PALM OIL TRADE FAIR & SEMINAR (POTS KL – 2012

PALM OIL TRADE FAIR & SEMINAR (POTS KL – 2012)

10-16 October 2012

Shangri-La Hotel, Kuala Lumpur OILS & FATS MARKET SCENARIO OF BANGLADESH PRESENTED BY SYED RAFIQUR RAHMAN (B.Sc. Mechanical Engineer) Technical Director, City Group. Dhaka, Bangladesh 1

BANGLADESH

2

Statistical information • • • • • • • • • • • • • • • •

• •

Country: Bangladesh Capital: Dhaka Area: 143,998 sq km Population: 156,118,464 (July 2010 est.) Population growth rate: 1.5% (2010 est.) Life expectancy: 69 (2010 est.) Ethnic groups: Bengali 98%, other 2% Languages: Bangla (official), English Inflation: 10.7% (2011 est.) GDP purchasing power parity: US$282.2 billion (2011est.) GDP per capita PPP: US$1,693 (2011 est.) GDP per capita: US$ 678 (2011) GDP composition by sector: agriculture: 20%; industry: 30%; services: 50% (2009 est.) Land use: arable land: 55%; permanent crops: 3%; other: 42% (2005) Major industries: cotton textiles, jute, garments, tea processing, paper newsprint, cement, chemical fertilizer, light engineering, sugar Agricultural products: rice, jute, tea, wheat, sugarcane, potatoes, tobacco, pulses, oilseeds, spices, fruit; beef, milk, poultry Natural resources: natural gas, arable land, timber, coal Export commodities: garments, frozen fish and seafood, jute and jute goods, tea, leather 3

Percentage of sector wise contribution to GDP during (2010 – 2011) Sector wise contribution in economy Service Sector

50%

Industry Sector

30%

Agriculture Sector

20%

Source:Bangladesh Economic Review-2011 (Bangla version), Ministry of Finance

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Bangladesh GDP-per capita (PPP) Bangladesh GDP - per capita (PPP)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

1800

Gross domestic product based on purchasing-powerparity (PPP) per capita GDP in US $

Year

301.8 331.261 353.214 374.149 394.136 410.832 426.118 440.744 456.103 482.679 512.997 541.8 569.311 594.82 622.188 652.432 684.698 719.758 750.268 787.812 834.645 879.013 920.411 977.397 1051.413 1134.018 1228.273 1324.102 1413.982 1492.629 1584.529 1700

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Percent Change

1600

Gross domestic product based on purchasingpower-parity (PPP) per capita GDP in US $

1400

9.76% 6.63% 5.93% 5.34% 4.24% 3.72% 3.43% 3.48% 5.83% 6.28% 5.61% 5.08% 4.48% 4.60% 4.86% 4.95% 5.12% 4.24% 5.00% 5.94% 5.32% 4.71% 6.19% 7.57% 7.86% 8.31% 7.80% 6.79% 5.56% 6.16% 7.32%

1200 1000

800 600 400 200 0 1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132

Gross domestic product based on purchasingpower-parity (PPP) per capita GDP in US $

Source: International Monetary Fund - 2011 World Economic Outlook

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OILS & FATS IN BANGLADESH BACKGROUND •

Bangladesh was self-sufficient in oils and fats till early `60s. Till that time Mustard oil was the major edible oil of Bangladesh, which was produced in sufficient quantity to meet the local demand. It is to be mentioned here that Mustard oil was the traditional edible oil of Bangladesh. Besides, some groundnut oil and sesame oil were also produced in the country to supplement the supply. But the supply of groundnut oil and sesame oil was not regular and the consumers were not as fond of this oil as edible oil because of comparatively high price. Major quantities of these two oils are being used as snack food.

•

The local production of edible oil did not increase at the same pace as the demand increase with the population growth and increase in per capita consumption.

•

As such at the end of the early part of `60s, soybean oil was brought from USA to meet the increasing demand. At first, consumers did not welcome soybean oil compared to mustard oil. Soybean oil was used to be sold through public distribution channel and was consumed by low income groups. After independence of Bangladesh in 1971, all essential commodities especially edible oil became insufficient and prices went up. Because of high price of locally produced mustard oil, the consumers inclined towards soybean oil, which was available at cheaper price and thus soybean oil started to dominate the market. 6

• In early `70s Palm oil was introduced to meet the growing demand. • During that period there was no refining facility of crude palm oil. • As such, only refined palm olein was used to be imported. • Refined palm olein was being imported from Singapore by private importers and was sold directly in the market. • On the other hand few international aid agencies distributed refined palm olein through govt. rationing system. • Due to better quality and price compared to other cooking oils, palm olein earned consumer’s confidence quickly as good cooking oil.

