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INTERNATIONAL JOURNAL OF
APPLIED BUSINESS AND ECONOMIC RESEARCH
VOLUME 15 NUMBER 19 2017
1. The Impact of Economic Conditions on Bank Profitability of Regional ...........................................1-12
Development Bank in Indonesia
Rizky Yudaruddin
2. The Comparisons on Incubation between Social and Business Enterprise: Same, .................... 13-25
Different or Both?
Su-Chuan Liu, Chia-Jung Chang, Hwa-Nan Chang, Yu-Hsin Liu
3. The Analysis of European Union's Vegetable Oil Consumption: "Will The European ............ 27-39
Parliament Resolution Halt the Consumption of Crude Palm Oil in the European
Union in the Future?”
Jan Horas V Purba
4. The Global Internal Audit Competency Framework: The Perception of Internal ...................... 41-58
Audit Staff in Thai Local Administration
Arus Kongrungchok and Supoj Poonnoi
5. Risk Management in Czech Manufacturing Company: Case Study ............................................. 59-73
Katerina Bockova, Gabriela Gabrhelova and Radka Vanickova
6. The Influence of the Authentic Leadership, School Culture, Information and .......................... 75-84
Communication Technology Acceptance on the School Management Effectiveness
in the Public Accredited Vocational High School in West Java
Daryanto, Sumarto, Aan Komariah and Dedi Achmad Kurniady
7. Insight Analysis of Foreign Labor Coming to Thailand: Implications for Human .................. 85-121
Resource Management
Phaninee Naruetharadhol
8. Internal Control Systems by the Internal Control Unit in Improving Officers Compliance 123-136
Bambang Pamungkas and Yunus Prasetyo
9. An Analysis of Diversification Practice of Domestic Individual Investors in the .................. 137-148
Indonesia Stock Exchange
Budi Frensidy, Sidharta Utama and Ruslan Prijadi
10. The Importance of Comprehensive Trusts Law in Indonesia .................................................... 149-155
Gunawan Widjaja
11. Oil Export and its Impact on the Growth of on-oil Sectors in Oman "is there any ................ 157-168
Spread Effects?"
Abdusalam F. Yahya
12. Empirical Study of Quality Healthcare Services: Public and Private Healthcare in the ....... 169-180
United Arab Emirates
Mohamad Murad Al Bolushi, 0lorogun, LA.,
Inoussa Boubacar and Roudaina Houjeir
13. Individual Characters for Sustainability Reporting ...................................................................... 181-193
Boby Wiryawan Saputra, Hamfri Djajadikerta and Majidah
14. A Structural Model of Foreign Tourists' Loyalty in Nature-based Tourism in Bali . ............. 195-214
I Gusti Ayu Oka Suryawardani, Agung Suryawan Wiranatha
I Komang Gde Bendesa, Made Antara and Maria Gravari-Barbas
15. Dimensions of the University Lecturers Behaviour in Using Non-original Software. .......... 215-233
Agus Hermaivan, Budi Eko Soeijipto, Sunaryanto,
Danardana Murwani and Suharto
16. The Relationship Between HouseRent, Income Inequality and Households Consumption . 235 -242
Dwi Wulandari, Thomas Soseco, Mit Witjaksono,
Bagus Shandy Narmaditya, Sugeng Hadi Utomo, Wahjoedi,
Nur Anita Yunikawati; Emma Yunika Puspasari &
Magistyo P. Priambodo
17. Experiential Learning: An Alternative Model of Entrepreneurship Learning in ................... 243-252
Higher Education
Sudarmiatin, Budi Eko Soetjipto, Puji Handayati; Suharto and
Rahmad Hidayat
18. Dismantling Social Romanticism for Corporate Social Responsibility . .................................... 253-263
Puji Handayati; Sulis Rochayatun, Budi Eko Soetjipto,
Sudarmiatin, Suharto and Imam Bukhori
19. The Effect of Entrepreneurship Education, Parents' role, and Self Efficacy on . ..................... 265-277
Students' Entrepreneurship Intention Mediated by Entrepreneurship Attitudes
Djoko Dwi Kusumojanto, Budi Eko Soejipto,
