Malaysia aims to nearly double palm oil market share in Russia

Malaysia aims to nearly double palm oil market share in Russia
Business & Markets 2013
Written by Bernama
Tuesday, 17 September 2013 12:30

MOSCOW (Sept 17): Malaysia aims to increase its palm oil import market share in Russia from the current 14 per cent to 25 per cent in the near term as that country has been identified as a major consumer of oils and fats.

Minister of PLANTATION [] Industries and Commodities Datuk Seri Douglas Uggah Embas said focus will be given on the food industry, oleochemicals and biodiesel as well as on increasing Malaysia's participation in the blended oil market segment in Russia.

"This includes promotion of Novelin (a blended cooking oil for the Russian market). Similarly, the potential of palm oil in oleochemicals for application in household and toiletry products as well as the prospects of palm kernel cake application in animal feed in Russia would also be highlighted," he told reporters after launching the Palm Oil Trade Fair and Seminar (POTS) organised by the Malaysian Palm Oil Council (MPOC) here.

He said Malaysia can expect Russia to import more palm oil with demand for oils and fats set to increase. Russia's domestic production of oils and fats is insufficient to meet the demand from its 143 million people.

Palm oil imports by Russia have increased from an average of 150,000 tonnes annually to 626,000 tonnes in 2012 with Malaysia supplyng 14 per cent. Palm oil currently accounts for 69 per cent of the total oils and fats imported by Russia, and is the second most popular vegetable oil consumed in the country after sunflower oil.

"We believe there is more room for improvement for palm oil in the Russian market especially considering the high amount of trans fats consumed by Russians. It is only logical for them to switch to palm oil which is more healthy and, more importantly, free from trans fats," he said.

In order to increase its market share, Uggah explained, Malaysia has come up with plans to renew and broaden contacts as well as foster better understanding with buyers, manufacturers and end-users related to oils and fats in Russia.

Other plans include using Russia as a hub for Malaysian palm oil to the Commonwealth of Independent States (CIS) countries, which were formerly part of the Soviet Union.

Speaking to Malaysian journaists on related matters later, Uggah said Malaysia is talking to oils and fats importers in Russia to persuade them to convince their authorities to reduce the import duty on palm oil which is currently capped at five per cent or a floor price of 120 euros per tonne.

Malaysia is hoping that Russia can reduce barriers on palm oil as the latter has maintained minimum import duties for palm oil, palm kernel oil, coconut oil and some hydrogenated vegetable fats and oils after it joined the World Trade Organisation (WTO).

"When the CPO price is dropped, the five per cent duty will be higher because there is this so-called fixed floor pricing of 120 euros per tonne. That is why we are interested to hold a dialogue with the Russian stakeholders, including oils and fat players," he said.
Russia, within the WTO framework, agreed on a maximum import duty for refined palm oil of five per cent in 2012. Based on a price of 1,000 euros a metric tonne, import duties for refined palm oil based on the WTO accords would be capped at 50 euros, but Russia’s minimum duty of 12 cents a kilogram equates to 120 euros a tonne which can be more than twice as much.