -· . -~ ·--t·r --·- ·t--+-. _,__ ... r-~ "t-,--+ +-·~--r-r......-,---1~ I

~H-t: · · +-'-·.;. ·t r-t-9· ....,. -•+ . t-~-+ +-+- ·t+++ ' :, l-- rt-.:;. i-h -1-- ~-H+ t++-t- --t-+-+ t-F ~ i · r ,; + +-:-i ; ~-; ~ r i ~-+..;.. ~+ : ... r -,...:-·-'-

30 ., ... ,....,. r·r+· ·t-·:·+·r- ·t-t·-~ 'T-t--- 1 •-H- H-H ,, '~r--1 -~-r- --1+-h· --rrt-·l . .;..;.L,.j·· .... ~x L r··-rt++·· -·-·-· '1--->.l-·--~ ••. .....,.....l~.,.--. : , ....._... , I . , .--- . . ~~ . I ~· j • lt • Lt~} H .. t : ._'-._ -:---: . I L . t: , : :~; It t--~-:--+-t---7-~~ .: \ I : ! ! . ! . L 1 , : . + . ~ : . o· -•:~-·-- ··~·· ,, .. l•·h· t·jtl'to-t -'·-1-~f c-.--t. ·++ t-'··"tt·•·_·...:.•+t·t· •·+• •. ,,.,~ri·--,·------·•-+·•----,-·-~·-r-"--··t·+-~~--_-j":~"t.tt·~ r~-: -1·: ~: ~ ~ ~.t: -1~·~ - t ·~·t; ;~~ ~ ~--+~0~t~-r -~.- ~1-t:-:·~-~~:~-~ t;: r-~ r'~--~L L _; 1

t. -~-; 1- · ·t-. -~-:-:_~~\i:t-~:-·~· -:_-;_-~rt=:t ~ t :: .-::~:-~:::_~-~

20 r+c--t;--[-- t-•' ': '' t ·-+·+·I 'T1 "\--• •. , • i ~--~1 ... -;--r •·r---t·;---r--:----o-·-:r--:-···H •\-t , ... -:-~ ;·-'-·--~j· ·-·----·-c··-··' [··---:-. r;----·· t----:----:----·---·1 [1--~+; -~ t, • t' 1,,; ;----:- +. '1 ··r 't .. .;.. .. L\ + ;..,...:. -r-~....-o --i-+•-.Lj i- ~- ;..f&EJ. -~ ..,....J. ;_;·!- . , - ~ ..... + : ...... J: . ...,. - .. t· . ..;.... .:... ... ~ . E ~Ttf=ftl-+-·. :·tj#t. -~~· ~~J~1rH=;..~~,..f.--irtr-:-----n-+---r--ri--'- ~-a-- ·1- ~-- ... , .. f--n+r-1-.-·f--t-···t .. ,L~.,- ~----t...:...,... .•

H- •-h H' 1 t •- 1 ! H I -r+i-+ -ri 1 ·r· r+ ~-......-Trf +~ 'Tr · '--:-;- •+--r•-- · •+ -r +- r• 'r ·I,··~ ··-~-+-~1-· 10 M-"-t- - ~tlt_jh -• tJJi -Ji t . . + t 11 r-- +t-+· rt-+--- +·+--~-+--o-f--:-:-- •-r-·~..L..,.t .. ~:.,...1---r--+-'l._s

H-t:t.HmE· f 1 'll; llJJ4'i ±i j1 +t u: H-t+r+ 'I I ·ii . r+f i.;"i'-i=P=Ii :...t.+=t.:Pi;tH~ :+tr -::.:.;:.;..R+-~r-14 +-1 ' '· r l 1 - T t · +t ++-+ + 1 i , r -r-r 1 .fir- H-r -·-1-H- r+-+• H-+ + ·-t- ... + r--r:- -rt-- 't- · • LJ' t r + ·:i- , ~-++t++-~ · -+-. · 1 • • • o--+-+ ~.,. l~> · ;o 1 '" 59 ov o o 3 ol! o; t> 67 cB 69 70 71

L1 The set of "competing oils" includes palm, soybean, palm kernel, rapeseed, sunflower, groundnut and cottonseed. Relative prices are tt• ratio of individual oil prices to a weighted average price tor the competing set, using current export shares ae wo1(hta.

Sourcee TtDl~ 9.

,:

Table 1: PHOWGI'ION OF PAI11 OIL, BY COUNrRIES, 1951-72

(1, 000 metr; c tons)

Proouct~cn oi Paim O~I Year West Ea:st Ivory Sierra ~ -Total Total Total· v:orld

Malaysia M.:ll.aysia Indonesia Nigeria Zaire Coast Dahomey Cameroon Leone Ghana Asia Africa Latin Total /1 a America /1