F. Danardana Murwani and Sunaryanto
20. Rural Tourism Management: Gap Between Expected and Reality ........................................... 279-289
Sudarmiatin, Pujii Handayati, Budi Eko Soetjipto,
Rahmad Hidayat and Imam Bukhori
21. Recognition of Margin Murabahah in Islamic Perspective: Analysis of Risks, . ....................... 291-304
Soundness of Bank and Maslahah
Muhamad Nadratuzzaman Hosen, Fithrah Kamaliyah, Fitriyani Lathifah
22. Relationships Between Mother and Son and Its Effect on Effort of Passing the Baton . ........ 305-314
Anita Maharani
23. Financial Literacy and Playing Intention of Financial Literacy Digital Game ......................... 315-326
Umi Widyastuti and Usep Suhud
24. Good Public Governance, Corruption and Public Service Quality: Indonesia Evidence ...... 327-338
Dyah Setyaningrum, Ratna Wardhani and Akhmad Syakhroza
25. Productivity Convergence at the Firm Level: Importance of Technology Diffusion.................339-352
Nguyen Khac Minh and Phung Mai Lan
26. Company Size, Profitability, and Auditor Opinion Influence to Audit Report . ..................... 353-367
Lag-on Registered Manufacturing Company in Indonesia Stock Exchange
Arifuddin, Kartini Hanafi and Asri Usman
27. Micro mall-Medium Enterprise Development Strategy in the Special Regions Yogyakarta….369-381
Hety Mustika Ani, Titin Kartini, Joko Widodo and Pudjo Suharso
28. Building Professionalism of Indonesia Teacher: Lesson Study from Japan .............................. 383-393
Retna Ngesti Sedyati, Sri Kantun, Pudjo Suharso and Sri Wahyuni
29. Prospect and Opportunityof Industry and Trade Investment in Economic ............................. 395-408
Development in Regencies of Tunggalrogo Mandiri Cooperation
Soetriono, Pudjo Suharso, SRDm. R. Hanafte, Sofia
30. The Improvement of Employee Performance in the Prevention of DHF in ............................. 409-422
Jember District, East Java, Indonesia
A. T. Hendrawijaya, T.A. Gumanti, Sasongko, Z. Puspitaningtyas and
Pudjo Suharso
27
International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
International Journal of Applied Business and Economic Research
ISSN : 0972-7302
available at http: www.serialsjournal.com
© Serials Publications Pvt. Ltd.
Volume 15 • Number 19 • 2017
The Analysis of European Union’s Vegetable Oil Consumption:
“Will The European Parliament Resolution Halt the Consumption of
Crude Palm Oil in the European Union in the Future?”
Jan Horas V Purba
Sekolah Tinggi Ilmu Ekonomi Kesatuan, Bogor, Indonesia, E-mail: janhorasvpurba@gmail.com
Abstract: In the last five years, the crude palm oil (CPO) industry in Indonesia has faced various
pressures, especially from the European Parliament, to stop or slow down the development of the palm
oil industry in Indonesia. Positively, this policy is trying to encourage rapeseed oil and sunflower oil as a
domestic crop in the EU and is expected to be a major source of vegetable oil in Europe, and at the same
time keep the EU from having a high dependence on CPO imports. This strategy is not easy to do
because, over the last two decades, CPO has grown into a major source of world vegetable oil and
managed to beat the dominance of soybean oil in the world vegetable oil market. This is supported by
cheaper CPO prices, and the highest productivity, so that CPO is easy to trade and flows to EU countries
and is available in large quantities. On the other hand, it should also be noted that palm oil has contributed
greatly to addressing global excess demand in global vegetable oils.
The objectives of this study are: (a) to analyze the consumption behavior of vegetable oils in the EU, (b)
to forecast of EU vegetable oil consumption by 2020, and (c) to analyze the influence of parliamentary
resolution of Europe on Vegetable oil consumption in EU.
