Palm oil producers are experiencing the most extreme El Niño effects in 18 years, which has caused droughts in palm oil producing regions such as Indonesia and Malaysia and will result in lower production yields, Dr James Fry of LMC International told the Price Outlook Conference and Exhibition (POC 2016) in Kuala Lumpur, Malaysia on 7-9 March.
In addition, there was the concern of a La Niña weather effect occurring later in the year.
Dorab Mistry, director at Godrej Industries, also focused on the huge impacting factors of El Niño and falling palm oil production in Indonesia and Malaysia.
He said Indonesia’s biodiesel mandate appeared to be successful, although he believes the success is falsely contributed to the mandate.
In addition, he spoke about France’s plan to triple import taxes on palm oil, which he called a ‘demented action’ – which prompted a round of applause from delegates.
The plan to impose a progressive tax on all palm-oil based products has been included in a biodiversity bill passed by the French Senate on 21 January and is due for approval on 15 March.
It would become effective from 2017, and will amount to €300/tonne for 2017; €500/tonne for 2018; €700/tonne for 2019; and €900/tonne for 2020, compared with the current tax of €103/tonne.
For the future, Mistry said that Indonesian palm biodiesel demand was critical for the market, as nothing further could be done about production figures. World energy demand for vegetable oils would grow in 2015/16 by more than 1.5M tonnes, he added.
Fadhil Hasan, executive director at the Indonesian Palm Oil Producers Association (GAPKI), also discussed the repercussions of El Niño.
He advised continuing the implementation of the B20 biodiesel blending mandate in Indonesia, as well as campaigning for the implementation of B5 in other ASEAN countries.
In addition he urged replanting to be accelerated and cooperation between other palm oil producing countries to be strengthened.
Olam International CEO Sunny Verghese spoke on the impact of climate change on agriculture.
He said people were finally believing in the existence of climate change, with 14 of the 15 hottest years on record occurring since 2001.
Alongside climate change, which was causing more extreme weather patterns and the outbreak of diseases such as the Zika virus, world food production needed to increase by 100%. The increasing demand for food had to be met without further impacting the environment. Renewable sources of energy were also necessary to attempt to cut back on the 120M tonnes of greenhouse gas currently emitted into the atmosphere every year, more than 85% of which came from fossil fuel usage.