1:151 49 - 121 * 191 * * * * * 170 930 - 1,100 lf$2 46 - 146 * 170 * * * * * 192 910 8 1,170 1953 so - 161 * 181 * * * * * 210 990 10 1,210 1954 55 - 169 * 196 * * * * * 224 1,040 15 1,280 1955 57 - 166 * 197 * * * * * 223 990 17 1,230 1956 51 - 165 * 221 * * * * * 222 1,060 18 1,300 1957 59 - 160 * 234 * * * * * 220 1,020 23 1,260 1Si)8 11 - 148 * 225 * * * * * 218 1,050 21 1,290 1959 73 - 138 * 245 * * * * * 210 1,030 22 1,260 1960 92 - 141 * 234 * * * * * 233 910 17 1,220 1CJ61 95 - 146 541 224 20 36 31 35 36 241 1,017 22 1,280 1962 108 - 142 509 229 23 35 37 35 40 2.50 1,002 26 1,277 1963 126 - 148 510 224 25. 36 51 31 42 27i~ 1,037 35 1,347 1964 122 - J.61 515 209 2.8 45 53 39 43 283 1,050 39 1,372 1965 149 3 1.57 530 162 27 43 44 39 37 309 996 1!2 1,348 1966 186 3 175 .508 168 28 30 39 40 44 364 973 45 1,383 1967 217 9 174 325 149 3o 27 60 41 56 400 807 51 1,258 1968 265 18 188 370 196 31 31 46 42 54 471 894 60 1,425 1969 326 26 189 425 179 36 33 52 45 55 .541 947 69 1,556 1970 402 29 21.5 488 180 52 37 54 53 60 6u6 1,046 10 1.762 197J.I2 551 31 225 500 200 69 40 56 60 60 813 ,1,110 85 2,008 19122'] 6oO 72 250 100

-* The figures are included in the regional totals.

{l An adjustment bas been made to the figures for Nigeria before 1961 to make them comparable with the f:\.gures from 1961 onwards. Tbie adjustment has been cazried into the regional and wrld totals •

. '/1. Provisionel.

~urce: FAO, Prodaction Yearbook (Annual).

c

Table 2: EXPORTS OF PAUl OIL FROM THE PRG!ltlCING COUNTRIES, 19.50-72

(1,000 metric tons)

Exports of paJ m oil from producing countd~" Share of naJ m Ivory Total Total Total Horld oiJ in ,wrJ d

Year Malaysia Indonesia Nigeria Zaire Coast Dahomey Cameroon Anuola ARia Africa Latin Total exrorts of America fats <'lr.d_Qils

19~0 19Sl 19')2 19')3 19~h 195''1 19~6 19S'7 19.58 1959 1960 1961 1962 1963 196h 1965 1966 1967 1968 1969 1970 197111 197271

52 L7 47 h9 so 56 60 6J 81 77 97 9S

107 117 J26 1u3 Jll4 189 286 357 ho2 572 670.

97 1o6 120 132 1uo 116 ):?c) 129 132 103 1Q9 118 100 no 133 126 177 133 152 179 1'55 190 200

176 152 170 20h 212 J R5 Jfl8 1 flo 173 157 186 167 121 128 136 152 145

)0 4

23 8

20

*

130 120 137 132 137 11t9 ] t:;l 154 Jf,3 186 167 154 152 1h2 129

79 84

116 1.59 133 1?4

. 112 110

1 1 1 l l l 2

1 2

1

1 1 1

2 13 28 55

13 8

15 13 17 16 10 12 6

16· 11 9 9

J2 13 10

9 10 13 14 15

*

* Figures are included in the regional and world totals.

/1 Provisional.

Sourcesi

3 1 2 1

10 10

7 10

6 13

6 10

7 6 8

* *

18 ll

7 13

8 9 9 9 9

13 15 15 17 18 15 14 15 12 11 11

*

FA.O, Trade Yearbook (Annual)· Unile.,.r Ltd., London, "World Oils and Fats statistic•" (Annual).

•

149 153 167 181 190 172 185 190 213 180 2o6 213 207 227 259 269 361 322 438 .536 557 762 870

360 326 3h0 371 387 367 377 366 369 397 402 367 3lh 313 309 261 266 188 197 192 182 200 225

-l 1 l 1 2 L. L. 4 3 2 3 3 3 3 3

509 h79 507 5~2 577 539 562 ')56 583 578 609 581 523 5u4 572-554 630 512 638 731 742 965

1,098

9.) ll.) 9.8

10. :J 9.0 7.8 7.7 7.5 8.1 7.4 7.3 7.0 5.9 5.13 S.7 5.6 6.2 u.s 5.7 6.7 6.2 7.9 8.7

'

~: Ii.Jlt~ P.Ar~':IC:P::rro~ !!l r·r:~lA!;c.::~;o Ol-' PAlY. OIL AND PA.l.M K~{.·'J 1-::\).J.,/,_'fiJN

Pro_~~r:te F1:r.-;nd 31 DA t.a Ter:hr.ic-a1 Dlt.J /1. 'total co:; t. A..":':>Ullt 1-\::·io.J. ov.:r Ar••:1~ ••• 1.. • .!.

ProJectQ Loan/Cre<litQ Purpose which pl.Jnt1ng3 l'.l:~ .t.:..tlr:-..:..t.':!d ::<~x.