The growth of EU vegetable oil production is 2.8 percent per year, while the growth rate of domestic
consumption is much larger, at 4.8 percent per year. This situation creates a widening gap and can lead
to an increasing dependence on imports. In 2016, total CPO imports reached 7.2 million tons, followed by
sunflower oil 1.3 million tons, 0.3 million tons of rapeseed oil and 0.25 million tons of soybean oil. In 2020, the
consumption is predicted will increase by 1 million tons from 22,96 million tons (2016) to 23,98 million tons
(2020). The EU will drive an increase in domestic RSO production by 1 million tons, while CPO
consumption will decrease by 461,000 tons, or 115,000 tons/year.
The resolution of the European Parliament encourages the EU government to increase domestic
production, both RSO and SFO. The impact of this resolution is a 1.7% reduction in CPO imports per year.
Unfortunately,
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International Journal of Applied Business and Economic Research
Jan Horas V Purba
RSO is categorized as a thin market in the global market, therefore CPO is needed as an important source
of vegetable oils and not easily removed. Thus, it is clear that the impact of the European Parliament to
stop the consumption of CPO in the EU can’t be done easily.
Keywords: Vegetable oil, widening gap, consumption pattern, thin market
INTRODUCTION
This research is motivated by the various pressures that occurred in the Indonesian palm oil industry in the
last five years. In 2011, the EU amended the EU Food Labelling Regulation No. 1169/2011, which required
all producers to include specific and detailed sources of raw materials. The new regulation of the EU has
been mandatory since December 2014. This labeling policy takes place quickly and becomes a marketing
campaign called Palm Oil free (POF).
This campaign on palm oil free is still running until today (PASPI, 2016 [1]). The world’s palm oil
producing countries are still facing a palm resolution issued by the European Parliament, on April 4 2017,
and ratify the Report on Palm Oil and Deforestation of Rainforests in Strasbourg. The report specifically
states that the issue of oil palm is a major issue linked to issues of corruption, child labor, human rights
abuses, the disappearance of indigenous peoples’ rights, and so on. (PASPI, 2017 [2]).
The other side of the resolution is the demand for palm oil investments to be diverted to sunflower
oil and rapeseed oil, both of which are domestic EU products, and the EU wants to protect and enhance
both commodities. The support that appears in this resolution is good enough to increase the production
of both commodities. The EU itself is one of the leading producers of rapeseed, but with a higher level of
vegetable oil consumption every year, has not been able to meet its domestic consumption, and the EU is
the second largest importer of RSOs in the global market.
On the other hand, this policy is positively trying to encourage Rapeseed oil and sunflower oil as a
domestic crop in the EU and is expected to be a major source of vegetable oil in Europe, and at the same
time keep the EU from having a high dependence on CPO imports.commodity in vegetable oil sources in
Europe. This then became the concern of European farmers and became an input for the European
Parliament to protect its domestic interests.
Indonesia and Malaysia are the two largest palm oil producing countries, which have contributed
greatly to addressing global excess demand in global vegetable oils. (Sipayung and Purba, 2015[3]; Sawit,
2015[4]). Therefore, the resolution is not wise if it becomes a movement that pushes to stop or slow down
the development of the palm oil industry in the world.
From the economics perspective, The European Parliament Policy attempts to shift the supply curve
to the right (by encouraging the world to plant and develop RSO and SFO), and on the other side, also
shifting CPO demand to the left, by a resolution to stop CPO consumption in the EU. This policy has been
systematically started with the “Palm Oil Free” labeling policy and other similar policies. This strategy is
not easy to do because CPO is one of the substitute commodities that are needed to meet the consumption
of VEG oil in the EU. This is supported by cheaper CPO prices, and consequently, the CPO is easy to
trade and flows to the EU countries. In 2015, the CPO/RSO price ratio is 0.67, where the price of 2 tons
of rapeseed oil is equivalent to 3 tons of CPO. The EU gains 1 ton of oil, with the same amount of money.
In the following year, when the price ratio between CPO and rapeseed oil (canola) (RSO) tends to one, the
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International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
demand for CPO is still high. This reflects that CPO is an important commodity to meet the demand for
vegetable oil in the EU.