• But in mid `80s, because of anti-palm oil campaign and prevailing market situation, negative perception about palm oil developed among the consumers of the country and import in relation to consumption of palm oil started to decline.

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Bangladesh : One of the biggest markets of edible oil: •

•

•

•

With the annual import of above 1.5 million tons of edible oils and fats, both crude and refined, Bangladesh has turned into one of the biggest market of edible oil. For past few years, Malaysia and Indonesia have been exporting refined & crude edible oil to Bangladesh. Before '60s, oil industries in Bangladesh meant only local made oil seed crushing units. Later on, edible oil refining units started to setup gradually in the country but till late '80s, the growth was very slow. To cope up with the situation, new refineries started to set up and simultaneously palm oil refining technology was also introduced in the country. Since mid '90s, when the palm oil gradually became popular, more and more palm oil refining units were set up in Bangladesh. These industries started to refine crude palm olein, which received a good response from the market because of its competitive price and quality as well. In later part of `90s fractionation plant had been set up by few industries and double fractionated palm olein locally known as super palm started to come into the market, the acceptance of super palm olein in the country rapidly increased. At present in Bangladesh there are more than 50 oil refining units among which 18 of them are in active and together they produce about 1.4 million tonnes of refined edible oils annually of which about 70% is refined Palm Olein and Super Palm Olein and 30% refined soya bean oil. These refineries have their own coordinating organization – the Bangladesh Vegetable Oil Refiners Association – but refineries act individually when it comes to importing and any refinery can import CDSBO. 8

Indigenous Production of Oils & Fats  In 2011 total 420,000 hectares of land was cultivated to get 387,000 tonnes of oil seeds namely, Mustard, Soybean, Groundnuts, Copra and Linseed. Mustard is the major oil seed crop occupying about 59.43% of total production annual production.  The Department of Agriculture Extension (DAE) had fixed a target of producing 259,258 tonnes of mustard seeds in 2011 from 216,048 hectares of land with a yield rate of 1.20 tonne mustard seed per hectare.  Sunflower cultivation is easier, cheaper and more profitable. It requires very little irrigation and small amount of fertilizers and insecticides. The average yield of sunflower is 1.4 tonnes per hectare.  Local farmers are encouraged in cultivating sunflower, mustard and sesame as it helps them to get edible oil at low cost while price of edible oil in local market is too high, while soyabean is cultivated for use in poultry feed production.  Besides, annually about 25,000 tonnes of cow ghee is produced

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 The decorticated pressed cake, the soya cake and mustard cake is being used as food ingredient for poultry and livestock, while some quantities of mustered cake is used as fertilizer also.  In 2003, the City Group of Industries established an oilseed solvent extraction plant. Production is now on going at capacity of 1,000 MT per day. City Group is now crushing 50 percent soybean and 50 percent mustard/canola seeds. Installation work of another 2000 MT per day solvent extraction Plant is on process which will come on production during November-December 2012. Meghna Group of Industries installed one 2000 MT per day solvent extraction plant which is in operation since April 2012. Another smaller size plant [supplied by China] was set up in Chittagong by S. Alam Group. Crushing capacity of this plant is 200 MT per day but it is not in success due to high consumption of Hexane.  Recently, Vietnam Vegetable Oils Industry Corporation [VOCARIMEX], a state owned enterprise has focused on Bangladesh market with their various products including crude and refined Soya Bean oil, Palm Oil, Coconut Oil, Cottonseed Oil, Vegetable Ghee etc.

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CONSUMPTION OF OILS & FATS IS INCREASING IN BANGLADESH  In Bangladesh, the per capita consumption of oils & fats remained far below the world average of 16 kgs. and was hovering in between 5 to 7 kg for long time. However, in 2011 it stands at 9 kg. Country`s nutritional experts described such increase as very encouraging, which, according to them, would have positive impact on national health.  Though still it is far below the required level prescribed by the nutritional experts, the per capita consumption of oils & fats in Bangladesh has been increasing gradually.  As the oil is a compact source of energy its regular consumption at required level is essential for normal growth of human body.  Besides, vitamins A,B,E& K are absorbed in our body through oil, “Accordingly, about 25 to 30% of our daily calories intake should come from oil “, experts maintain.  The consumption of oil and fats in Bangladesh has been increasing due to increased level of awareness of the consumers about health and nutrition and increase in population growth.