Countq c.ur1ed ov.t. Totd ond 1971 !~·u -, ·,~d Prorlal"'ticn Ar_:;u~l f>'r,-,:-;::~t!on

l.!Ji• -l.t/!;1 J..:I::HJ lco.r ,r,...,..:.~:u.d

metric \.one

(US$ 11111llonl (US$ :.J.Uior) (Thousand ha. ) ( Thaunr>i ha. ) (Thou. met.ric tona)

Ya.ll·:::.h ~to·.e ot Pa.hanc

9.) 1967~1970 40.0 $6.0 )7.0 lst Jengl<a 20.0. Produ.:tion 11.1 u.~ - 1981 2rA Jenglca 20.0 8.6 Production 1!111·1972 6.7 ).2 . 6.$ )2.0 1982 )).0

l.r. ~oce~s. 1?73-76 8.6 45.0 1985 ;r~ Je~a 23.9 11.9 !'r-:>r;•.:ctinn - - - 50.0

!r.t.:-:-:~sia & prc.c~••·

1.s;. ;;orth Su.u t.ra 24.0 12.7 Production 1969-1973 13·7 11.7 0.) 18.4 68.) 1960 68.S &. trocess.

2n.:! ::ert.h Su. .... aW'a 20.) 1).2 Pro<...'\:cUon 1970·1974 8.0 4.) - 9.) )9.6 1982 42.0 4 proceae.

?at· .. l.:. ar.~ r:,..., C•1inea i ·t') :.e·.; ~r:..t~ lat. Sta&• ).) 1.) Prcduction 1968-1972 1.7 - ).7 6.4 1981 8.)

lie"J 3ri tal.n 2nd St&p ).9 2.2 &. proceaa.

Prod01ction l970.l97S )ol• · 0.6 - 0.1 12.6 1964 14.1. '"

C.~·=:~cn \

10.9 9.0 Production 1?67-1974 7.9 7.2 - 7.4 20.7 1$84 22.4 .• Eaa~ 14.1 1.9 Prod;.;.cUon 1!168-1973 9.0 4.) . ).0 22.0 1982 2).)

!ihc~eT

li:i:r.rl 8.2 4.2 ?reduction 1966-1970 6.0 6.0 - 4.) 10.1 1960 lO.l & process.

!von '?'ast 24.0 14.1 Production 1968-1971 l6.o 16.0 - 2).2 )9.0 1919 )9.0 l.o• noject

2nd Project 6.$ 2.6 & process.

Prod·-Jction 1972-1914 4.S - - . 1·9 1982 9-9 &: process.

~.) s~~rr& !.~or.e iJ. ).1 /}; 2.4 Production lgr3-l975 0.9 . - 2.1 4.3 .• ., c & proe:esa.

TOTAL 1.82.4 99.8 97.4 68.5 0.3 123.3 362.3

J:! Oil p&la ;>ortion ot. eost. ot -project and of' IBRD lO&n or c:redit. 1 ea.cb 1nelud.lng inter11t.

11 Are& and production :t'11Ure• exclude I.JZIO\lnt• ruulting f~ rehabilitation an4 tertllhe'J" which are include4 in ve.lue ot lo.,l/credlt.

J:J. Iocldes the produotion rrooa 1,077 ha. planted in tha period 1S68-l972 prior to ·-"""'"""t ot IBRD project.

f:. Ioclu4u one-thir4 ot tl1o project w>it coo~.

a..&. • not available.

Souz-a•• lli!D Projects \opor'-nt. \

•

:"'<. 2:'1. :.t· •. ~ .. ~ :i ~-

i:..:i~i..-.. t..,.: j,.-.,;.:, • t '"1 ·tt•i P!"nlu~t '.0"1 A z:...~ ·.:..<! P: .-.. ~ .·- :.1 c:. :/:~-,- 197> l)..;,J Year 'lin·l~-..t.(l

:r:.etr.l c lone

(TJ,ou. autric tons)

. ' ' 11.0 1).0 1961 :u..o . " 2.0 8.0 1962 8.2

- 8.5 1985 10.0

. 7.8 17.6 1980 17.8

. 2.) 9.9 1982 10.2

. l.l 1.) 1981 1.4

- 0.1 2.1 1964 2.2

. 2.1 6.) 1984 7.1 - l.) 5.) 1982 6.0

. l.k 2.4 1979 2.4

. s.r 9.4 1979 9:4 . . - 1.9 1962 2.4

- 0.8 0.9 1981 0.9

. 35.-6 86.8

~

s1-.arc of Production Ec~-no..~1e rate a-::-:<..lari,. fo~· .. ::-:r"'!'t __ e!' rc~"ccrn r .. ..:r. .i •1.~ cil kernela

(P(:reerrt.a&e)

100 100 16 100 100 17

100 50 16

75-to 15-80 29 75-60 15-80 29

100 100 a.. a ..

100 100

)0 )0 n.& .. 2$ 2$ 7

100 100 12

So-GO S0-60 12

100 100 D.~

0 100 1?