This same experience also happened when Indonesia faced the black campaign attacking Indonesian
palm oil industry when Indonesian palm oil industry began to develop in the early 2000s. The trade war
that took place was the commodity of palm oil versus soybean oil, using health issues The United States
has earlier conducted anti-CPO black campaigns from the tropics to suppress CPO development, followed
by European countries by developing environmental damage issues. (Purba, 2012[5]). Othman’s research
shows, nine major types of vegetable oils are traded in the U.S. domestic market-soybean, sunflower seed,
rapeseed (canola), peanut, coconut, palm kernel, palm, corn, and cottonseed oils. These oils are highly
interchangeable in some uses. In the 1980s, however, palm oil had the largest annual global increase in per
capita consumption. (Othman and Alias, 2000[6]). The American Soybean Association (ASA) joined a generic
promotion campaign which highlighted alleged health risks associated with the relatively high saturated fat
content of tropical oils as compared to soybean oil (Othman, 1995[7]). However, some studies do not
support the negative campaign. In later studies, it was found that the statement was not proven. At this
time the demand for United States CPO has increased.
Based on the description above, the main question in this study is, “Will the resolution of Palm Oil by
the European Parliament halt the consumption of CPO in the EU in the future?” Long-term historical
data is needed to answer this question, in order to obtain vegetable oil consumption behavior in the EU.
Therefore, the objectives of this study are: (a) to analyze the consumption behavior of vegetable oils in the
EU, (b) to forecast of EU vegetable oil consumption by 2020, and (c) to analyze the influence of
parliamentary resolution of Europe on Vegetable oil consumption in EU.
THEORETICAL ANALYSIS
Market equilibrium is a market state where the supply in the market is equal to the demand in the market.
The equilibrium price is the price of a good or service when the supply of it is equal to the demand for it
in the market (Salvatore, 1990[8]). In each marketing year, supply must equal with demand. Supply is the
sum of beginning stocks, domestic production, and imports, while demand is the sum of domestic
consumption, exports and ending stocks. (Mundi, 2017[9]). Supply and demand analyzed in this study is a
composite of four major vegetable oil which had the largest share, namely crude palm oil (CPO), soybean
oil (SBO), rapeseed oil (RSO) and sunflower oil (SFO), as described below.
In open international trade market, the total import – as the reduction of the amount of demand and
the supply - must be equal with export. (Figure 1). According to the purpose of this study, the amount of
export and import will be determined by domestic production and domestic consumption. If domestic
production is smaller, the country will import the commodities to meet its consumption (vice versa).
(Figure 2).
The consumption pattern is measured from two things, the proportion of each source of consumption
and its tendency. Suppose a country consumes three types of goods, then within a certain period can be
obtained the consumption data of the country. (Figure 3a). The consumption pattern will be shown by the
proportion of each item as shown in Figure 3b, These two pictures present 3 types of consumption
patterns. In the first 6 years, the country only consumes goods A and B, and share of goods A reaches 67%
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International Journal of Applied Business and Economic Research
Jan Horas V Purba
Figure 1: Free International Trade Market Figure 2: Gap between Production
and Consumption
Figure 3: Consumption behavior of 3 types of goods in Volume (a) and in Percent (b)
and the rest is goods B. As per capita consumption increases (which is also influenced by increasing population
and income), the country meets its consumption with commodity C by importing. Initially, the number of
imports is still small (26%), and the consumption of B is 39 % and A 30 %. Data shows that in this
moment, B increased more rapidly than A.
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International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
This indicates a larger growth of commodity B (domestic production), that influenced by higher
yields or extensification programs. This consumption pattern lasts until the 13th year. Then, we find the
third pattern, where the number of imports tends to increase. This shows the existence of a widening gap
between domestic production and domestic consumption, which forced governments to intervene to avoid
worse dependency in the long term.
In this study, trend analysis is needed to see the projection of consumption pattern in the next four
years purposively (the year 2020), so that it can be compared and measured the amount of change that
happened.
