by usman karim
The Food and Agriculture Organization, an agency of the United Nations, reported that its index of export prices for 60 internationally traded foodstuffs climbed 37 percent last year. That was on top of a 29 percent increase in 2008, and the trend has accelerated in the past few weeks.In some poor countries, desperation is taking hold. Just in the last week, there have been protests in Pakistan over wheat shortages and in Indonesia over soybean shortages. Egypt has banned rice exports to keep food at home, and China has put price controls on cooking oil, grain, meat, milk and eggs. According to the Food and Agriculture Organization, food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen. We are expecting riots in Pakistan due to price soaring in across the country. After ramzan new war is going to fight between government and hoarder .The urban poor, the rural landless and small and marginal farmers stand to lose," said He Changchui, the agency's chief representative for Asia and the Pacific.A startling change is unfolding in the world's food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food. A growing middle class in the developing world is demanding more protein, from pork and hamburgers to chicken and ice cream. And all this is happening even as global climate change may be starting to make it harder to grow food in some of the places best equipped to do so, like Australia. In the past few years, world demand for crops and meat has been rising sharply. It remains an open question how and when the supply will catch up. For the foreseeable future, that probably means higher prices at the grocery store and fatter paychecks for farmers of major crops like corn, wheat and soybeans.There may be worse inflation to come. Food experts say steep increases in commodity prices have not fully made their way to street stalls in the developing world or supermarkets in the West. Governments in many poor countries have tried to respond by stepping up food subsidies, imposing or tightening price controls, restricting exports and cutting food import duties. These temporary measures are already breaking down. Across Southeast Asia, for example, families have been hoarding palm oil. Smugglers have been bidding up prices as they move the oil from more subsidized markets, like Malaysia's, to less subsidized markets, like Singapore's.No category of food prices has risen as quickly this winter as edible oils, sometimes with tragic results. A 2007 University of Leicester study found that for every hectare of oil palm, 170 tonnes of carbon are released into the air over the plantation's useful life of 25 years. By contrast, each hectare of peat-swamp absorbs 2.6 tonnes of carbon annually, so it stores 65 tonnes over 25 years. Producing palm oil on peatland, in other words, results in a net emission of carbon.
When a Carrefour store in Chongqing, China, announced a limited-time cooking oil promotion in November, a stampede of would-be buyers left three people dead and 31 injured.Cooking oil may seem a trifling expense in the West. But in the developing world, cooking oil is an important source of calories and represents one of the biggest cash outlays for poor families, which grow much of their own food but have to buy oil in which to cook it.Few crops illustrate the emerging problems in the global food chain as well as palm oil, a vital commodity in much of the world and particularly Asia. From jungles and street markets in Southeast Asia to food companies in the United States and biodiesel factories in Europe, soaring prices for the oil are drawing environmentalists, energy companies, consumers, indigenous peoples and governments into acrimonious disputes.The oil palm is a stout-trunked tree with a spray of frilly fronds at the top that make it look like an enormous sea anemone. The trees, with their distinctive, star-like patterns of leaves, cover an eighth of the entire land area of Malaysia and even greater acreage in nearby Indonesia.The palm is a highly efficient producer of vegetable oil, squeezed from the tree's thick bunches of plum-size bright red fruit. An acre of oil palms yields as much oil as eight acres of soybeans, the main rival for oil palms; rapeseed, used to make canola oil, is a distant third. Among major crops, only sugar cane comes close to rivaling oil palms in calories of human food per hectarePalm oil prices have jumped nearly 70 percent in the past year because supply has grown slowly while demand has soared.
