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6 July 2020 (closed)
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The European Union (EU) is a key export market for Indonesian crude palm oil (CPO) producers. The EU consumed 6.3 million tons of CPO in full-year 2015, 65.2 percent of which (about 4.2 million tons) originated from Indonesia, the world's biggest palm oil producer and exporter. After India, the EU is Indonesia's biggest client in terms of CPO shipments. However, despite the big market for Indonesian CPO in the EU, there are major challenges for Indonesian CPO exporters due to negative (anti-palm oil) campaigns launched in the EU.
The people behind these negative campaigns aim to limit the inflow of CPO into the European Union due to environmental as well as health concerns (although some speculate they actually want to limit the import of cheaper crude palm oil for the benefit of locally-produced edible oils such as sunflower oil, canola oil or soybean oil).
In the year 2017 negative campaigning continues. Several authorities in Europe had already listed palm oil, an edible oil, as a cancer risk. The European Food Safety Authority (EFSA) reported that palm oil generates more of a potentially carcinogenic contaminant than any other edible oil when refined at temperatures of at least 200°C. Nutella, the hazelnut and chocolate spread made by Italian confectionery firm Ferrero, became a victim when calls were made to boycott Nutella due to its palm oil content.
In recent years there has been a series of anti-CPO campaigns in the EU, including:
- In 2012 France proposed higher import duties on crude palm oil. It is believed this proposal was aimed at protecting the country's own sunflower oil production.
- In 2014 there started to emerge various products in Belgian and Italian supermarkets with the label "palm oil free", in an attempt to promote those products that do not contain palm oil.
- In 2015 there spread many negative stories about Indonesia's palm oil industry after the severe forest fires that occurred on the Indonesian islands of Sumatra and Kalimantan in late-2015.
- In 2016 France again proposed (progressive) import duties on palm oil imports (again the plan was cancelled after discourse).
Sahat Sinaga, Executive Director at the Indonesian Vegetable Oil Refiners Association (GIMNI), said these negative campaigns have a big impact on palm oil consumption in the European Union. In full-year 2016 Indonesia is estimated to have only exported 3.3 million tons to the EU, down 21 percent from 4.2 million tons of palm oil shipments in the preceding year. Toward the future, the figure may continue to decline and therefore Sinaga does not see a good future for palm oil shipments to the EU in case it involves palm oil shipments for food. However, EU demand for biodiesel or oleochemical is expected to increase. Therefore, exporters are advised to focus on the non-food palm oil-related shipments to the European Union.
Indonesia's Palm Oil Exports Volume to Top Markets:
in thousand tons
¹ January-September 2016 period only
Source: Statistics Indonesia (BPS)