METHODOLOGY
This study is descriptive research. This study uses data from international data sources, including United
State of Department of Agriculture, oil world and FAO and Indonesian Central Bureau of Statistics. The
main concern of this study is vegetable oil which includes 4 commodities, namely soybean oil, palm oil,
rapeseed oil and sunflower oil in the European Union. The model used in this study can be presented in a
succinct manner as follows.
1.
Commodity balance:
Supply = Production + Import + Initial stock,
Demand = Consumption + Export + Final Stock.
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International Journal of Applied Business and Economic Research
Jan Horas V Purba
RESULT
Analysis of Demand Supply of Vegetable Oil in The European Union
Vegetable oil world is one of the important groups in the world food problem. There are 17 world vegetable
oils, and 4 of them are the most dominant, and close to the world’s vegetable oils, namely soybean oil
(SBO), rapeseed oil (RSO), sunflower oil (SFO) and crude palm oil (CPO). Thus, in this analysis, the
analysis of Vegetable oil is to cover these four commodities.
Vegetable oil production in the EU includes 3 other commodities, namely soybean oil (SBO), rapeseed
oil (RSO) and Sunflower oil (SFO), while oil palm does not grow in the EU because this plant is a tropical
plant.
In 2000, EU vegetable oil production was 9.75 million tons. In the same year, EU consumption has
reached 12 million tons. This shows that EU domestic producers are still able to meet 81 percent of total
consumption. In 2010, EU vegetable oil production rose 41 percent to 13.76 million tons. However, the
increase in consumption is much larger that is 72.6 percent to 72.56 million tons. This shows that vegetable
oil consumption is able to be fulfilled by 66 percent, and the rest is obtained by import. By 2016, EU
vegetable oil production has reached 15.36 million tons and consumption volume of 22.7 million tons.
This data indicates that about two-thirds (68 percent) of EU vegetable oil consumption is able to meet
domestic production.
Supply and demand of Vegetable Oil in the EU is presented below (Table 1).
Table 1
Supply and Demand of Vegetable Oil in the EU, 1999-2016
Year
Production
Import
InitialStok
Consumption
Export
Final Stock
Market Balance
1999
9749
2775
60
10513
1974
97
12584
2000
9751
3650
97
12030
1268
200
13498
2001
9540
4312
200
12747
1259
46
14052
2002
9366
4381
46
12626
1120
47
13793
2003
9301
4668
47
13235
932
-151
14016
2004
10177
5754
-151
14765
820
195
15780
2005
10811
7166
195
17474
498
200
18172
2006
11543
7903
200
19023
443
180
19646
2007
12192
8141
180
19408
588
517
20513
2008
13365
8460
517
21262
666
414
22342
2009
14346
7943
414
22197
649
-143
22703
2010
13760
7712
-143
20759
841
-271
21329
2011
14199
8272
-271
20709
1179
312
22200
2012
14465
8983
312
22108
1713
-61
23760
2013
15753
9263
-61
22964
1449
542
24955
2014
16419
8665
542
23924
1785
-83
25626
2015
15775
8947
-83
23019
1694
-74
24639
2016
15364
9050
-74
22736
1550
54
24340
Source: United States Department of Agriculture, 2017 (processed)
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International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
In the period 1990-2016, Supply Demand Nabati in the EU increased almost twice from 12.6 million
tons (1999) to 24.34 million tons. Vegetable oil production pattern European Union from the EU vegetable
oil production pattern, it is clear that the main production of EU vegetable oil is Rapeseed (RSO), followed
by soybean oil (SBO) or soybean oil and sunflower oil (SFO). In the period 1999 to 2008, there was a pattern,
that the RSO came first, and the SBO was second and SFO third. In that period, RSO has a positive trend,
which is an average of 7.8 percent per year increase, where RSO production increases 449 thousand tons
every year. While SBO and SFO both tend to decrease, with negative trend 0.5% and 0.5% per year. The rate
of decline in soybean oil (SBO) is greater than the decrease rate of SFO, where the average SBO is reduced 24
thousand tons per year, while SFO is reduced 23.56 thousand tons per year. This resulted, SFO managed to
beat SBO well in 2008. When 1999 the RSO production reached 4.4 million tons, and in 2008 almost doubled
to 8.5 million tons, but since 2009 to 2016, the production of RSO only increased 1 percent or tend to be
constant with an average production of 9, 67 million tons per year. Similarly, the sunflower oil (SFO), in 8
years only increased 3 percent or was classified as constant with an average production of 2.88 million tons,
and soybean oil (SBO) also tend to be constant with an average production of 2.47 million tons per year. In
2016, the pattern of vegetable oil production in the European Union consists of rapeseed oil by 63 percent,
followed by 20 percent sunflower oil and soybean oil 17 percent.
