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Punjab’s unrealistic edible oil plans

December 04, 2017


A WORKER shows palm oil fruits in this March 25 photo.—Reuters
A WORKER shows palm oil fruits in this March 25 photo.—Reuters

Pakistan’s consumption of oils and fat for cooking and industrial application is increasing fast, reaching 3.8million tonne in 2016 from 2.9m tonne five years back. The use is expected to grow even faster going forward as the economy expands and household income levels rise.

Of the total oil and fats consumed last year, only 13 per cent came from local oilseed crops. Oil extracted from imported oilseeds constituted 18pc of the total consumption. The rest of the national requirement was met by palm oil imports that formed the bulk of the oil and fats imports of 2.6m tonne, up by 30pc from two million tonne in 2012.

With palm oil imports, including palm kernel oil, spiking by a third to 2.4m tonne last year from 1.6m tonne five years back, Pakistan’s edible oil and fats market is acquiring more significance for the two major palm oil producing countries — Indonesia and Malaysia, which together produce 85pc or 53.3m tonne of the total world palm oil and control 91pc of its international trade of 48.2m tonne.

“Traditionally, Pakistan has been a very important market for the entire palm oil consortium. Many years ago when Malaysia was a major producer and exporter of palm oil, we depended heavily on Pakistan,” Dr Kalyana Sundram, the chief executive officer (CEO) of the Malaysian Palm Oil Council, told Dawn during an interview in Kuala Lumpur.

He pointed out the consumption patterns in Pakistan were pretty varied like in the rest of the Indian subcontinent with the affluent segments over-consuming oil and fats and the poorer under-consuming, offering sufficient room to Malaysian palm oil exporters for increasing their share here.

“What you can do is encourage a combination of liquid oils and solid fats. We are doing this in Malaysia, and this is happening in the rest of the world. If you want to ban solid fats, you have to completely change the diet and eating habits of the Pakistani people. Are you prepared to do that?”

“Ideally, fat consumption should be at least 25pc-30pc of daily energy requirements of a person. If you factor that along, there is significant room for growth for all oils and fats in Pakistan. And as the economy develops and per capita income increases, one of the first things that the population around the world spends on is food. If that happens, you will see a significant growth in total oil and fats consumption in the Pakistani market,” he argued.

Once a leading supplier of palm oil to Pakistan, Malaysia has lost much of its share to Indonesia over time. Dr Sundram blames the preferential trade agreement between Indonesia and Pakistan for the decrease in Malaysia’s share in Pakistan’s palm oil market to 25pc-30pc from above 50pc.

“With the PTA kicking in, we lost the level playing field. Price-wise, we are a little bit disadvantaged because our production cost can be slightly higher. Regaining our market share is going to be a challenging task because we realise that Pakistan is a price sensitive market.”

He saw an opportunity for Malaysian suppliers as Pakistan’s palm oil requirements for industrial applications such as manufacturing soaps, shampoos, cosmetics, detergents, etc will increase as the economy improves and income per capita rises.

“It’s an untapped market and offers opportunities when diversifying. Let me just add here that palm oil will remain a major food commodity and here’s no running away from that even if its use for other applications increases.”

Speaking about health issues related to palm oil and the recent campaign by the Punjab Food Authority against vanaspati ghee, Dr Sundram said: “Historically, there have always been accusations about palm oil for health and nutrition.

“It all started in the 1980s with anti-palm oil campaigns waged by American Soybean Association. So we responded by commissioning health and nutrition studies and clinical trials all over the world including in Pakistan. We did a lot of work at that time with Agha Khan Medical Centre in Karachi and the Armed Forces Institute in Rawalpindi.

“Nearly 170 studies later, we have established that no harm comes to people with the continuous consumption of palm oil. At no point did we claim that palm oil is a miracle fat. In Malaysia, around 80pc of the fat consumption is provided by palm oil. Hence, this country is a living proof that palm oil is good for populations. Yes, over consumption of anything is harmful.”

He continued “the problem that we see in Pakistan is related to vanaspati. Vanaspati is partially hydrogenated. Since the 1990s, there has been growing evidence that if you consume partially hydrogenated fats containing trans-fatty acids — a fat that actually increases the risk of heart disease.

“Many countries including the US, are now legislating to remove trans-fatty acids from their supply chains. We fully endorse the removal of trans-fatty acids and partially hydrogenated oils. We have been telling Pakistan that if you want to reformulate vanaspati, we can offer formulations that can be made with palm oil that have zero trans-fatty acids, and yet you will get the characteristics and the texture of Vanaspati.”

On PFA’s resolve for a total liquid oil diet in Pakistan, Dr Sundram pointed out that it wasn’t realistic. “There are world population can be divided into two types: One that consumes liquid oils and the other that consumes solid fats like vanaspati ghee, butter, etc. It is the culinary habits of the population.

“What you can do is encourage a combination of liquid oils and solid fats. We are doing this in Malaysia, and this is happening in the rest of the world. If you want to ban solid fats, you have to completely change the diet and eating habits of the Pakistani people. Are you prepared to do that?”

He said he was planning to sit down with the Punjab authorities next January, give them all the evidence and ask them to be reasonable and rational based on scientific evidence. “I would like to go one step further, and tell them that we are prepared to engage in a research to be undertaken in Pakistan. The food authorities must weigh all the unbiased data and look at what’s manageable. No country depends on single oil. You need different oils and fats for functionality. That’s why we are asking you to choose the middle path.”

He warned that the implementation of the PFA plans to totally replace solid fats with liquid oils will leave Pakistan with no option but to import genetically modified oils like soybean, sunflower, etc. “The cost of these imports to the country will also be significantly higher because palm oil trades at a discount to soybean, sunflower and rapeseed oils. So you are going to impose an economic burden on your people and country.”

Published in Dawn, The Business and Finance Weekly, December 4th, 2017