0.1 Economic aspects

Over the last two decades, world production and consumption of oil fruits and oil seeds and their products has almost doubled. In terms of value, oil fruits and oil seeds now take third place after starch plants and fruits/vegetables.

Apart from their nutritious value, oil fruits and oil seeds are of particular economic importance for the developing countries, from where a substantial part of the (statistically registered) world production originates. In Africa, Asia and Latin America, the cultivation of oil plants not only plays a major role in the provision of protein and fats, but contributes considerably to exports earnings.

Table 1 reflects the development of world production of major oil seeds as registered by the Food and Agricultural Organization of the United Nations. The figures given for the last 15 years, however, do not necessarily reflect the total for each crop, since, in many countries, there is a significant production for the growers' domestic requirements which never appears in official statistics.

Table 1: World Production of Major Oil Seeds (million tons).

Source: FAO Production Yearbooks, Vols. 35 39

- For Coconuts, production is expressed in terms of weight of the whole nuts, excluding only the fibrous outer husk, whether ripe or unripe, whether consumed fresh or processed into copra or dessicated coconut
- For Cottonseed, direct production figures are reported by countries accounting for about 60 % of world production, data for the remainder are derived from ginned cotton production
- Groundouts in shell
- For Rapeseed, figures include mustard seed for a few countries (e.g. India and Pakistan)

As can be seen in Table 2, soyabeans have established a leading position and now represent more than 40 % in volume terms of world production. If the annual increase in production is considered, rapeseed, with an average increase of more than 12% per year, has an even more positive trend than soyabeans, followed by palm kernels and sunflower seed. Palm kernels are, in fact, to be seen as by-product of palm oil production. The production of palm oil fruit, however, is not recorded, and therefore palm kernels can indicate the growth for the whole crop

Table 2: World Production of Major Vegetable Oils (million tons)

Sources: Oil World, Vol. XX. No. 13, p. 302 f Marches Tropicaux, No. 2112, p. 1167

World production of major vegetable oils, as shown in Table 2, has been steadily increasing over the past decades with average annual growth rates of more than 5 %. In volume terms, the total (recorded) production now stands at more than 60 million tons per year, which contributes more than two thirds to the world consumption of all edible oils.

Table 3: World Exports of Major Oil Seeds (million tons)

Source: FAO Trade Yearbooks, Vols. 25-39

- For Groundnuts, nuts reported in the shell are converted to shelled equivalent using a conversion factor of 70 %
- For Rape and Mustard seed, most trade statistics do not allow a distinction, and figures in many instances even include other minor oil seeds

The great increase in the production of soyabean oil has been the major development on this market in the past decades. Due to the introduction of the hydrogenation technique, which made the oil suitable for margarine, and the rapid increase in demand for soya cattle cakes, world production of soyabean oil tripled over the last 20 years.

The production of vegetable oils from palmfruits, sunflowerseed and rape/mustard has doubled over the same period. The group of oils made from cottonseed, groundnut and coconut, however, is more or less constant. Since many vegetable oils are direct competitors, the relative importance of these oils may well change in the future, but the dominance of soyabean oil is unlikely to change.

In terms of volume of world production, other vegetable oils are of minor or only regional importance. Olive oil, for example, is almost exclusively produced in the mediterranean countries where it meets a unique consumer preference. Since it has not gained acceptance in other regions, olive oil will not be dealt with in the present publication. Other oils, however, are of particular relevance for specific areas in developing countries (e.g. sheanut in West-Africa) and will therefore be described in more detail than their overall importance would appear to justify.

World trade in oil fruits and oil seeds, as shown in Table 3, is even more dominated by soyabeans than the production figures seem to indicate. With one quarter to one third of the total production entering the world market, soyabeans is in fact the only oilcrop with considerable exports in an unprocessed condition. Most prominent exporter is the USA, which has two thirds of the whole market. The soyabean exports of all developing countries together only amount to about half of this share, showing South America (Argentina and Brazil) in a leading position. The main direction of the soyabean trade is towards Europe, which imports more than half of the available quantity.