Figure 4: Pattern of Vegetable Oil Production in the European Union, 1999-2016
Source:United States Departmen t of Agriculture (processed)
DISCUSSION
1.
Consumption Pattern of Vegetable Oil of European Union
In 1965, the pattern of vegetable oil consumption in the European Union was prioritizing soybean oil
(90.4%). The share of rapeseed oil (RSO) is still relatively small (6.83) and even palm oil (CPO) is 2.72%.
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International Journal of Applied Business and Economic Research
Jan Horas V Purba
SBO dominance occurred during the period 1965 to 1990 (25 years), where the average consumption of
SBO reached 50%, followed by sunflower oil (SFO) 22%, rapeseed oil (RSO) 21% and palm oil (CPO) 8%,
as As shown in the following figure.
In 2000, the EU vegetable oil consumption pattern had changed, with RSO defeating the dominance
of the SBO (44%), and the second position is CPO, which increased sharply to reach 23.7% share, followed
by SFO with 71.3% share, and SBO slumped sharply from first to the fourth position, with 15% share.
Figure 5: Pattern of Vegetable Oil Consumption in the EU Area in 1965-2015
Source:Oil World
Throughout 15 years (2000-2015), RSO still holds the first position reflecting CPO as the main source
of vegetable oil in the European Union. RSO consumption increased 3.7 million tons, and RSO remained
at 44% share. However, the consumption pattern of CPO also rose sharply, from 23.7% share in 2000 to
30.51% in 2012, then decreased to 29.19% in 2014, still rising again in 2015 to 29.73%. The share of SBO
also declined considerably, from 15% in 2000 to 9.5% in 2015. This is due to the high CPO/SBO price
ratio of 3.11 (PASPI, 2017), which means that the price of CPO is much cheaper, Where 1 ton of SBO is
equivalent to 3.11 CPO, making it more profitable to import CPO.
Thus, the EU consumption pattern shows a change from the dominance of the SBO to the RSO, and
the EU succeeded in developing RSOs into a major source. In addition, CPO is also an important source
of vegetable oil and is not easily defeated.
2.
Widening Gap and Import of Vegetable Oil in EU
In 1999-2016 the EU vegetable oil consumption pattern was relatively stable, therefore, this period was
purposively selected purposely, as a basis for analyzing the widening gap in vegetable oil consumption of
the EU, and this period was used as a projection basis until 2020.
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International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
(a)
Widening Gap
The pattern of EU vegetable oil production and consumption above indicates a widening gap between
domestic production and consumption. In 1999, the EU was able to meet 93% of its consumption from
domestic production, or a gap of 7 percent. However, in 2006 domestic production was 11.5 million tons,
while consumption reached 19 million tons. The gap between domestic production and consumption
accounts for 29 percent. In 2016, with consumption of 22.7 million tons, the availability of domestic
production only reached 15.36 million tons. The gap between production and consumption is 32 percent.
Overall, production appears to grow 2.8 percent per year, while consumption growth rate is 4.8 percent
(almost 2-fold), resulting in a widening gap between domestic production and consumption (Figure 6).
Figure 6: Widening Gap of Vegetable Oil Consumption in the EU
The details on each commodity are shown in Figure 6, where the largest gap is seen in CPO, ie 29%,
RSO 1%, SFO 4%, and SBO tend to be self-sufficient, with 13% production, consumed 13%.
(b)
Import of Vegetable Oil
To meet the demand of vegetable oil of the European Union, the policy is imported. Most of the EU
vegetable imports are CPO, with trends tending to increase over the period of 1999-2016. In 2016, total
CPO imports reached 7.2 million tons, followed by SFO 1.3 million tons, RSO 300 thousand tons and
SBO 250 thousand tons (Figure 8).
