So when the government there announced an unprecedented ban on palm oil exports in april, it sent a shockwave across the global agri food market. Now that ban has since been reversed, but its certainly had an impact. Were joined now by steffi hammond assistant, professor at the university of guelph. Thank you very much indeed, for joining us. Thank you for having me andy its a pleasure. Just remind us what happened, because we saw vegetable oils around the world. Soaring, maybe well put up a one year chart for soybean oil as a proxy uh for the vegetable oil market or for soybeans, but the prices have come down a bit. Yes, but i mean coming down at this point. Still, you know means were part of a big roller coaster of whats, going on in the vegetable oil markets. These days, the united nations food and agriculture organization, which tracks the price of food commodities, shows that the price for vegetable oils rose to almost 250 percent compared to the average price from 2014 to 2016, which serves as the standard reference period, and that was in march. So we are, you know, experience we were experiencing unprecedented times were looking here at a chart, a 10 year chart for soybean futures and they have just surged its quite incredible. You have done a lot of work on global inequality, youve spent time in burkina faso and cameroon, youre, very youre interested in lets say non oecd countries and their food stability.
What does this mean, though, for the worlds lower income nations, when vegetable oil goes up like that? Well, the immediate repercussions for a crunch like this are always felt the most in populous low income nations that rely on the import of vegetable oils as a basic cooking ingredient. So were talking india, pakistan, bangladesh, egypt, kenya, you know, those are the kinds of countries where the immediate worry about. The current state of global food prices is always linked to an immediate worry about food security concerns, and we saw an as you know, significant drop. For example, in palm oil imports in may – and that was certainly felt in those countries a big place like india or bangladesh, they would tend not to be self sufficient in vegetable oils. No india is the largest importer for palm oil in the world. For example, what about nations that are further down on the income scale such as burkina and cameroon? I presume the the impact is even more dramatic there um theyre interesting because they dont import as much of their palm oil. Well, burkina would but cameron, for example, is one of the largest palm oil producers in the west african central west african region itself. This is where the tropical palm oil tray originated, but over the past 40, 50 years, its been indonesia and malaysia that have risen to become the dominant player in this in this market, theres been a lot of destruction of jungle hasnt there along that along the along.
The road precisely theres, this big debate about palm oil, which, on one hand, is treated as sort of a miracle plant because it is you know, a perennial plant that can be harvested all year. It is highly highly efficient because its the highest yielding vegetable oil crop per hectare of palm oil plantation. You can produce more than four tons of palm oil per year for any other vegetable oil. It is less than one turn per hectare per year. Palm oil is extremely versatile: your toothpaste, your shampoo, your lotions, a lipstick, shaving, cream, tortilla, baked goods all of these kinds of things, nutella doritos. They all contain palm oil and, at the same time, its cheap and crucial ingredients in technical lubricants and paints and animal feeds. Its used as a biofuel, its a flex crop its, you know a miracle plant and it has an extremely long shelf life compared to many other vegetable oils once its processed. But then, on the other hand, we have the very significant problems that always come up when we talk about palm oil, deforestation, the cutting down of rain forest has been a huge concern and the loss of biodiversity. You know the loss of the orangutans and borneo and sumatra has been one of the major issues. There are poor, labor conditions in the sector. This is well known and the land pressures um exert concerns on indigenous communities. So you know its uh theres great benefits, but also very great problems and what are the worlds biggest palm oil? Oh sorry, vegetable oils, which oils have the biggest market share.
Can you give us a ballpark idea? Absolutely so the um, the vegetable oil market is accounts for about 213 million tons per year that are produced palm oil and palm kernel oil. So these are the two types of oil that are extracted from the palm oil fruit. They account for 84 million tons of that thats about 40 percent of the global, edible oil market and indonesia dominates within this. They, as you said, account for two thirds of the palm oil exports following palm oil, which is the dominant, edible oil, oil commodity. We have soybean, which is about 60 million tons per year, so 28 percent uh canola would work.