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 Palm oil turns the tide in US market - AHMAD IBRAHIM

12/08/2008 (NST Online) - ARNOLD Schwarzenegger, the governor of California, has just announced that come Jan 1, 2010, all 88,000 restaurants in the state will be prohibited from using oil, margarine and shortening containing trans fats. Retail baked goods will have an extra year's grace period until Jan 1, 2011. Packaged food, though exempted, will have to show distinct trans fat labelling on their packaging.

True to his Terminator movie role, the "Governator" has, more or less, terminated the sale of products rich in trans fats. They are to be avoided at all costs. And this has come after many years of conclusive scientific and nutritional evidence on the cholesterol-raising behaviour of trans fats.

What does this mean for the US oils and fats market? A major overhaul, by the look of it. For one, the use of partially hydrogenated soft oils will be severely curtailed. All these years, Americans have consumed huge quantities of such unnatural fats, which now explains the high incidence of obesity and heart disease in the US.

Americans by tradition use more solid fats such as margarine and shortening rather than liquid cooking oil, unlike in Malaysia, where cooking oil is the norm. The small amount of margarine and shortening that Malaysians consume is mostly made from palm oil, which is naturally semi-solid.

Margarine made from palm oil does not contain trans fats, and is, therefore, much healthier than margarine made through the partial hydrogenation of liquid oils such as soya or rapeseed.

With the new ruling prohibiting the use of products containing trans fats, the manufacturers of margarine and shortenings in the United States will have no choice but to switch to palm oil.

The prolific growth in palm oil exports to the US started around 2004, when exports went above the usual 200,000 to 250,000 tonnes annual average. Export of palm oil reached 343,000 tonnes in 2004. In 2005, it reached nearly 560,000 tonnes. And last year, the volume of palm oil export to the US almost touched 700,000 tonnes. The prediction is that this year, the volume may reach one million tonnes.

However, even at this high export rate, the proportion of palm oil in the US oils and fats usage is still only three per cent. This means that if US consumers choose to completely rid themselves of products containing trans fats, the potential for a further increase in palm oil exports to the US is massive.

Palm oil has always had an on-off relationship with the US market. In the early days when Malaysia began exporting palm oil in a big way, the US became an important buyer because of palm oil's competitive price. That was when competing oils felt the pressure and decided to deny palm oil the lucrative US oils and fats market.

But they resorted to dirty tactics. That there was no scientific evidence that palm oil raises the "bad" cholesterol responsible for America's high incidence of heart disease did not stop the interests in competing oils from engaging in a publicity campaign to attack and destroy palm oil's nutritional image. This significantly affected palm oil consumption in the US.

The palm oil industry was not deterred by the challenge. Through the Malaysian Palm Oil Board (MPOB), nutritional studies were pursued to establish the scientific truth. Prominent American and European scientists were engaged to undertake the studies. What was eventually revealed was that the real culprit had nothing to do with palm oil. The evidence was conclusive that trans fats not only raise the "bad", low-density cholesterol but also reduce the "good" high-density cholesterol in the body.

With such findings in hand, Malaysia's palm oil industry managed to convince the US Food and Drug Authority to include trans fats as a separate item on nutrition warning labels. The rest is history. The banning of trans fats announced by Schwarzenegger may well be the beginning of the end for fats made from partially hydrogenated soft oils.

The demand for palm oil as a replacement fat for the US market should witness further growth, from the current three per cent of US total consumption to at least 10 per cent -- a three-fold increase.

It would not be unrealistic, therefore, to expect palm oil exports to the US to reach as much as three million tonnes in the not-too-distant future.


Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
Tel : 603 - 7802 2800 || Fax : 603 - 7803 3533