Table 4• ESTIMATED \o.O!U.D OO~UMPTION OF OilS AND FATS, BY MAJOR RIDIONS

(million metric tons - oil equivalent)

-J"\·vc},JDL'C; G~:\:D n~vt;}ooinr; G.:--:-,·,:o Cvntrall;r Plarc":rl r.,·o·J o

"Til \ ~ ~3) \1:) (::) H (ij \b) (·ll (lll/ \ ll2 .JE2. u.s. & \·i..:.:st.crn L~ti.n

C<;nt.cia £-~rope Other~ Total Asiu. Africa America Total U.S.S.R. Ot.hcrs Total 'r!ORLD

1··::'0 ).l! "., .J•( 0.5 D.6 3.0 1.0 1.3 5.3 1.9 3.2 5.1 22.C 5.0 6.1 0.7 ll.8 ).0 0.9 1.1.> 5.3 2.0 ).6 5.6 ?:: . 7 ~.l G.ti 0.6 12. 1 3. ~~ 0.8 1.7 5.7 2.2 3.6 5.& 2J.S 5.2 6.5 (;,8 12.5 3.4 1.0 1.1 6.1 2.2 3. 8 6.0 ~L.0

.l;.:;.; 5.3 6.8 0.9 13.0 3.6 1.1 1.7 6.4 2.4 3.9 6.3 .... ~.- "? "-....'•1 ,, .. - 5.5 7.0 1.0 13.5 3.7 1.0 1.9 6.6 2.4 4.1 6.5 2!~.6 ....... :;;:;

::.;06 5.7 7.3 1.1 14.1 3.7 0.9 2.1 6.·r 2.8 4.5 7.3 2~.1 :-) ~ 7 5.7 7.7 1.2 lti .6 4.0 1.1 2.0 7.1 2.9 ).9 6.8 (:~ . . :; ~ ~~;c :;.8 7.G 1.1 11:.7 3.8 1.4 2.2 7.4 3.0 4.0 7.0 2;!.::.

6.:!. 7.9 1.2 lS .2 4.5 l.h 2.4 8.3 3.2 4.h 7.6 ---·· 6.1 8.2 1.2 15.5 4.7 1.5 2.4 8.6 3.3 4.6 7.9 )~·. ·~ J

__ ::):.. 6.1 8.h 1.3 15.8 4. 7 1.6 2.5 8.8 3.4 4.7 8.1 :.~.7 J)::2 6.5 8.6 l.h :16.5 5.1 1.5 2.5 9.1 3.5 4.8 8.3 33./ J lc:; 6.6 8."( 1.6 :16.9 5.1 1.6 2.6 9.3 ).6 4.8 8.4 ]' .. 6 :Jr~!.. 6.9 9.1 1.8 17.8 5.2 l.S 2.8 9.5 ).8 5.0 8.8 )6.1 l7() 6.9 9.5 1.9 18.3 5.5 • 1. 7 2.8 10.0 4.0 5.2 9.2 37.5 19~6 1·3 9.8 2.C 19.1 5.1 1.8 ).2 10.1 4.1 4.9 9.0 J8.2 2.Yc./ 7.2 10.0 2.1 1$1.3 5.6 1.9 ).2 10.7 4.2 4.9 9.1 3~.1 17~3 7.6 10.) 2.2 20.1 5.9 1.8 ).2 10.9 4.3 4.9 9.2 ~.~ .,

JO~

lJ67 7.7 10.6 2.3 20.6 5.7 1.9 3.6 11.2 4.4 4.9 9.3 Ll . .i lj(O 7.8 10.9 2."4 21.1 6.2 2.J. 3.6 n.9 4.5 5.1 9.6 4Z.6

'Irend GrC>-~th Rate 1960-1970 2.6 3.0 7.0 3.2 2.5 3.1 4.J 3.2 - - 1.8 2.9

(l) A~t;;al consur.ption figures for the t:ni ted States a::rl apparent estimated consu:nption for Canada. (2) A~tt:.&l ccr.51ll".ption figurea 1'or \-iestern Ecll'Ope, including France, Federal Republic of Germany, Netherlands, Italy, BelgiurrJLuxembourg, Denmark, Norway, Sweden, Switzerland, Austria,

?ortue;al, Finl&r.d., Republic of Ireland, Greece arrl Spain. Yugoslavia is included from 1965 only. (3) Ot~ers include apparent consumption for total Oceania, actual consumption for Japan ani apparent consumption for the Republic of South Africa. (5) Apparent consumptior. figures for Asia, excluding Japan and l-lainland China. (6) Apparent con~,pt1on f1eures for Africa, excluding Republic of South Africa. (7) Apparent consunption figures for area. (9) Actual cOnsUITlption figures. (10) Others include Eastern l'urope and Mainland China; all the figures are estimated apparent conswnption.

