Fertilizer

Date 5 July 2022: Everchem Corporation bring our guest from Korea to visit MPOB Gallery. The visiting purpose is to introduce our guests to “Malaysia Golden Crop”.

Our arrival was welcomed by Mr Ali & Miss Asliza from MPOB

Beside MPOB Gallery, We visit the Oil Palm Garden that have been planted for 11 years in MPOB

Elaeis guineensis (Palm Oil) was classified by Nicolaas Jacquin in 1763. While it can now be found in many parts of the world besides West Africa, most notably South-East Asia and South America, it is clearly of African origin.

Palm oil is an important source of vitamins, particularly vitamin A, in the West African diet. Its culinary use in West Africa is long established; archaeological evidence suggests that West Africans used palm oil in their cooking some 5,000 to 6,000 years ago. It also used for lighting and as a bodily ointment, while the palm tree itself provides material for building, particularly roof thatching, and for brushes, as well as being the source of palm wine.

It entered the global economy in the 1500s aboard ships engaged in the transatlantic slave trade. During the deadly “middle passage” across the Atlantic, palm oil was a valued food that kept captives alive. Traders also smeared captives’ skin with palm oil to make them “look smooth, sleek, and young” before sending them to the auction block.

By the mid-1600s, Europeans were rubbing palm oil on their own skin, too. European writers, learning from African medicinal practices, claimed that palm oil “does the greatest cures upon such, as have bruises or strains on their bodies.” By the 1790s, British entrepreneurs were adding palm oil to soap for its reddish-orange color and violet-like scent.

After Britain abolished the slave trade in 1807, traders sought out legal products. In the following decades Britain slashed tariffs on palm oil and encouraged African states to focus on producing it. By 1840, palm oil was cheap enough to completely replace tallow or whale oil in such products as soap and candles.

As palm oil became increasingly common, it lost its reputation as a luxurious good. Exporters made it even cheaper with labor-saving methods that allowed palm fruit to ferment and soften, although the results were rancid. European buyers, in turn, applied new chemical processes to strip away foul odors and colors. The result was a bland substance that could be freely substituted for more expensive fats and oils.

By 1900, a new industry was gobbling up all kinds of oils: Margarine was invented in 1869 as a cheap alternative to butter. It soon became a mainstay of working-class diets in Europe and North America.

Palm oil was first used to dye margarine yellow, but it turned out to be a perfect main ingredient because it stayed firm at room temperature and melted in the mouth, just like butter.

Margarine and soap magnates such as Britain’s William Lever looked to Europe’s colonies in Africa for larger quantities of fresher, edible palm oil. However, African communities often refused to provide land for foreign companies because making oil by hand was still profitable for them. Colonial oil producers resorted to government coercion and outright violence to find labor. They had more success in Southeast Asia, where they created a new oil palm plantation industry. Colonial rulers there gave plantation companies nearly unlimited access to land. The companies hired migrant workers from southern India, Indonesia and China.

The oil palm itself also adapted to its new locale. While scattered palms grew to towering heights on African farms, in Asia they remained short in tight, orderly plantations that were easier to harvest efficiently. By 1940, plantations in Indonesia and Malaysia were exporting more palm oil than all of Africa.

Prices for raw materials that constitute the fertilizer market — ammonia, nitrogen, nitrates, phosphates, potash and sulphates increase up 30% since the turn of the year and now exceed those seen during the food and energy crisis in 2008.

Shortages supply fueled by the Ukraine-Russia conflict, along with a host of pre-existing factors, have driven fertilizer prices to record highs.

Russia and Ukraine are among the most important producers of agricultural commodities in the world, with exportable supplies in global foodstuff and fertilizer markets.

In 2021, Russia was the world’s top exporter of nitrogen fertilizers and the second-largest supplier of both potassic and phosphorous fertilizers, according to the U.N. Food and Agriculture Organization.

Trade between Russia and the rest of the world has not stopped, but has been severely disrupted as importers and vessel charterers steer clear of the country in light of the invasion of Ukraine

Russia, which accounts for around 14% of global fertilizer exports, has temporarily suspended outgoing trade, which is expected to have a strong ripple effect across global food markets.

Natural gas is a key input for fertilizer production. High gas prices have resulted in a curtailing of production in regions such as Europe, further constricting an already tight market.

Meanwhile, sanctions on Russian-ally Belarus have substantial implications for the potash market, with Russia and Belarus contributing a combined 40% of annual traded volumes.

Starting 2020, nitrogen fertilizer prices have increased fourfold, while phosphate and potash prices over threefold.

Farmers have benefitted from high agricultural commodity prices, helping to partly offset high input prices, demand destruction is increasingly likely due to high prices and supply shortfalls.

Economies around the world are already dealing with historically high inflation driven largely by soaring food and energy prices. The U.N. Food and Agriculture Index shows food prices are at an all-time high. The suggestion prolonged period of fertilizer shortage will affect longer-term farming yields.

Given the already tight grains and oilseeds market, and the importance of both Russia and Ukraine in those markets, food price inflation is an increasingly prominent risk.

Prior to the threat of reduced supplies from Russia and Belarus, fertilizer prices had already been facing upward pressure from global supply chain disruptions, a Chinese export ban and a Canadian rail strike.

While much of the focus of discussions around price spikes in the wake of Russia’s invasion of Ukraine has been dominated by energy, the supply shock to fertilizer, wheat and other grains is expected to compound the problem.

Indonesia eased pressure on the global vegetable oil market which is hitting peak prices due to the suspension, the war in Ukraine and global warming. Indonesia issued a ban last month on procuring supplies of the commodity, which is used in a range of goods from chocolate distributions to cosmetics, in the face of domestic shortages.

The lift ban based on the supply and condition of cooking oil and given that there are 17 million people in the palm oil industry; farmers and other support workers, cooking oil exports will reopen on Monday, May 23.

Authorities have enforced a strict export ban, with the Indonesian navy seizing a tanker carrying palm oil out of the country in violation of directives earlier this month.

However, Jakarta is under pressure to control prices that have soared after Russia’s invasion of agricultural power, Ukraine.

Palm oil producers staged protests last week in central Jakarta and several cities in Indonesia complaining that oil palm fruit prices had dropped sharply.

The Indonesian leader said he lifted the suspension because domestic supply and cooking oil prices had improved since the ban took effect on April 28.

The price has dropped from 19,800 rupiah (RM5.94) per liter to about 17,200 rupiah (RM5.15) since the ban. Domestic cooking oil supply also tripled after the ban from 64,500 tonnes a month to 211,000 tonnes, he said.

Palm oil is the most widely used vegetable oil in Indonesia and, despite being the world’s largest producer, the country has faced a shortage of cooking oil for months due to weak regulations and producers refusing to sell domestically. The shortage in some cases forces consumers to queue for hours at distribution centers.

Indonesia produces about 60 percent of the world’s palm oil, with a third used by its domestic market. India, China, the European Union and Pakistan are among its major export customers.