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 Colombia palm oil production to rise 10% this year, says producers' federation

02.09.2020 (www.nasdaq.com) - BOGOTA, Sept 2 (Reuters) - Production of palm oil in Colombia will rise this year to 1.65 million tonnes, a 10% uptick on last year because of increased output, the president of the producers' association said on Wednesday.

Colombia is the world's fourth-largest producer of the oil - used in foodstuffs, cosmetics and biofuels - behind Indonesia, Malaysia and Thailand.

Production in the first half already rose 8% to 953,000 tonnes because of the harvesting of crops planted in previous years and an increase in workforce, said Jens Mesa, president of the National Federation of Oil Palm Growers.

"It puts us on a path to recovery once again, compared to what we had last year when there was a contraction of production, and it has compensated in a way for what we've lost in price," Mesa said. Output fell 6% in 2019.

Producers were forced to reduce prices to try to counteract a fall in consumption amid quarantine measures imposed to contain coronavirus, though farmers were exempted from lockdown.

Biofuel consumption was hit by closures in transport.

Consumption in hotels, restaurants and schools in Colombia was nearly nil during the five-month quarantine but higher consumption in homes partially made up for the fall, Mesa said.

"In the export markets we observed the same situation, so sacrificing price during the first semester was a way of moving exports and local sales," Mesa said. "And by surprise...we've seen a slight continuing recovery."

Colombian palm oil sales reached around $1 billion last year, half in exports.

Europe is the destination for about 60% of Colombian exports, but plans to restrict palm oil purchases for environmental reasons could have a negative impact, Mesa said.

"At the end of the day it's about commercial worries, giving more space to European oils and putting the brakes on the competition they've had from palm oil," he said.

(Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb; Editing by Lisa Shumaker)


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