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Present Import Trend of Oils and Fats  CDSBO imports stood at 395,290 tonnes in 2011 declining by 7,21% compared to 2010 due to its high price as shown on table-1. The average C&F price of CDSBO and refined soybean oil both increased by 40% in 2011 compared to 2010. On the other hand palm oil (CPO, CPL and RBD PL) contributed to increase in import.

 Soybean Seed imported for local crushing increased significantly by 184.33% to 150,060 tonnes in 2011, the oil equivalent was 27,011 tonnes on 18% extraction basis. (Table-1). Canola/mustard seed imports registered to 157,133 tonnes up by 4.06% over the same period. The oil equivalent was 59,711 tonnes on 38% extraction basis. (Table-1)  CPO, CPL and RBD PL imports increased by 2.03% (Table-2) in spite of the 31-36% increase in average global price and consequent increase by a similar margin in the average prices of refined olein and super olein in Bangladesh. 12

Table 1: Oils & Fats Imports Trend in Bangladesh Table 1: Oils & Fats Imports (tonnes) Jan-Dec 2011 Jan-Dec 2010 Change(Vol)

Change(%)

Crude degummed SBO

395,290

425,984

-30,694

-7.21

Crude SBO from imported beans1

27,011 (150,060)

9,500 (52,783)

17,511

184.33

Canola/mustard oil from imported seed2

57,381 (151,003) 6,006 804,140 126,007 7,990 6,150 6,655 1,090 187 1,374

2,330

4.06

Coconut oil3 CPO & CPL RBD PL Crude/RBD PS PFAD PKO Refined vegetable oils4 Butter oil Ghee/vegetable ghee/shortening

59,711 (157,133) 8,352 671,122 277,953 9,232 2,788 10,982 1,976 91 694

2,346 -133,018 151,946 1,242 -3,362 4,327 886 -96 -680

39.06 -16.54 120.59 15.54 -54.67 65.02 81.28 -51.34 -49.49

TOTAL

1,465,202

1,452,464

12,738

0.88

Source: Chittagong Port Authority/Bulk Storage Terminals/Importers, MPOC Market Intelligence:MPOB Note: 1Oil equivalent of imported beans @18% extraction: data within brackets=volume of imported beans. 2 Oil equivalent of imported seed @38% extraction: data within brackets=volume of imported seed. 3 includes both the oil & oil equivalent of imported copra @60% extraction. 4 all refined edible vegetable oils, except palm olein, imported in consumer packs/bulk

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Table 2: Palm oil imports (tonnes) Volume 949,075 930,147 1,023,128 815,965 581,183

2011 2010 2009 2008 2007

Change(%) 2.03 -9.09 25.39 40.21

Source: MPOC Market Intelligence

Imports of Malaysian palm oil (MPO) declined to 134,010 tonnes in 2011, a drop of 18.45% compared to 2010 (Table-3). Table-3: Palm oil Imports from Malaysia (tonnes)

CPO, CPL and RBD PL

Jan-Dec 2011

Jan-Dec 2010

Change (vol)

Change (%)

134,010

164,320

-30,310

-18.45

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IMPORT RATIO In 2011 total import of fats & oils in Bangladesh was 1,465,202 tonnes of which Palm oil 949,075 tonnes, Soybean oil 422,301 tonnes and Canola/mustard oil 59,711 tonnes and (others 34,115 tonnes), i.e. at an import ratio of 66:30:4 respectively. YEARWISE IMPORT TREND OF MAJOR THREE EDIBLE OILS: 2005--2011

Palm oil Soybean oil Canola/Musta rd oil Total

2005 826 207

2006 879 320

2007 581 508

2008 816 217

2009 1,023 397

2010 930 435

2011 949 422

29 1,062

49 1,248

73 1,162

27 1,060

44 1,464

57 1,422

60 1,431

1600 1400 1200 1000

Palm oil

Soybean oil

800

Can ola/Mustard oil

600

Total 400 200 0 2005

2006

2007

2008

2009

2010

2011

Canola/Mustard oil figures are oil equivalent of imported seed @ 38% oil extractions

15

CONSUMPTION RATIO In 2011, the consumption quantity of fats & oils in Bangladesh was 1,582,000 tonnes of which Palm oil 991,000 tonnes, soybean oil 405,000 tonnes and canola/mustard oil 106,000 tonnes,

i.e. consumption ratio 66:27:7 Fig: 2 Imports of Oils & Fats in Bangladesh in 2011 Total: 1,465,202 tonnes Palm oil

