Bio-diesel is new buzzword for palm oil sector – Business Standard, Mumbai, 29^th September, 2005

Bio-diesel is the new buzzword lighting up the palm oil industry. With crude oil prices soaring, Asian palmoil and South American soyoil producers see huge opportunities as countries seek vegetable oil to produce environmentally friendly biodiesel.

Analysts believe biodiesel usage has the potential to become the biggest component of growth in vegetable oils. It has already lifted once depressed prices and forecasts point to a five to 10 per cent increase for most oils in the new year.

“All over the world there is a switchover to vegetable oil for biodiesel, even for straight burning,” said Dorab Mistry, industry analyst and director of Godrej International Ltd. A colleague of Mistry made the point in lighter vein at a conference in Kuala Lumpur. “I will not hazard any range, for very soon I will have to change,” said Nadir Godrej, Godrej Industries Ltd.

“Please don’t think that I am weasel. Just pray and say biodiesel,” Malaysian news agency Bernama quoted him as telling the conference. European governments are trying to promote the use of biofuel, notably biodiesel derived from vegetable oils and ethanol that can be produced from grains, sugar or biomass, to cut greenhouse gas emissions from fossil fuels. “The total biodiesel capacity coming on stream in the United States alone by the end of October, 2007 will require 1.6 million tonne of soya oil,” said Mistry. Mistry told a weekend conference that rising biodiesel uses will mean demand for edible oils will outstrip production by at least 6 million tonne a year. Biodiesel output by 15 EU members rose to an estimated 1.85 million tonne last year from 1.45 million in 2003 and 1.05 million tonne in 2002, industry associations say.

To sell their oils, Malaysia and Indonesia have for decades looked at India, until recently the world’s largest edible oil importer. But now the countries, which also must battle with South American soybean oil producers, are increasingly looking to the European Union.