Of more relevance to the developing countries is the world trade in vegetable oils. As shown in Table 4, palm oil alone accounts for about one third of the trade, the major exporters being Malaysia and Indonesia, with Singapore as the major port of the region. Prior to 1945, Africa produced and exported most palm oil, but has now lost this position due to the massive planting of high yielding varieties in South East Asia. For palm oil, Asia has also the highest demand, although import statistics do not correspond to actual consumption due to substantial re-exports (Singapore).

Table 4: World Exports of Major Vegetable Oils (million tons) * no records

Source: FAO Trade Yearbooks, Vols. 25-39

- In general, figures do not reflect entire world trade since some national statistics classify all or a large part of their trade under such headings as “edible oils", “vegetable oils, nes" etc. and therefore have been omitted

Whereas coconut and palm oils are almost exclusively exported from developing countries, they are able to supply three quarters of the world market for linseed oil and groundnut oil and even realize shares of about 50 % for sunflower, cottonseed and soyabean oils. Major suppliers in these markets are currently Malaysia (palm and palm kernel oil), Philippines (coconut oil), Brazil (soyabean and groundout oil) and Argentina (linseed and sunflower oil).

The world trade in vegetable oils is, to a considerable extent influenced by the demand for by-products (oilseed cake and meal) and the prices of others chemically similar, i.e. competing vegetable oils.

As shown in Table 5, the trade in oilseed cake and meal consists to more than 70 % of the by-product of soyabean; a crop for which the meal is - due to the low oil content - relatively more important than the oil. A great advantage of the soyabean and, in fact, a reason for the production increase, is that it can be freely fed to all livestock groups. Major exporters of soyabean meal are Brazil, USA and Argentina, the major importing region is West Europe.

Table 5: World Exports of Oilseed Cake and Meal (million tons)

Source: FAO Trade Yearbooks, Vols. 25-39

As illustrated in Figure 1, world market prices for vegetable oils depend as much on the specific variety of oil as on apparently periodical fluctuations. The different characteristics of vegetable oils, which determine the relative scarcity and the possible use of the product, will be discussed in more detail in Chapter 1.1 of this publication.

Figure 1: World Prices for Selected Vegetable Oils (monthly average quotations, West European ports) in US $ per ton.

Source: E. A. Weiss, Oilseed Crops, 1983, p. 9

The price fluctuations tend to assume a cyclic pattern with a periodicity of several years. During this period, stock build-up leads to more demand and subsequently higher prices, followed by a period of stock liquidation with the opposite price effect with shorter periods of market consolidation in between. As reported in market observations of “Marches Tropicaux" (5/86), prices for specific oils have, over the last few years, shown fluctuations of more than 300 % (based on the lower price). In absolute terms, the price for coconut oil, for example, rose from about 400 $/t (CIF, Rotterdam) in 1983 to about 1400 $/t in the following year only to fall back to the 1983 low the year after. Except for soyabean, prices in the last two to three years have taken another drastic downturn and are likely to stabilize at a relatively low level.

For certain vegetable oils or specific qualities of oils, only regional or even local markets have been established. Accordingly, no representative market data are available for these products. For the African context, however, the following examples should demonstrate that these local markets can show particular consumer preferences and do not necessarily follow the same trend as the world market for the major varieties.

In nearly all oil palm growing countries in West Africa, the red palm oil is an important food ingredient. The colour and the taste from the oil of the traditional aura variety are generally more highly valued than those from the (hybrid) tenera variety. Also, the taste of the oil processed by traditional methods is preferred. In Benin, Cameroon and Nigeria about 50 % of the palm oil consumed is produced in the traditional way. In Ghana and Sierra Leone it is even 70 % and 90 % respectively.

In the Pacific Islands and along the coast of West Africa, coconut oil is also produced in a traditional way. Although this kind of oil has a particularly preferred taste its keeping quality is reported to be low. Shea nut butter is an important fat in Burkina Faso and Mali and also has a special taste that is highly regarded.

Most of these traditionally produced oil varieties are only available in a certain season of the year, which leads to low market prices at harvest time and co-nversely to high prices out of season.