Sources; Fats and Oil Sit .. !:!£.!:!., April 1971, uSDA; various issues of World Oi1B and Fats Statistics, Unilever Ltd., London and Oil World Weekly, l:!a.'llburg; Pilot StuSor :·• :.s arrl Oils, second progress report prepared 'by the Food ani Agriculture Organization of the United Nations,. COJTilliBsion on International Commod:i. ty Trade, E/CN.l3/L, 6, 'E"March 1958,

-·--· -------------

Tub_l..£.21 CONSUMP'l'lON Pm fn;AD Or' SEJ::~TED F1HBLE OILS A!JD FAT:>, OECD COUrll'Rll'.S, 1;/C0-1968

(kilos per head per year)

1960 1961 1962 1963 1?64 1965 1966 1967 1968

United States Vegetable Oils 5.? 5.1 5.3 0::.9 6.1., 6.4 6.7 6.8 7.? Shortenings 5.7 s.s ( •• 1 6.1 6.2 6.1., 1.? 7.2 7., Margarine (fat content) 3.5 J.S 3.4 3.5 3.6 3.6 3.9 ).8 3.9 Butter 2.7 2.7 ?.7 ?.5 ?.5 ?.4 ?.1 2.0 2.!

Japan /1 Vegetable Oils and Fats 3.2 3.6 4.2 4.7 5.1 5.1 s.e 6.2 6.!. Animal Oils and Fats 1.1 1.0 1.1 1.4 1.7 1.7 1.9 2.1 2.1

Belgium-LuxembourE /1 VegEtable Oils and FPts 1?.4 13.1 1).1 1J.L 1).8 1).6 12.5 ll.6 Fish Jils and Fats 2.1 2.2 ::>.6 1.8 2.:> 1.4 1.7 ).2 Butter 7.5 8.1 8.7 7.9 7.5 7.2 7.2 e.? Margarine (prcduct ~ight) 11.9 11.8 12.1 1? .9 13.? 1).1 1).) llt.6

Den.~.ar Y./1 V<:oget~ble Oils and Fats 8.1 8.0 7.1 6.8 7.h 7.0 7.0 1.0 7 .c /2 Fist Oils and Fats 4.6 5.4 5.1 6.4 6.) 6.1 6.0 6.2 6.C 72 Butter 8.9 6.8 8.6 8.7 8.6 8.3 8.1 7.9 7.7 1'2 Margarine (product weight) 16.9 18.8 18.2 18.5 18.6 16.0 17.9 17.9 18.0

France 11 Veget;ible Oils ar.d Fats 10.5 10.7 11.0 u.s 12.1 12.1 12.0 12.3 13.1 /2 Fish Oils and Fats o.s 0.6 0.6 0.7 0.7 0.6 o.s 0.6 Butter 6.3 6.4 6.6 6.7 7.1 7.4 7.3 7.8 7.5 12 ¥.argarine (product weight) 3.0 3.2 3.3 3.4 3.3 3.3 3.1 3.2 3.3

<krranv /1 Vegrtable Oils and Fats 1?.0 11.7 11.7 1? .s 12.7 1?.5 12.6 12.2 Fi~h Oils and Fsts 1.6 1.7 1.6 1.0 1.1 0.9 1.1 1.4 -Butter 7.0 7.2 7.4 7.3 7.0 7.1 7.1 7.1 7.0 /? Margarine (product weight) 10.7 10.0 9.7 9.8 9.9 9.4 9.6 9.4 9.3 7?

Ireland Vegetable Oils and Fats 3.9 .7 3.5 4.1 4.5 4.0 4.3 la.8 4.3 Butter 1).2 1 ') 13.2 13.0 12.9 12.2 11.5 11.2 lO.S Lard 0. 7 0." 0.7 0.7 o. 7 o.8 0.7 0.7 0.8 Other Oils and Fats 0.7 0.7 o. 7 o.s l.h 1.7 1.8 2.0 ?.1

Italy /1 V€F;etable Oils and Fats L.O 3.6 5.1 5.2 5.1 6.la 6.9 8.5 6.:; ~~ !l'Jtter 1.5 1.4 1.5 1.5 1.4 1.5 l.la l.S 1.~ !'ergar!:-."= (prG<i'J-: ... ..-.e ::.¢. t) 1.6 1.7 1.9 1.9 1.8 1.8 1.7 1.8 1.~ +--

NetJ·lErle-~1-js ~ -

VegEtable Oils and Fa t.s 16.0 15.6 14.7 16.1 16.2 17.0 16.8 17.3 Fish Oils and Fats 5.6 6.5 7.6 6.9 7.3 6.4 7.1 7.6 Butter 4.6 4.4 4.8 u.s ).7 3.6 ).0 2.la Margarine (product weight) 19.L 19.5 19.4 20.0 20.3 19.L 19.6 19.5

United Kingdom /1 Oils and Fats, rEfined 3.9 4.0 L.l 4.2 4.3 1.,.7 4.7 s.o 5.1 I? Animal Fats (incl. lard) ).8 4.1 4.4 s.o 3.6 3.5 ).7 ).6 3.6 T? Butter 7.1 7.5 7.0 7.2 7.1 7.2 7.5 7.0 7.4 T? ~largarine (product weight) 6.4 5.8 6.0 6.0 5.9 5.4 5.3 5.2 5.2 7?

