Africa's palm oil sector 'faces monumental change'

The oil palm tree is coming home.

The palm oil industry in Africa, where the tree originated in freshwater swamps, is "on the cusp of monumental change", Standard Chartered said, estimating that the continent could produce an extra 2.8m tonnes of the vegetable oil by 2030 more than doubling current output.

The increase reflects in part the decreasing availability of land in the South East Asian countries, notably Indonesia and Malaysia, where the palm oil tree whose scientific name of Elaeis guineensis suggesting suggest a West African origin - has thrived since being taken there by Dutch and British traders.

However, an extra incentive will come from growing consumption palm oil consumption in Africa, thanks to the continent's growing and increasingly affluent population.

'Set to boom'

Africa's palm oil industry, whose output is currently "anaemic", is "on the cusp of monumental change",  Standard Chartered analyst Abah Ofon said.

"Africa's edible oil market is set to boom," growth which will "create tangible market opportunities" in the sector, and hand strong market shares to those quick to invest.

"Industry players - including concession owners, mill owners, consumers, policy makers and investors can ride the crest of this wave of Africa's burgeoning demand for crude palm oil."

Supply vs demand

The pace of commercial palm plantings in Africa is "already picking up", albeit from a low base, with output at 2.2m tonnes, on US Department of Agriculture data, from area estimated at perhaps 5m-7m hectares, but of which only 1.5m hectares the bank deemed "productive".

Nonetheless, even with an increase in output of 2.8m tonnes, the sector would be unable by 2030 to meet local demand, seen soaring more than 60% to 8.2m tonnes by then.

That assumption rests in part on an estimate of per capita consumption of 7.2 kilogrammes of palm oil, up 40% from current levels, but still below the 7.7 kilogrammes in China and 8.8 kilogrammes in India.

Rising consumption means that only three African countries will be net exporters in 2030, with Liberia to show the biggest surplus, thanks to a 12-fold rise in production to 500,000 tonnes a year.

Gabon will also become a net palm exporter.

However, Ivory Coast, the continent's only net exporter currently, will become a net importer "as consumption gathers pace", with demand growth outpacing increases in output in Ghana, Nigeria and the Republic of Congo too.

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