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G. Chandrashekhar

Kuala Lumpur , March 3

DESPITE being the world's largest palm oil importer and long-time market for this oil, Indian tariff policies once again became the target of criticism and attack at the Palm Oil Price Outlook Conference 2005 organised by Bursa Malaysia Derivatives.

Delivering the keynote address to over 1,000 delegates from as many as 36 countries, the Malaysian Minister for Plantation Industries and Commodities, Mr Peter Chin, said that even after facing strong competition from other palm oil producing countries and unfavourable tariff treatment in some markets (read India), the Malaysian palm oil industry recorded an impressive performance in 2004.

"Palm oil is trans-free (free from trans fatty acids) and does not require hydrogenation unlike soft oils," he said, adding that supply prospects of competing vegetable oils and purchasing direction of vegetable oils by importing countries could invariably influence the price direction of palm oil.

"The most effective solution against declining prices is to produce at the lowest cost. The Malaysian Government has set a target for palm oil producers to produce eight tonnes of oil per hectare (from four tonnes now) by producing 35 tonnes of fresh fruit bunches per hectare and ensure oil recovery of 25 per cent.

Later, speaking to newspersons, Mr Chin again referred to the unfavourable tariff policy of India (crude palm oil attracts 80 per cent duty while crude soyabean oil 45 per cent) and said he would visit India to speak to the Government on lowering the tariff.

Malaysia is seeking to be known as a supplier of palm oil products (value-added) rather than merely a supplier of palm oil, the Minister said.

He added that Malaysia was looking at a palm oil supply management policy and for this purpose, would work closely with Indonesia, the second largest producer of the commodity.

To a specific question from Business Line whether agricultural biotechnology or genetic engineering would be employed for the proposed productivity improvement in palm oil, he replied in the negative, suggesting that palm is GM-free and would remain so.

Referring to the findings of a study conducted by the London-based consultancy, LMC International, a Malaysian official said the Indian duty structure distorts palm oil prices and discounts it by $100 a tonne against soyabean oil.

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