PUTRAJAYA: Palm oil industry expert Dr James Fry believes that the European Union (EU) resolution that discriminates palm oil is wrong and runs contrary to the International Sustainability and Carbon Certification (ISCC) system – the driver for certified palm oil.
He said the lSCC and the Roundtable on Sustainable Palm Oil certification were the systems set up and approved by the EU.
“(As) the EU approved those certifications, this means palm oil is produced in a sustainable way,” he said when presenting a briefing titled “What are the Next Important Drivers in the Oils and Fats Market and Outlook” in conjunction with the Palm Oil Economic Review and Outlook Seminar 2018 here, yesterday.
On Wednesday, 429 members of the EU Parliament voted for the resolution to phase out palm-based biofuels from the EU energy mix after 2020.
The final decision will be made in a tripartite meeting along with the Council of the EU and the European Commission.
Fry, who is chairman of London-based palm oil consultancy firm LMC International Ltd Chairman, said as at last year, 99 per cent of all palm oil biofuel in the EU was certified.
“That means the laws are not for fun, and oil palm producing countries had met the EU’s requirements,” he said.
Fry said from the EU’s own assessment on greenhouse gas reduction, palm oil is the best and has outperformed than any other vegetable oils.
“Therefore, at the level of logic and my own view, probably, ultimately the World Trade Organisation’s (WTO) consistency, I feel that the EU Parliament resolution is wrong,” he added.
On another development, Fry believes that the EU’s move would hike food prices in the region, once palm oil is excluded from biofuel.
“They would probably use rapeseed oil to replace the 3.5 million tonnes palm used in biofuels production.
“But they will also have to find other 3.5 million substitution oils, which could be sunflower oil, to fill the hole when rapeseed oil is out of the food market,” he said.
Fry added that the cycle would increase the sunflower oil price and hence, triggering vegetable oil consuming countries like India and China to go back to palm oil.
“The EU then would have a huge and expensive job for that,” he said.
On palm oil price outlook, Fry foresee it would average at around US$670 per tonne this year.
He noted that when Brent crude oil was traded at US$70 per barrel and converted into tonnage, it amounted to US$520 per tonne.
“Since palm oil traditionally trade at US$150 premium above Brent crude oil, this year it is foreseeable that the commodity would average at around US$670 per tonne,” he said. — Bernama