Farmers and plantation companies are responding to the higher prices, clearing hundreds of thousands of hectaes of tropical forest to replant with rows of oil palms. But an oil palm takes eight years to reach full production. A drought last year in Indonesia and flooding in Peninsular Malaysia helped constrain supply. Worldwide palm oil output climbed just 2.7 percent last year, to 42.1 million tons.the same time, palm oil demand is growing steeply for a variety of reasons around the globe. They include shifting decisions among farmers about what to plant, rising consumer demand in China and India for edible oils, and Western subsidies for biofuel production.In the United States, farmers have been planting more corn and less soy because demand for corn-based ethanol has pushed up corn prices. U.S. soybean acreage plunged 19 percent last year, producing a drop in soybean oil output and inventories.Chinese farmers also cut back soybean acreage last year, as urban sprawl covered prime farmland and the Chinese government provided more incentives for grain. Yet people in China are also consuming more oils. China not only was the world's biggest palm oil importer last year, holding steady at 5.2 million tons in the first 11 months of the year, but it also doubled its soybean oil imports to 2.9 million tons, forcing buyers elsewhere to switch to palm oil.Biofuels accounted for almost half the increase in worldwide demand for vegetable oils last year, and represented 7 percent of total consumption of the oils, according to Oil World, a forecasting service in Hamburg, Germany. Widely used in food and
cosmetics, palm oil accounts for 21 per cent of the global edible oils market. It is also used to make a renewable fuel called biodiesel, the mainuser of which is the European Union (EU). In 2003, the EU announced it was mandating biofuels in 5.75 per cent of transportation by 2010, and 10 per cent by 2020. This initiative stoked investment in oil palm plantations and biodiesel refineries in Indonesia The process of producing palm oil itself takes a heavy toll on the environment. Still, the biofuel industry favours the palm as1ha of it yields 20 tonnes of the crude. By contrast, biofuels like soybean and corn yield just 7.5 and 3 per cent of that, respectively. By early last year, there were 6.1 million ha of oil palm in Indonesia, up from 600,000ha in 1985. Palm oil production rose from 157,000 tonnes in 1964 to 15.9 million tonnes in 2006, with exports jumping from 126,000 tonnes to 11.6 million tonnes in the same period. Last year, these exports were worth US$4.43 billion (S$6.3 billion)
.The growth of biodiesel, which can be mixed with regular diesel for use in heavy engines, has been controversial, not only because it competes with food uses of oil but also because of environmental concerns. European conservation groups have been warning that tropical forests are being leveled to make way for oil palm plantations, destroying habitat for orangutans and Sumatran rhinoceroses while also releasing greenhouse gases.The European Union has moved to restrict imports of palm oil grown in unsustainable ways. The measure has incensed the Malaysian palm oil industry, which had plunged into biofuel production in part to satisfy European demand.Even in Malaysia, the center of the global palm oil industry for half a century, spot shortages have cropped up. Recently, as wholesale prices soared, cooking oil refiners complained of inadequate subsidies and cut back production of household oil, sold at low, regulated prices.Street vendors in the capital, Kuala Lumpur, complain that they cannot find enough cooking oil to prepare roti canai, the flatbread that is the national snack. "It's very difficult; it's hard to find," said one vendor who gave only his first name, Palani, after admitting that he was secretly buying cooking oil intended for households instead of paying the much higher price for commercial use.Many of the hardest-hit victims of rising food prices are in the vast slums that surround cities in poorer Asian nations. In Dharavi, a sprawling slum in Mumbai, the former Bombay, the nine members of the Kawle family are coping with recent price increases for palm oil, though it is difficult with just one member working as a laborer for $60 a month. The family has responded by eating fish once a week instead of twice, seldom cooking vegetables and cutting its monthly rice consumption. Next to go will be the weekly smidgen of lamb. World palm oil price hits $850 per tonne: Palm olien import cost to increase by 20% * Importers say they would have to pay Rs 15 per kg in may 2007In recent months, the international palm oil price has increased substantially as back in January 2007, it stood at $600 per tonne Pakistan imported around $731 million worth of palm oil during July-April 2007 against $196 million in the same period last year.Import during July-April 2007 witnessed a rise of around 22.60 percent to Rs 443.30 million as against Rs 356.53 million during July-April 2006, importers said.During July-April 2007, Pakistan imported 1.512 million metric tonnes of palm oil as against 1.388 million metric tonnes in July-April 2006, Importers said palm olien import would further increase by around 20 percent this year despite the higher international price of the commodity and lower than expected yield of cottonseed in the country.Pakistan imported around 1.99 million tonnes of edible oil from Malaysia last year, including 35 percent of crude oil in 2006.