Cheap Cooking Oil Imports Hit Burmese Producers

By May Lay 14 November 2012

RANGOON — A sharp increase in palm oil imports from Malaysia over the past two years is causing more Burmese consumers to switch from relatively costly peanut oil, dealing a serious blow to domestic peanut oil millers.

“Imported palm oil is nearly as good as peanut oil. It has a clear color and the price is cheaper, so more people are choosing it,” said Sein Naing, the owner of an edible oil trading company at the Theingyi commodities market in Rangoon.

He noted that brand-name peanut oil now costs more than twice as much as imported palm oil—4,500 kyat (US $5.20) per viss (1.63 kg), compared to just 1,800-2,000 kyat ($2.10-2.30) for the same amount of palm oil.

Part of the reason for the high price of peanut oil is the rising price of peanuts on the domestic market, driven by strong demand for Burmese peanuts in China. “The price of peanuts has gone up a lot because of border trade with China,” said Myint Oo, the owner of a peanut oil mill in Prome.

Another problem, he said, is that Burmese oil mills don’t have modern equipment, and so can’t produce for the international market. This has left them entirely dependent on shrinking Burmese demand for their product.

And while peanut growers are enjoying strong sales to China, many lament the fact that they are only able to sell raw materials at low prices, and lack the means to sell value-added products.

With the value of Malaysia’s palm-oil exports to Burma reaching a record $682 million in the first half of this year, the best hope for the domestic cooking-oil industry is more foreign investment to improve its access to more advanced technology.

At a press conference on Nov. 1, Malaysia’s minister of plantation industries and commodities, Tan Sri Bernard Dompok, said Malaysian companies were exploring the possibility of investing in palm plantations and oil processing plants in Burma.

“Malaysia and Myanmar trade in three main sectors: palm oil, rubber and timber. We see how we can maximize long-standing business relationships between our two countries,” he said ahead of a planned meeting with President Thein Sein.