London, June 24 - The global economic crisis is dragging on demand for edible oils but production and consumption are expected to increase markedly over the longer term, an industry analyst said on Wednesday.
"Edible oil consumption is growing but with a temporary slowdown," said Vito Martielli, industry analyst with Rabobank.
"Confidence and economic recovery are key to a recovery in demand," he told The Public Ledger's Edible Oils 2009 conference.
Martielli said growers' demand for fertiliser and other farm inputs in developing countries had dropped due to the impact of the credit crunch.
The main challenges facing the edible oils industry were higher price volatility and the needs for working capital to finance production, he said.
Martielli said that growing populations, incomes and energy demand over the longer term would boost world requirements of food, feed and fuel commodities by 1.1 billion tonnes by 2015.
He added that global meat demand was expected to rise by around 20 percent over the next decade, and that demand for food commodities was forecast to grow by 180 million tonnes between 2005 and 2015.
Paul Nellens, a member of the executive committee of SIPEF N.V., a palm oil producer, cited United Nations figures predicting the world population could exceed 8 billion people by 2025, underscoring the strong oilseeds demand outlook.
"Higher incomes and living standards in emerging countries are leading to shifts in eating patterns, with increasing demand for meat and dairy in India and China," he said.
He noted the need to boost yields per hectare as availability of agricultural land per capita was falling.
Martielli noted increased support for biofuels across the world, notably in Brazil and Europe, which would spur output of feedstocks.
Ian Pinner, general manager of the European softseed crushing division of ADM International in Switzerland, said world production and use of vegetable oils was expected to rise by around 5 million tonnes year-on-year to more than 130 million tonnes in 2009/10.
He said increased demand for food was the key driver for increasing production of vegetable oils, and also noted that mandates for biofuel use could drive biodiesel demand higher.
"The food market is where the drivers (for demand) are," Pinner said in a presentation.
"We can't afford any production problems on food crops."
The two-day conference ends on Thursday.