949,075

Soybean oil

422,301

Canola/ Mustard oil

59,711

PKO

10,982

Coconutoil Others

8,352 14,781

Consumption of Oils & Fats in Bangladesh in 2011 Total: 1,582,000 tonnes Palm oil Soybean oil

991,000 405,000

Canola/ Mustard oil PKO Coconutoil Sunflower oil Butter Others

106,000 22,000 26,000 1,000 28,000 3,000

1,000 26,000

22,000

28,000 3,000 Pa lm oil

106,000

So ybea n oi l Ca no la/ Musta rd oil PKO

405,000 991,000

Co con utoi l Su nflow er oi l Bu tter Oth ers

Source: MPOC Market Intelligence Source: MPOC Market Intelligence Note: 1. Soybean oil figure indicates both CDSBO &oil eqivalent of extracted soybeans @ 18% 2. Canola/Mustard oil figure is the oil equivalent of extracted Canola/Mustard seed @ 38%

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Yearwise Consumption of Palm Oil in Bangladesh in 1000 MT

Year

Consumption MT

Growth Rate

2000

306

90.06%

2001

395

29.08%

2002

398

0.76%

2003

540

35.68%

2004

747

38.33%

2005

800

7.10%

2006

860

7.50%

2007

797

-7.33%

2008

700

-12.17%

2009

891

27.29%

2010

1015

13.92%

2011

1020

0.49%

2012

1075

5.39%

until Aug.

Source: United States Department of Agriculture

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Yearwise Import of Palm oil in Bangladesh ( IN 1000 MT )

YEAR

Imports MT

Growth Rate

2000

327

90.12%

2001

399

22.02%

2002

398

-0.25%

2003

528

32.66%

2004

757

43.37%

2005

847

11.89%

2006

898

6.02%

2007

724

-19.38%

2008

700

-3.31%

2009

951

35.86%

2010

996

4.73%

2011

975

-2.11%

2012

1075

10.26%

until Aug Source: United States Department of Agriculture

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Yearwise Consumption of Soybean oil in Bangladesh (in 1000 MT)

Year

Consumpti on MT

Growth Rate

2000

503

5.67%

2001

416

-17.30%

2002

393

-5.53%

2003

366

-6.87%

2004

275

-24.86%

2005

276

0.36%

2006

342

23.91%

2007

380

11.11%

2008

353

-7.11%

2009

371

5.10%

2010

388

4.58%

2011

410

5.57%

2012 until AUGUST

415

1.22%

Source: United States Department of Agriculture

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Yearwise Import of Soyabean oil in Bangladesh ( In 1000 MT)

Year

Imports MT

Growth Rate

2000

503

4.57%

2001

406

-19.28%

2002

383

-5.67%

2003

332

-13.32%

2004

228

-31.33%

2005

262

14.91%

2006

327

24.81%

2007

401

22.63%

2008

254

-36.66%

2009

349

37.40%

2010

376

7.74%

2011

425

13.03%

2012 until AUGUST

370

-12.94%

Source: United States department of Agriculture

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Bangladesh Palm oil/soybean oil domestic consumption by year in 1000 MT Bangladesh Palm oil/Soybean oil Domestic Consumption by year (in 1000 MT) 2000 306 503

Palm oil Soybean oil

2001 395 416

2002 398 393

2003 540 366

2004 747 275

2005 800 276

2006 860 342

2007 797 380

2008 700 353

2009 891 371

2010 1015 388

2011 2012 til Aug 1020 1075 410 415

1200

1000

800

Palm oil

600

Soybean oil 400

200 Source: United States Department of Agriculture 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012 til Aug

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Yearwise Import of Palm Oil vis-à-vis Soyabean oil in Bangladesh (In 1000 MT)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011 2012 til Aug

Palm oil

327

399

398

528

757

847

898

724

700

951

996

975

1075

Soybean oil

503

406

383

332

228

262

327

401

254

349

376

425

370

1200

1000

800

600

Palm oil Soybean oil

400

200

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: United States Department of Agriculture

2009

2010

2011 2012 til Aug

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Import Tariff on Oils and Fats DESCRIPTION

TARIFF

NOTES

Crude palm oil/Olein

0%

10% VAT

Crude Degummed Soybean Oil

0%

10% VAT

Refined Palm Olein

0%

10% VAT

Refined Soybean Oil

0%

10% VAT

Refined Sunflower Oil

0%

15% VAT

13%

15% VAT

Palm Kernel Oil

25%

10% VAT + 5% regulatory duty

Crude Palm Kernel Oil

13%

15% VAT

Crude Palm Stearin Restricted to Soap Products

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Major Importers of Palm Oil in 2011 and Respective Brands Estimated Volume of Palm Oil Imports