In summary, CPO imports increased 1.39%/year during 1999-2016, but SFO, RSO, and SBO, the
amount of import tended to increase by 1.76 percent per year in 1999-2006, then after 2006 declined by
0.63 percent per year. (Figure 9) This indicates that CPO has a relatively large role in meeting the demand
for vegetable oil in the EU.
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International Journal of Applied Business and Economic Research
Jan Horas V Purba
Figure 7: Widening Gap on RSO, SFO, SBO and CPO Commodities in the European Union, 1999-2016
Figure 8: Imports of Vegetable Oil (RSO, SFO, SBO, and CPO) of the European Union, 1999-2016
3.
Projection of EU’s Vegetable Oil Consumption in 2020
The proportion of CPO consumption in the EU is still relatively substantial, with almost one-third of
Europe’s vegetable consumption being CPO. The largest consumption is Rapeseed oil, with a share of
nearly half of vegetable consumption in the EU, while soybean oil tends to be constant at 1.95 million
tons. In 2016, EU CPO consumption reached 6.5 million tons (higher than China) and will tend to decline
by 2020, to 6.35 million tons. Rapeseed oil, although quite high, is down from 9.7 million tons (2016) to 9.5
million tons by 2020.
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International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
Figure 9: Trend of Vegetable Oil Import (RSO, SFO, SBO, and CPO) in EU, 1999-2016
The Europe Union is trying to develop local products (rapeseed oil) and also seeks to develop sunflower
oil. Amid the pressure of oil palm in the EU, even campaigning “No Palm Oil” can’t be done quickly.
Because the share of CPO consumption is still high. However, this needs to be observed continuously, and
in the last three years (2014, 2015 until 2016), Indonesian’s CPO imports also tend to decline 0.1 million
tons per year.
In the period of 2000-2016, the consumption pattern of rapeseed oil rose from 44 percent to 45
percent, followed by palm oil (CPO) increase from 24 percent to 28 percent, sunflower oil increase from
17 percent to 18 percent and soybean oil fell from 15 percent to 8 percent (Figure 10).
The European Parliament is facing strong pressure from the peasants of rapeseed oil (RSO) and
sunflower oil (SFO) in the European Union to restore the positions of these two commodities into the
dominant commodity in vegetable oil sources in Europe.
Table 2
Projection of EU Vegetable Oil Consumption Pattern 2020E
Volume (000 Tons) Percent The Change
2016
2020E
2016
2020E
000 Tons
%
CPO
6 520
6 059
28.4
25.3
-461
-3.1
SBO
1 950
1 950
8.5
8.1
0
-0.4
RSO
10 400
11 400
45.3
47.5
1 000
2.2
SFO
4 090
4 569
17.8
19.1
479
1.2
Sum
22 960
23 978
100.0
100.0
1 018
4.43
In 2020, the consumption of vegetable oil increase from 22,96 million tons (2016) to 23,98 million
tons (2020E). The consumption pattern of rapeseed oil rose from 45.3 percent to 47.5 percent, followed
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International Journal of Applied Business and Economic Research
Jan Horas V Purba
Figure 10: Projection of EU Vegetable Oil Consumption Pattern by 2020E
by palm oil (CPO) decrease from 28.4 percent to 25.3 percent, sunflower oil increase from 17.8 percent to
19.1 percent and soybean oil fell from 8.5 percent to 8.1 percent (Table 2).
CONCLUSION
In the period 1990-2016, supply and demand of vegetable oils in the EU increased almost twice from 12.6
million tons to 24.34 million tons. In 1999, the EU was able to meet 93% of its consumption from domestic
production, or a gap of 7 percent. However, by 2016, with consumption of 22.7 million tons, the availability
of domestic production only reached 15.36 million tons.