Economic Comrr.uni t.ie s /) Vegetabl<: Oils and Fat.s 8.2 9.9 Butter 5.6 6.0 Margarine (product weight) 6.6 6.4

/1 Two-year avcra~e 1960-1961 to 1967-1968. 72 Avt·rage 1968-1969. 73 Weighted average consumption per head, using 1967-1968 for last year for countries where data is in two-year average. For

Ireland consumption of "other oils And fats" was used as proxy for margarine. For the UK "oils and fats, refined" was USE'd as proxy for vcget.able oils and fats.

Source a OECD Food Consum[!tion Stati ~ti cs 1 1960-1961\, Paris, 1970.

Table 6: CONSUMPI'ION OF FATS AND OILS IN MAJOR CONSUMING AREAS, 1971 AND 1980

(1,000 metric tons)

1971 1980 Change Actual Projected 1971 to 1980

United States 7,410 9,500 2,090

~stern Europe 10,870 13,800 2' 930

Japan 1,600 L1 3,000 1,400

Canada 400/1 620 220

Total OECD Countries 20,280 26,925 6,665

All Other Countries 24,150 29,130 4,980

Total World 44,430 56,050 11,620

/1 Provisional.

Source: Unilever, Ltd., "Vk>rld Oils and Fats Statistics".

Percentage Change

1980/lm

+28.2

+27.0

+87.5

+55.0

+29.3

+20.6

+26.2

Table 7: HORLD OUTPUT OF FATS AND OILS, 1960-1970

( 1, 000 metric tens oi 1 or fat equivalent)

---l96J 1961 1962 1963 1/tl 1965 1966

Ve~~table Oils 18,580 19,000 20,230 20,540 22,035 22 '775 23,285 or' ::r.:~r.: Ea:.ble oils 16,770 17,225 18,545 18,765 20,135 20,790 21,420

A~-..~~.:;:2. ?c.:.s c.;.C: ~~arine Cils 13,540 13,945 14,135 :.4, 04J 14,250 14,4~5 14,690 c.:.' ·"t.!.c;,: ...:.:-• .:;.~~j_ fats 12,5&5 ::.2,830 12,980 12,995 :3,125 13,3~5 13,545

!'.a.~"ine oils C,.....""" ,,, 1,115 1,155 1,045 ., ... ~C' ~,J.?..; 1,110 1,145

A:l Fc.t.s ~~:-.C C-:..ls 32,120 32,945 34,365 34,580 36,31.5 37,230 37,975

Sunflower seed 1,180 1,345 2,045 2,195 2,2!..0 2,750 2,730 Scybe:.r.. 4,020 3,750 4,250 4,395 4,545 4,855 5,230 Rope seed 1,075 1,235 1,240 1,245 1,160 1,510 1,545 ?a:.~ 1,220 1,280 1,277 1,347 1,372 1,348 1,333 Gro~d.nut 2,680 2,920 2, 700 2, 765 2,850 3,115 2,960 Cocor.ut 2,110 2,120 2,115 2,180 2,230 2,220 • 2,365 Cottc::seed 2,275 2,270 2,290 2,380 2,520 2,635 2,575 PaL"l! Kernel 440 430 440 455 460 !_.{·' 455

Srurce: Unilever Ltd., "World Oil.s and Fats Statistics"; FAO Production Yearbook (for palm oil).

..

1967 1968 196;;

2), 795 24,635 24,800 21,930 22,845 22,930

15,270 15,460 15,135 13,890 14,140 ~,03S 1,360 1,320 1,105

39,045 40,095 39' 935

3,285 3,420 3,400 5,520 5,649 6,090 1,625 1,785 1,660 1,258 1,425 1,556 3,020 3,195 2,775 2,150 2,220 2,065 2,2to 2,260 2,455

370 375 375

1970

26,365 24,425

15,5:.:5 14,3:..5 1, 2~0

41,9l0

3,360 7,400 1,810 1,762 2,985 2,120 2,360

,. ~

375

r'arc,.::--.:.~ z;e incro::-Lr.t. l9:'i) ~0 19? J

+41.9 +45.6

+:;.;...e +~.)

+25. 7

<iJ.5

+1e4.3 .,.5L.l +6J.L +~.~ .,.ll.l + 4. 7 + 3.7 -ll.. 8

Co11111odity

Edible Veget~ble Oils Soybean Sunflower Ground nut Cottonseed Rape sPed Coconut PALM Olive Sesane Palm K~>rnel (incl. babassu)

Animal Fats Tallo;;/Greases Butter (fat content) Lard

Industrial Oils Linseed Castor Tung

Marine Oils

!£1!l

Table 81 \IOR.LD OUTPUT OF FATS AND OILS, 1971 AND 1980 PROJECTIONS, RANKED BY ~RCENTAGE SHARES

(million metric tons, oil or fat equivalent)

1971 Col!l!l!Odity Output % of Total

26.00 60.46 Edible Vegetable Oils 7.10 16.51 Soybean 3;55 8.26 Sunflower 3.05 7.09 PAUl 2.50 5.81 Groundnr' 2.50 5.81 Cottonse•i 2.)0 5.35 Rapese!'d 2.10 4.88 Coconut 1.55 ).60 Olive 0.70 1.63 Palm Kernel (incl. babassu) 0.65 1.51 Sesame

14.10 32 .?9 Animal Fpts 5.00 11.6) Tallow/Greases 4.90 11.39 Butter (fat content) 4.20 9.77 Lard

1.70 ).95 Industrial Oils 1.25 2.91 Linseed 0.35 0.81 Castor 0.10 0.2) Tung

1.25 2.90 l".arine Oils

43.00 100.00 ~

Output

37.0 11.0 5.o* 4.3 4.0 3.3* 3.0* 2.9* 1.9* 0.9* 0.7*

15.8 5.4* 4.5* 5.9

2.0 1.)* o.s* 0.2*

1.4*

56.2

Sources 1971 Production: Unilever Ltd. "World Oils and Fats Statistics" and FAO Production Yearbook.

