Palm oil makes up nearly 50 percent of edible oils consumed worldwide. Apart from being a popular ingredient in African food (especially soups, stews and pottage), palm oil has one of the most versatile uses of any plant product. The global palm oil market is worth hundreds of millions of dollars every year.
Although West Africa lies in the center of the world’s oil palm belt, it produces less than 5 percent of the palm oil consumed worldwide. Malaysia and Indonesia have become the dominant powers in palm oil production and presently supply more than 70 percent of the palm oil consumed worldwide. Currently, no African country, except Cote D’Ivoire, produces enough palm oil to meet the demand of its local market. Let’s explore the many opportunities available for entrepreneurs in red palm oil production…
In the 1950s and 1960s, West Africa was the heartbeat of global palm oil production and the number one export commodity of many countries in the region. In its heyday, West Africa produced up to 75 percent of all the palm oil consumed worldwide. Nowadays, the region imports nearly 60 percent of its palm oil from faraway Malaysia and Indonesia to complement local production.
Who uses palm oil and needs to buy it?-Palm oil is a hugely versatile vegetable oil used in a variety of ways in different cultures, industries and markets. In food, palm oil is used as a substitute for fat in making condensed milk, coffee cream, ice cream and margarine. Because of its consistency and ability to resist high temperatures, it is commonly used as cooking oil and is considered one of the best oils for frying. All these amazing qualities make palm oil a highly sought after commodity in homes, restaurants and food processing industries.
As a non-food product, palm oil makes an important raw material in the production of soaps, detergents, greases, lubricants and candles. With the growing profile of the biofuels market, it has also proven to be a valuable feedstock for biodiesel and serves as an alternative to mineral oils used in power stations. Palm oil derivatives are widely used in the pharmaceuticals and cosmetics industry. It is also used in the production of printing ink, drilling fluids and water-treatment products.
Apart from local trade in palm oil, it is heavily sold on the international markets as CPO (Crude Palm Oil) and usually commands a high premium price given its vast capabilities and high demand from several industries. The graph below shows the prices of CPO over the last three years between 2010 and 2013.
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