“We are presently paying around Rs 12,000 a tonne more cost and freight to the government on palm oil imports than in 1997.”The importer has to pay 45 percent duty on import value besides paying 50 percent import-landing tax to the government, Ibrahim added. Malaysia’s exports are picking up after months of slowdown because of strong demand from the world’s top buyers, particularly China and India. Malaysian palm oil prices surged 40 percent in 2006, boosted by bio-diesel demand, and analysts expect the market to rise around 20 percent this year. The local market is up and would remain bullish so we can expect importers to cash on the situation and import a higher quantity in coming months. “We believe there will be an increase in import orders as we are expecting lesser yield of cottonseed this year, which is major source of edible oil production,” he extraction of oil from 100 kilograms of cottonseed was around 40 kilograms.Pakistan imports mostly Malaysian palm oil and olein to meet the domestic demand of 1.97 million tonnes as locally produced cottonseed meets the rest of the demand. Edible oil imports cost around $ 750 million every year.“Blending ratio of 35:65 for soft and hard oil has been introduced for improving quality of ghee and generating demand for soft oil “Solvent oil extraction industry was persuaded to purchase farmers’ produce at Rs 590 per 40 kilograms, and as a result sunflower cultivation increased in Sindh and Punjab.” cottonseed is the major source of the domestically produced oil followed by rapeseed, mustard, canola and sunflower. However the share of canola was only six percent in the total indigenous edible oil production. The price of 16kg ghee tins, which hold 40 per cent market share and are being widely used by hoteliers, caterers and sweet-makers, is now quoted at Rs1,920-1,940, while it was Rs1,700 on April 1 and Rs1,800 in the third week of March. On Jan 1, 2007 it was available at Rs1,000.The 16kg ghee tin price, which fluctuates on a daily basis, touched the peak level of Rs2,150 on March 1, 2008, but after one week it started coming down after a decline in palm oil rates in March.Consumers have been facing a tough time in purchasing branded ghee and cooking oil in the last one and a half years. In Sept 2006, five kg Dalda ghee was priced at Rs395. On Jan 1, 2007 it was available at Rs440 as compared to the current price of Rs720. On Jan 1, 2007, five litre Dalda cooking oil was also selling at Rs440 as compared to the current price of Rs750.As a result of the rising price of 2.5 and five kg/litre tins, the market share of one kg pouch, which was five to 10 per cent a year ago, has surged to 20 per cent as consumers prefer to buy a smaller quantity as per their requirements rather than five kg/litre tins. Pakistan produces 3.2 million tons of ghee and cooking oil per annum in which the share of ghee is 70 per cent, while the rest is of cooking oil. when the manufacturers had procured palm oil at higher rates, they had easily passed on the impact to the consumers. When palm olien rates fell in March, the producers adopted a dilly-dallying attitude. However, since Sept 2006, leading packers had increased the rate nine-fold.Many packers had earlier said that if the falling prices of palm olien continued for two to three weeks, they would then think about cutting the rates. The palm olien rate remained lower for two weeks but consumers are still waiting for any relief from branded packers.The government had not checked with the branded packers as to why the rates had not been brought down despite a cut in palm oil rates in March.The palm oil rate had fallen to Rs3,800 per maund (37.23kg) in the third week of March from Rs4,600 in the first week of March, while in Malaysia it declined to $1,280 per ton from $1,540 peak level in the first week of March A packer said the palm olien rate is now quoted at $1,360 per ton while it is priced at Rs4,150 per maund in the local market. Two weeks ago, the palm olien rate was $1,330 per ton. Malaysian crude palm oil futures slid almost 5 percent on Friday, hitting an 11-month low, as falling crude oil prices knocked down vegetable oil markets from China to the United States. Palm oil prices, which have tumbled more than 18 percent this year, also broke past the key 2,500 ringgit ringgit level as investors scrambled to sell on fears that rising exports will do little to cut into swelling stockpiles.
The benchmark October contract fell as much as 129 ringgit or 4.9 percent to 2,491 ringgit ($747.6) per tonne, a level unseen since Sept. 10 last year. The palm oil rate in Malaysia and Indonesia had been declined in September and still in Pakistan the prices is same who will help to stop the fod inflation in Pakistan and give the relief to poor people in Pakistan .it’s seems no rule of law flow in Pakistan. Vegetable oil markets followed suit. Global vegetable surged $75 dollars to $935 to $955 dollars in September but prices issame in pakistanThe most-active January 2009 soyoil contract on China’s Dalian Commodity Exchange fell 4.2 percent and September soyoil at the Chicago Board of Trade dropped 1.9 the government is eating up Rs30 per kg in taxes and duties in the price of reasonable quality ghee and cooking oil of Rs125-130 per kg available in the market, while the high-quality varieties sell between Rs140-150 per kg.There is a need to cut the sales tax of 15 per cent and import duty on palm oil so that consumers could get an immediate relief, otherwise “there are dim chances for any relief for consumers in ghee and cooking oil,”.A sizable quantity of palm olien has been arriving from Malaysia following a 10 per cent duty cut on palm olien imports from Jan 1, 2008, under the Free Trade Agreement (FTA) between Pakistan and Malaysia. However, its impact in the shape of price cut was just Re1 per kg.who will help the poor nation of Pakistan who is ruling the country no one know really worried the whole country now.
by usman karim based in lahore pakistan
lmno25@hotmail.com