(Bernama) — Soyoil is sold at a premium to palm oil owing to
market-distorting agricultural subsidies given to US and European
farmers by their governments, according to the Malaysian Palm Oil
Council (MPOC).
It is not due to any inability of the Malaysian commodity to compete on
the world stage, said MPOC chief executive officer Tan Sri Dr Yusof
Basiron.
Yusof said it was difficult for palm oil to be at par with soyoil or
other oils as these were being highly supported through their countries’
subsidy systems.
“So it’s not because soyoil is good that the price is high, but because
of the subsidy system,” he told reporters after a roundtable discussion
on the palm oil industry organised by Bernama on Thursday.
The discussion was moderated by Bernama editor-in-chief Datuk Yong Soo
Heong, deputy editor-in-chief Salbiah Said and assistant editor Siti
Hawa Othman.
Yusof said the subsidy system was artificially causing the price of
soyoil to be higher.
On Wednesday, the US Senate passed a tax bill that included a one-year
extension of the US$1 per gallon biodiesel tax credit, retroactive to
Jan 1.
As reported, biodiesel production came to a virtual stop after the
credit expired Dec 31 when senators could not agree on legislation that
would have kept it alive.
Yusof also said the soyoil industry was crying for support in order to
create good demand and high price needed by soybean farmers.
However, oil palm cannot have such a support system as there is no
subsidy for palm oil in the country, he said.
“It should not be regarded that we are the discount. We are the natural
price, they are the inflated price because of their subsidies,” he
added.
Oil palm planters in Peninsular Malaysia have to pay windfall tax when
palm oil prices go beyond RM2,500 per tonne in the cash market. Planters
in Sabah and Sarawak, however, only need to pay the windfall tax if the
price crosses RM3,000 per tonne.
Yusof said even with palm oil prices between RM2,600 and RM3,000, the
industry was still getting the necessary income.
“We are not complaining about the price and I think everybody will be
happy getting their necessary income from this industry,” he said.
According to him, oil palm is the best crop and is also competitive as
it yields 10 times more oil per hectares a year compared to soybean.
“This high yield is contributing to our competitive pricing, meaning
that we can compete with those costly oils in the world market,” he
said.
Yusof said that due to its competitiveness, palm oil could not be
replaced by soyoil or rapeseed oil.
Currently, he said, palm oil was competing with soyoil as the prices
were narrowing with palm oil having a discount of about US$100 per tonne
to soyoil.
The discount was likely to narrow further and palm oil could even trade
at a slight premium soon, Oilworld’s editor-in-chief Thomas Mielke said
recently at the Palm & Lauric Oils Conference held here.
A record soybean harvest this year may have some dampening effect on
soyoil prices as palm oil prices strengthened on bullish supply
fundamentals, he said.
Source : BERNAMA by Wan Nor Azura Mior Abd Aziz