1980 % of Total

65.83 19.57

8.90 7.65 7.12 5.87 5.33 5.16 3.38 1.60 1.24

28.11 9.61 8.00

10.50

3.56 2.)1 0.89 0.)6

::>.49

100.0

1980 Projections: TI1e estimates for oils marked with asterisks are those msde by FAO and published in their Study, "Agric'ultur-al Commodity Projections, 1970-80", Rome 1971. Others are Bank staff estimates.

Year

1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971

Table 9: RELATIVE PRICE OF PALM OIL AND SHARE OF PALM OIL IN EXPORTS OF A SEIECTED GROUP OF

COMPETING VEGETABLE OILSL!, 1955-1971

(percent)

Relative price of Palm Oil /2

99.1 87.9 91.2 97.9

103.7 103.6

92.9 104.4 109.4 109.3 110.7 102.1 112.7 92.4 91.2 96.2 91.8

Share of palm oil in world exports of

competing oils

25.1 24.7 25.4 25.9 24.9 26.5 24.2 20.7 20.3 21.1 19.4 19.3 15.3 17.9 20.6 22.1 27.9

/1 Soybean, groundnut, sunflowerseed, rapeseed, cottonseed and palm kernel oils.

/2 Calculated in percent of a weighted average of the prices of the competing oils, using current shares in world exports as weights.

Source: Prices as in Table 12. Exports: Unilever, Ltd., "World Oils and Fats Statistics".

Country or Group

I. Developed Countries

II. Socialist Countries

III. Developing Countries

A. Non-producing

B. Producing

IV. \o.ORLD

Table lOt PALM OIL - ACTUAL CONSUXPTION/l IN SELECTED YEARS AND DEMA.'ID PROJECTIONS FCR 1980

(1,000 metric tons)

A"tuaT- Consu,-,ntio~ 1980 Pro iectio:ls 1951-SS 1956-bO 1961-65 1967 1971 $?12 At curre-=-r.""t"'l'""9"'"8"'"o­

per ton price o!' $?00 re- ton

492

4

18

667

1,181

508

4

57

688

1,257

447

5

74

770

1,296

450

6

80

101 (+666)

637 ( +666)

878

6!J...

90

214 ( +890)

1,188 ( +890)

2,100

50

360

520 (+1,100)

3,030 (+1,100)

2,250

so

360

520 (+1,100)

3,180 (+1,100)

Note: Figures in brackets represent subsistence conslli~tion.

Share in total

52.6

1.2

8.4

37.8

100.0

/1 Consumption !or the developed countries, non-producing developing countries and socialist countries represents net imports.

fl. 1970 data,

Sourcesr FAO Production Yearbook; FAO Trade Yearbook; Unilever, Ltd., ~rld Oils and Fats Statistics•.

"

Table 11: EXPeRTS OF PALM OIL AND SHARE OF EXPORTS IN OUTPUT, ACTUAL AND PROJECTIONS TO 1980, BY COUN'IRY

(1,000 metric tons}

Country Actual/1 Projected/1 1901-o~ 19o7-ti9 19>1->> 19~0-00 1971 1980

Malaysia so 75 118 277 573 1,910 ·(98 .0} (100.0) (94.4) (96.5) (97.3) (97 .0)

Indonesia 123 120 117 135 190 375 (80.4) (80.0} (77.5) (73.4) (84.4) (78.9)

Nigeria 185 220 141 34 20 95 (n. a.) (n.a.) (27.1) (9.4) (4.0) (12.3)

Zaire 135 164 131 p6 115 75 (72 .2) (70. 7) (62.4) 63.0) (50.0) (31. 9)

Ivory Coast 1 2 1 1 28 120 (n.a.) (n.a.) (4.0) (3 .0) (36.4) (54.5)

Dahomey 13 12 11 11 17 65 (n. a.) (n.a.) (28.2) (28.2) (36.2) (61. 9)

Cameroon 2 9 8 10 20 (n.a.) (n.a.) (20.9) (25. 0) (17. 9) (20.0)

World Total ttb 578 1ct9) =fffh> 930 2~660

_) ~4>.7) ~42. 7) ro2.1>

/1 In brackets: share of exports in output, in percent. Percentages are calculated on the basis of average exports and average output in calendar years 1956-1960 and crop years 1956/57-1960/61.

Sources: Actual Exports: Unilever, Ltd., "World Fats and Oils Statistics" and FAO Trade Yearbooks.

