Wageningen, Netherlands, Oct 8 - Malaysia's Sime Darby aims to rapidly expand its palm oil processing operations in China to meet rising demand for cookies, ice cream and instant noodles from the country's growing middle class, its chairman said on Thursday.
Tun Musa Hitam said the global economic crisis had not affected the rising demand trend for palm oil and while the European market was stable, demand in China, India and the Middle East was still increasing sharply.
The conglomerate is developing palm oil processing for cooking oil in China, but Musa said the firm was already talking about increasing the scope of its downstream operations in the country to include more vegetable-oil based food ingredients.
"The bigger the middle class that exists in a country, the more they consume palm oil," said Musa.
"The essential needs were just ordinary oil for cooking and frying. As the middle class grows they come to be interested in cookies, ice cream, or noodles," he said at a food conference in the Netherlands.
Musa said it was not unlikely that annual Malaysian palm oil exports to China could double in the next decade, from a level of around 4 million tonnes at present. He also expected growing Chinese investments in palm oil in countries such as Malaysia.
"The Chinese are interested in two things: security of supply of energy and food. The beauty of palm oil is that it can be considered food and energy."
SUSTAINABLE PALM OIL
At present, Musa said 5 of Sime Darby's 65 plantations, located in Malaysia and Indonesia, were certified as sustainable by the Roundtable on Sustainable Palm Oil (RSPO) while more than half of them had been audited.
But Sime Darby's managing director of plantations, Dato Azhar Abdul Hamid, said uptake of the 'sustainable' variety of palm oil was slow, even though it now carried only a small premium to uncertified palm oil.
But he added that Sime Darby, the world's biggest oil palm planter by land bank, aimed to have all its plantations certified as sustainable by 2011.
"We see inquiries, customers want to know if we could supply it, they want to know how far we are, but it will become the norm in the future," said Alexander van der Klauw, managing director of Unimills, a Sime Darby-owned vegetable oil processor in Europe.
Van der Klauw said about 60 percent of the vegetable oils Unimills uses are palm-based, while coconut and palmkernel oil each make up 15 percent, and the final 10 percent are liquid oils such as rapeseed oil.
But he said that usage of liquid oils, which tend to have a lower saturated fat content, was rising as demand grew among increasingly health-conscious customers.
"The health issue is making us turn more to making use of more than just one oil. Liquid oils became a more important part of what we deliver," Van der Klauw said.