Written By: Selly Novela, ST, MM
Crude Palm Oil (CPO) is edible oil which is extracted from the pulp of fruit of oil palms. The color of pulp is red. That’s why crude palm oil is naturally similar to pulp color because of high inactive vitamin A content. Main usage of CPO is for cooking purposes and is largely used in South-East Asia, West Africa and some parts of Brazil. Commercial kitchen use it due to its low cost. It’s not healthy as its counterparts due to high content of saturated fats.
Largest producer of CPO are Indonesian, Malaysia, Nigeria and Columbia. They are major exporters of palm oil. India is net importer of CPO and Mumbai being one of the major trading centers. It is also used for making bio diesel and one of its by product is Glycerin.
The largest derivatives market for CPO is Bursa Malaysian Derivatives. It’s also traded heavily on MCX and NCDEX in India wherein delivery center is Mumbai. Its prices are affected mainly by demand and supply cooking oils and oil seeds all over the world. It’s measured in kilogram. (source: http://economictimes.indiatimes.com).
Based on data from UN in 2009, Indonesia as a biggest country stated in South East Asia, has total territory about 1,990,250 km2. The government type is Republic and total population more than 230 million. Meanwhile, India stated in South Asia, with the territory about 3,287,240 km2, and the government type is Federal Republic. The total population is no 2 biggest in the world, with more than 1,210 million people (UN, 2009).
In order to know how the trading CPO between Indonesia and India take place, the further explanation will describe India as Importer and Indonesia as Exporter.
From the characteristic of consumption of fish oil pattern: High demand until 7,59 million tons/year (60% import). Importer countries: Malaysia and Indonesia. In 2013: 70-30 Malaysia-Indonesia. In 2014: 60-40 Malaysia-Indonesia. In India, from year 1982 – 2011 there is significant increase in CPO Import (source: Toepfer 2009:38/USDA 2010a:Table11).
According to Mainstreaming Responsible Business Practices in Palm Oil Sector in India, there is shifting in consumption of edible oils in 2002-02 and 2012-13 from Soy oil to palm oil, from only 29% to 50%. The total consumption increased from 10.13 MMT to 17.34 MMT.
Production of CPO in India only about 2.5 million tons. India will accept CPO with maximum acidity 4.5%. There will be fine and penalty for importer accept more than that threshold.
Based on data from Oil World Annual & MBOP, from 1964-2013, Indonesia is a biggest exporter country of CPO (48.4%) compare with others. About 70% Indonesia CPO exports to other countries. CPO from Indonesia has acidity in the range 3% – 3.5%.
According to Toepfer 2009:36/USDA 2010 and 2010a, CPO Export Indonesia had significantly increased in 1982 until 2011, from 435 thousand tons to 18 million tons. The main destination countries are Europe Union, India and China. India in the second position. (source: Oil World Annual & MBOP, 2010). The growth rate of oil palm in Indonesia from 2004 to 2014 is 7.67%.
With the demand in India of CPO is increasing every year, while the supply of CPO in Indonesia continues to increase, it can be concluded that the palm oil import-export business between the two countries will continue to run well.
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