Investment in Palm Oil

The growing global demand for palm oil

Investments in agricultural land in West Africa has been promoted as it allows investors to ensure higher productivity of food grains which can meet the local demand for food and it also allows investors to harvest food grains for the purpose of export.

The land rates are increasing in the region at a contract rate and investors can also earn through land rents which is generated by renting the land to farmers or private management companies which are involved in plantation or agriculture based projects.

Palm oil plantation

The investments in palm oil plantation projects are increasing in West Africa due to a number of reasons – the cost of crude is increasing, the increase in price of vegetable oil and increasing demand for agricultural land investments. The growing demand for fossil fuels raises the demand for bio-fuels. The increased use of palm oil for the production of bio-fuel has been a major cause in the rise in price of palm oil.

About 80% of the total palm oil which is produced across the globe is used as cooking oil. The food products prepared from palm oil are cakes, sauces and condensed milk. Palm oil is a great source of nutrition and it also offers ingredients which have anti carcinogenic properties. These features allow the oil to protect human body from various diseases. Due to its nutritional value, palm oil is increasingly used in foods in households and for the preparation of industrial products.

Palm oil is also used commercially for the preparation of detergents, soaps, medicines, cosmetics etc. One of the largest producers of palm oil products is Unilever which is known globally for its products.

Furthermore, governments globally are promoting the use of palm oil for the production of bio fuel. In Africa some regions are trying to move away from the use of fossil fuels and shift to natural ways of producing electricity. It is expected that the palm oil plantation projects in a certain region in Africa will produce oil which will be used to fulfil the power needs of the region.

Investment in palm oil

Investors from across the globe have invested into palm oil plantation as it is believed to provide safe and higher returns. Palm oil plantation projects in western Africa are supported by its climatic conditions and soil. The soil and weather support the plantation projects. Certain unused land area in western Africa have been converted into palm oil plantation projects.

Indonesia and Malaysia are the largest producers of palm oil and these countries have been progressively increasing plantation in palm oil. The increased acreage of palm oil plantation in Malaysia and Indonesia has been criticised because it has been a major cause of deforestation. However, in western Africa palm oil plantation projects are not based on deforestation.

The plantations are environmentally friendly and hence, the investors have supported these projects. These plantations are also backed by the local communities as it provides employment opportunities to local communities.

– by Stewart Atwell