Projections IBRD: Commodities and Export Projections Division, Economic Analysis and Projections Department.

I

Table 12: PALM OIL - PllliSENT l'llOJJJ!7flOll, PROlliCTION IN SElECTED EARLIER YEARS A.';D PROJECTED OUT!'I.iT IN 1980, BY COU!'."TitY

(1,000 melric tons)

. Actlliil ~(,cf,[cTfon-z:;r- -l9ifc5Forecast ~- Shares inl980 Oucput. 1951-55 1956-66 1961::6$ l9CJ7-69 Ml Cour.tr;

S c T S C T S C T C 'i'

!-:C. in h o--:·~.: t~ s 1. 1-:.U ..... ay.;:;J.a

2. ). 4. s. 6. 7. 8. 9.

(,rest East Total

Indonesia n;;e::ia Zaire Ivory Coast ::.a:-.c~ey

C:a.:r.eroon Colombia Sierra Leone Total

Ct!'~er ?r~d:'.tcers '; ~.Jo

" ...... 12.

Afr.J..ca kt.in k'.erica Otr.ers Total

World To+,al

51 75 153 lSO .. .. 187 232

~ 1,266

125 151 521 210

25 39 43 -37

1,151

174

~

338 53 17 28 24 -40

500

162

162

~

287 287 134 184 20 358

163 216 16 33 11 39 8 32

lS 15 1 41

7CE 1,205

25 187 35 35 - -&:J 222

122. 1,427

S 3 subsistence production. C m corr.mercial production. T 3 total production.

- 589 589 - 225 225

470 30 500 60 170 230 16 61 77/2 30 17 4772 36 20 56 - 34 34

6o - &:J 672 1,146 1,818

155 - 155 59 - 59

1 - 1 215 - 215

~ 1,146 2,03/2

1,700 270

- 1,970 - 475

625 150 60 175 25 195 30 75 10 90 - so 60 -

810 3,180

200 -78 -12 -

290 -1,100 3,180

1, 700 270

1,970 475 775 235 220 105 100 50* 6o*

3,990

zoo* ?j* 12*

290*

4,280

62.0 ::.s.o 4.7 5.5 6.1 2.4 2.8

l.SL1

!QQ.&.

* FAO esti::u;t<;s, as given in the article "Prospects for Supplies of Pam Oil and Palm Kernels in 1980 1~ FAO !l.onthly Bulletin of Agricultural Economics arrl Statistics, April 1972. ':r.is sign implies tl'.at figures are nPt separately sh:lwn but are included in the world total.

/1 72 a

Source: FAO Prodlction Yearbook; ''West African Production sn:i Export Prospects for Palm Oil an:i Palm Kernel Oil to 1980", FAS, USDA, Wa.shington, September 1972. These figures differ BOl'IBWhat from trose given in FAO Product.ion Yearbook, because of differences in estimates of subsistence production. · All producers except. hose list.ed above.

46.0 11.1 18.1 5.5 ).1 2.5 2.)

9.4L1

~

Years

1954-56 1957-59 1960-62 1963-65 1966-68 1969-71 1972 1973 (mid-March)

1980 (Projected)

1954-56 1957-59 1960-62 1963-65 1966-68 1969-71 1972

1980 (Projected)

Table 13: FRICES AND PRICE RATIOS OF SOME VEGETABLE OilS, PAST AND PROJECTED

Palm Groundnut Cottonseed Sunflower seed Oil Oil Oil Oil

A. Actual Prices ($ per metric ton)

238 343 286 324 236 312 289 294 2?5 310 269 267 245 303 257 262 209 283 305 216 235 385 346 306 212 426 324 327 261 456 349 342

200 312 - -B. Price ratios (Palm Oil = 100)

100 144 120 136 100 132 122 124 100 138 120 119 100 124 lOS 107 100 135 135 103 100 164 147 130 100 200 153 154

100 156 - -

Coconut Soybean Oil Oil

270 331 309 262 272 240 314 238 339 219 360 264 235 270 329 349

288 230

113 139 131 111 121 107 128 97 162 105 153 112 123 127

144 115

Sources: 1960-l~/2r FAO, Document CCP:OF/ST 72/CRS. 3 dated February, 1972 as amended and supplemented. Earlier years: Van Doorn and Co. N.V. - Rotterdam and USDA.

•

Country

Malaysia

Malaysia

Indonesia

Indonesia /1

Indonesia /1

Table 14: IBRD: PROPOSED PALM OIL PROJECTS AND PROJECTS WITH A PALM OIL COMPONENT

Project Area in ha.

Jahore Tengara 60,250

Agricultural 16,667 Credit Project

Estates IV 9,400

Estates v 10,000

Estates, Rubber 5,000

Planting Period

1971/72-1986

1974-1976

1974-1976

After 1976

After 1976

Indonesia /1 Credit Projects 5,000 After 1976

Ghana Production and 5,300 1975-1978 processing

Costa Rica /1 Crop development 2,000 n.a.

/1 The data for these projects are only notional.

Source: IBRD Regional Departments.