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Free Example of Palm Oil Trade Essay

Globalization has advanced the market scope of many commodities around the world of which palm oil cannot be overlooked. This is because o its market value and the quality of palm oil byproducts. Globalization has played a significant role in the spread of palm oil and by products in various parts of the world. This is because considering the fact that palm oil is produced by few countries around the world it has managed to capture a considerable part of the market share and it is also penetrating in markets which initially had rejected or countered its use. The major challenge which has also being considered in this research is the effects of establishing the palm oil plantations due to environmental issues, global warming and deforestation. These challenges need to be addressed from different perspectives to avoid bias considering the advantages and disadvantages of establishing palm oil plantations.

Palm oil trade came to replace slave trade in West Africa. Ikein, Alamieyeseigha &Azaiki (2008) indicated that this was inline with the emergence of the European Industrial revolution. They continue to say that the slave trade was abolished by the British in 1807. Ikein, Alamieyeseigha & Azaiki (2008) indicated that “by the 18th century the British who had large plantations in the West Indies and America had created enough capital to launch the industrial revolution and at the same time the need for African slave declined” (p. 24). As a result this was translated into political and economic initiatives one of which was the abolition of the African slave system and therefore this saw the emergence of palm oil trade.

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Ikein, Alamieyeseigha &Azaiki (2008) found out that the palm oil trade signified a new development in the relationship between the Europeans and the delta people. This was a begging of a new era of palm oil trade. The palm oil trade led to the loss of economic and political independence by the people and close integration of the local economy into the capitalist economy due to the emergence of palm oil trade (Ikein, Alamieyeseigha &Azaiki, 2008).

According to Europa Publications (2004) Nigerian Government banned palm oil imports since 1986 which was partially relaxed in 1990 as domestic output was able to satisfy only two thirds of the annual demand of 900,000 metric tons (p. 1382). The book continues to indicate that Nigerian reliance on imports subsequently increased and at the same time increases in domestic production now tend to be used for import substitution rather than to boost exports (Europa Publications, 2004).

There are a number of countries in the world which produce palm in large quantities. Europa Publications (2004) says that these countries include Angola, Cameroon, DR Congo, Cote d’ Ivoire, Ghana, Guinea, Nigeria, Sierra Leone in Africa and Colombia, Indonesia, Malaysia and Thailand in South East Asia. Europa Publications (2004) continues to say that in Benin, where the oil palm has traditionally been a staple crop of the national economy oil palm plantations and natural palm groves cover some 450,000 ha. On the same note studies show that in 1997exports of palm oil contributed 0.8% of the countries total export of the country.

Europa Publications (2004) says that Ivory Coast is now Africa principal palm oil exporter and has in some recent years been the fourth largest in the world. Malaysia is by the largest and often accounting for 65% to & 75% of all palm oil trade. This means that Malaysia has very big plantations of palm oil compared to almost all the palm oil producers. Europa Publications (2004) says that “one half of Ivory Coast palms were planted in 1965 to 1970 and therefore they have reached and passed their peak of productivity years” (p. 1382). The scaling down of the planting program was attributed by management and financial difficulties during the 1990s together with the then declining prices for palm oil.

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Europa Publications (2004) says that following the revival in prices during the 1997 and 1998 the country had to recourse to imports from Malaysia in order to satisfy domestic demand plans were announced in 1999 to increase capacity to 600,000 he world’s sixth largest exporter of palm oil. Europa Publications (2004) also says that in 2001 Ivory Coast was ranked as the world’s sixth largest exporter of palm oil. On the same note in 1999 a palm oil extraction mill financed by the Netherlands commenced production in various parts of the country (Europa Publications, 2004). In the longer term prospects for palm oil exporters do not appear favorable. According to the publication this is because of technological advances in oil palm cultivation Europa Publications (2004).

In addition, Europa Publications (2004) says that “during September 1996 the import price of Malaysian palm oil in the Netherlands declined from US$572.5 per metric ton to 502.5 per ton”(p. 1382). The price advanced to $585 per ton in February 1997 but fell to 467.5 in July. The publication thus says that the market revived and in late December palm oil traded at $565 per ton. The upward movement continued in the early months of 1998 and in May the import price of palm oil reached $800 per ton (Europa Publications, 2004).

In the year 2004 the European import price of palm oil averaged $436.00 per ton 35% below the previous year’s level. Europa Publications (2004) says that in the previous year level. In 2000 the average European import price of palm oil declined by almost 29% to $310.00 per ton. They continue to indicate that a further decline by was witnessed in the following year were import price of 7.95% to $285.7 per ton occurred.  In 2002 however it was noted that the average European import price of palm oil increased by 37% to $390.3 per ton and the prices continued to rise in 2003.

Chivian & Bernstein (2008) says that “millions of acres of palm oil have been planted in the tropics which are in Asia, Africa, Latin America and Oceania an d many millions  more are being planned for the industrial production of palm oil” (p. 105). Chivian & Bernstein (2008) continue to say that while oil palm can be grown and harvested for local populations as has been demonstrated in many parts of Africa and in some countries in South America problems arise when its industrial scale commercial cultivation requires massive deforestation. They thus say that countries like Malaysia are developing large scale palm oil biodiesel production for export, which is mainly to the European Union where interest in such bio-fuels (Chivian & Bernstein, 2008).

Oil palm is an example f a crop that is often grown in a plantation operated by a commercial company and yields products that bring in overseas currency (Wild, 2003). The growth of oil palm industry in Malaysia is considered to be recent because most o the plantations were established since 1970 (Wild, 2003). He further says that the area of oil palm increased as demand for palm oil increased between 1980 and 1991. Wild (2003) says that “during this period he area increased from 1.02Mha to 2.09Mha in which Malaysia accounted for over half of the world production of edible palm oil” (149).

Wild (2003) says that the oil palm plantations are on land that had been under rain forest or rubber trees. He continues to say that the success of oil palm plantations in Malaysia owes much to the earlier infrastructure and experience from rubber plantations (Wild, 2003). At the same time it has been noted that commercial companies had provided financial investment besides the government building roads and railways and tree selection been undertaken on private estates.

In addition Wild (2003) found out that “plantations of oil palm in the humid tropics are sustainable agricultural systems that provide the country with foreign exchange and workers with income to buy inputs for their farms” (p. 149). In this context Malaysia has been successful in developing the oil palm industry because of government economic policies, established research institutes and its early entry to the international market (Wild, 2003). 

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