Brand Name of Palm Olein Natural

City Group

38,700 MT CPO 98,753 MT CPL

------

S.A.Group

5,000 MT CPO 57,589 MT CPL

------

Nurjahan Group

6,000 MT CPO 146,950 MT CPL

T.K.Group

49,158 MT CPO 75,840 MT CPL

Hilsa Family

Shakti

Mostafa Group

20,000 MT CPO 17,704 MT CPL

MEB

40,327 MT CPL 6,000MT CPO 122,513 MT CPL

-------Dalda Super Pure

Meghna Group

9,500 MT CPO 92,871 MT CPL

Name

S.Alam Group

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OILS & FATS INDUSTRIES BRIEF PROFILE MAJOR REFINERIES WITH CAPACITY Name of the Refining Group City Group S.A.Group Nurjahan Group T.K.Group Mostafa Group

S.Alam Group MEB Meghna Group

Number of Plants (Units) Refineries-3 Dry Fractionation-2 Refineries-3 Dry Fractionation-2 Refineries-2 Dry Fractionation-1 Refineries-3 Dry Fractionation-2 Refineries-1 Dry Fractionation-1 Refineries-2 Dry Fractionation-2 Refineries-1 Dry Fractionation-1 Refineries-2 Dry Fractionation-2

Capacity (Tonnes/day) 2,300 1,800 1,000 1,000 1,300 500 1,700 1,000 450 300 150 120 500 300 1,300 1,100

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Storage Capacity of Bonded Tank Terminals in Bangladesh NAME OF THE COMPANY

CAPACITY

CITY GROUP (VOTT OIL REFINERY)

120,000 MT

SUMMIT UNITED TANK TERMINAL

85,000 MT

MEB GROUP OF INDUSTRIES

65,000 MT

T.K.GROUP OF INDUSTRIES

45,000 MT

MOSTAFA GROUP (EASTERN FISHING)

30,000 MT

26

27

28

29

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PROSPECT OF OIL PALM CALTIVATION IN BANGLADESH

 The first batch of oil palm seeds was brought from Malaysia in 1978.  Oil palm cultivation started in Bangladesh from 1979 through the import of seedlings from Nigeria and Malaysia.  By 1981 about 784 acres of land were brought under oil palm plantations.  Insects, rats, wild animals, and some diseases affect the growth and cultivation of oil palm in Sylhet area. Considerable damage of plantations of Cox's Bazar Division by elephants is reported. 31

 As it is a labour intensive work, such plantation would lead to generation of employment for the poor people and thus can contribute in create massive employment opportunity. The Job seekers who went to Malaysia and worked in oil palm gardens have practical experience in oil palm gardening can be engaged in oil palm plantation.  Few NGO`s started to work in oil Palm tree Plantation in Hilly district of Chittagong and they have shown success in plantation. Nearly 500,000 Oil Palm trees, scattered across the country with concentration in Chittagong Hill tracks, are now fruit bearing and on an average, weight of each bunch is about 40 to 50 kgs, which shows that the land is suitable for Oil Palm planation.  The agriculture extension department and the forest department are assigned to take separate projects for oil palm plant cultivation in Bangladesh.  In Bangladesh, still there is no facility to extract palm oil from flash (mesocarp). Since, Oil Palm trees in Bangladesh are fruits bearing a Palm oil Mill may be set-up near the plantation area to extract Palm oil from the palm fruits. There is a good opportunity for the Malaysian expertise to utilize their technical knowhow to work together with Bangladeshi entrepreneurs to build up the required facilities for extraction of palm oil.

 In Bangladesh there are millions of hectors of uncultivated lands are laying vacant, mostly are in Hilly district of Chittagong and nearby, Sylhet, Tangail, and Mymensingh, which could be taken under oil palm plantation. 32

Conclusion  Indigenous production of oils and fats in Bangladesh is insufficient to meet the local demand.  Bangladesh is dependent on import to meet its annual requirement of oils and fats, which is in increasing trend in pace with increase of consumption.  Palm oil is price competitive and contributes to keep the prices of edible oils steady in the local market.  Palm oil is heart friendly and provides vitamins that protect us from heart disease and cancer.

 So for cost and health ground palm oil is recommended for consumption in Bangladesh.

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THANK YOU

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