The Hindu Business Line : Palm oil to be a viable energy source

Chennai, Oct. 19 Enjoying the advantage of being more profitable and viable than soyabean oil, palm oil is likely to find new uses for industrial application and as an energy source, according to Mr Dorab Mistry, Director of Godrej International.

Currently, there are restrictions on palm oil use in energy due to lack of certified green credentials and with the problem being expeditiously addressed and once certified green palm oil is available in sufficient quantity a vast new market will open up, Mr Mistry said presenting a paper on ‘The competitive advantage of palm oil versus other vegetable oils’ at China International Conference of Seed Crushers 2008 held in Nanjing, China.

In view of replanting taking place in palm plantations, productivity was increasing at a very healthy rate, far in excess of any other annual or tree crop.

BIO-FRIENDLY

Palm oil would produce environment-friendly, bio-degradable oleochemicals to replace petro-chemcials and it will make huge strides to give world energy security through bio-fuel use, he said.

Currently, the cost of producing one tonne of palm oil was $350 a tonne ( Rs 17,150). The cost of producing soyabean based on current fertilizer, seed and land rent cost was $294 (Rs 14,450). This when translated into 40 per cent oil contribution will be $735 a tonne (Rs 36,000). Though the costs may decline as cost of fertiliser drops and land rent falls on fall in oilseed prices, it is clear that palm will continue to be profitable, according to Mr Mistry.

PRICE FRONT

Stating that incremental supply of vegetable oils exceeded incremental demand, Mr Mistry said with liquidity and capital availability being tight, demand growth could not be strong.

The fall of NYMEX crude below $80 a barrel signified weak economy and lower prices for vegetable oils, he said. It would mean that crude palm oil would rule around 1,600 Malaysian ringgit a tonne.

At 1,600 ringgit, palm oil remains one of the most profitable agricultural pursuits, according to Mr Mistry.