The gap between production and consumption is 32 percent. This can also be seen from the EU
vegetable oil production rate of 2.8 percent per year, while the consumption growth rate is much larger, at
4.8 percent per year. This creates a widening gap between production and consumption. To meet the gap,
the policy is import
In 2016, total CPO imports reached 7.2 million tons, followed by SFO 1.3 million tons, 0.3 million
tons of RSO and 0.25 million tons of SBO. This suggests that CPO has a very high contribution in
meeting EU vegetable consumption. The contribution of CPO accounts for 80 percent of total vegetable
imports, while SFO is 14 percent, SBO 3 percent and 3 percent RSO. In addition, SFO, SBO, and RSO are
thin market commodities in the global market.
39
International Journal of Applied Business and Economic Research
The Analysis of European Union’s Vegetable Oil Consumption: “Will The European Parliament Resolution Halt...
Based on the findings in trend analysis (forecasting 2020), it can be concluded that the level of EU
vegetable oil consumption increased by 1 million tons, from 22,96 million tons to 23,98 million tons. The
EU will drive an increase in domestic RSO production by 1 million tons, to meet rising domestic consumption.
CPO consumption will decrease by 461,000 tons, or about 115,000 tons/year. This reduction will be
overcome by increasing domestic SFO production.
The European Parliament resolution has a positive impact on the EU’s own domestic interests, which
is able to encourage increased domestic production, both RSO and SFO. The amount of CPO reduction
is 1.7% per year, and CPO is still needed as an important source of vegetable oil and has a fairly high
proportion (25%). RSO commodity is classified as a thin market in the global market, so CPO is not easy
to shift or be defeated. In 2017 the total RSO that can be traded is 27.7 million tons, which 9.75 million
tons (35.19%) are imported by the United States, and 8.1 million tons (29.23%) are imported by the EU
itself, and still compete with India and China, and 29 other countries in the world (USDA, 2017[9]).
The resolution of the European Parliament can’t be considered trivial, but it is also clear that the
impact of the European Parliament to stop the consumption of CPO in the EU can’t be done easily, (with
the policy of “palm oil free” labeling or moratorium on oil palm plantations, and possibly other issues), and
Indonesia can still perform its important role to feed the world (PASPI, 2015[10]).
NOTES & REFERENCES
[1] PASPI. 2016. Apakah “Palm Oil Free” Akan Mengancam Masa Depan Minyak Sawit Dunia? Monitor, Strategic Analysis
of Palm Oil. Vol 2(36) pp. 509-512.
[2] PASPI. 2017. Palm Resolution by European Parliament in Global Vegetable Oil War Perspective. Monitor, Strategic
Analysis of Palm Oil. Vol 3(15):749-756.
[3] Sipayung, T dan Purba, J.H.V., 2015. Ekonomi Agribisnis Minyak Sawit. Kesatuan Press. Bogor.
[4] Sawit Indonesia : http://www.sawitindonesia.com/artikel/kontribusi-kelapa-sawit-sebagai-pilar-perekonomian-bangsa.
[5] Purba, J.H.V., 2012. Dampak Pajak Ekspor Minyak Sawit terhadap Permintaan Minyak Goreng Sawit (Crude Palm
Oil) dan Minyak Goreng Kelapa (Crude Coconut Oil) Indonesia, Jurnal Ilmiah Ranggagading (JIR),10(2), pp. 157-163.
[6] Othman, B.J. and Alias, M.H. 2000. Examining Price Responsiveness in U.S. and EU Import Demand for Malaysian
Palm Oil. Journal of International Food & Agribusiness Marketing, 11(2):83-96.
[7] Othman, J.B.; Houston, J.E. and Ames, G.C.W. 1995. Noneconomic Distortions in International Agricultural Trade:
The Case of Palm Oil in the U.S. Journal of International Food & Agribusiness Marketing, 7(2):79-89.
[8] Salvatore, D. 1990. International Economics, 3rd ed. MacMillan International Edition. Singapore.
[9] United State Department of Agriculture. 2017. Index Mundi. http://www. indexmundi.com/agriculture/.
[10] PASPI. 2015. Solusi Trade-off Fuel-Food dalam Pengembangan Biodiesel. Monitor, Strategic Analysis of Palm Oil. Vol
1(3):17-24.
