PRODUCT MARKET STUDY: PALM OIL IN THE NETHERLANDS
Date: December 2004
The Netherlands have historically been an important importer of vegetable oils
and fats. Since the invention of „artificial butter‟ (margarine) by the French
chemist Hippolyte Mège Mouriès (1817-1880) for the purpose of the troops of
Emperor Napoleon III, engineers of the Dutch company Van den Bergh &
Jurgens (originally founded in Oss, but established in Rotterdam since 1891)
have found ways to improve the production process, especially with the advent
of reliable refrigeration units in the 1930‟s. Subsequently, this company
developed into the multinational Unilever (after merging wither soap producers
Lever Bros.), and ever since, the Dutch have been importing vegetable oils and
fats on a large scale.
The following vegetable fats and oils are currently used in the production of
margarine, baking oils, soap, shampoo and many other edible products (such as
ice-cream, confectionary): soybean oil, palm oil, rapeseed oil, sunflower oil,
groundnut oil, coconut fat, palm kernel fat, olive oil and other oils and fats (castor
oil, cottonseed oil, corn oil, linseed oil and sesame oil).
Palm oil, its applications and its competitors
Palm oil is the second largest source of vegetable oil in the world. It is the third
most widely traded oil after soybean and rapeseed oil. Palm oil is the largest
perennial crop. It is used in many food items like margarine, ice cream,
confectionery, filled milk and as cocoa-butter substitute. Due to its
characteristics, palm oil is often blended with other oils in colder countries.
The principal trading centres are Kuala Lumpur, Rotterdam and London. The
palm oil trade to the EU is governed by FOSFA trading rules and contracts
(FOSFA 80 for crude, unbleached palm oil in bulk CIF, and FOSFA 81 for palm
oil products in bulk CIF).
The three largest competitors for palm oil in the Netherlands are soybean oil,
rapeseed oil and sunflower oil.
Soybean oil dominates the world trade in vegetable oils. This is due to favorable
agronomic characteristics, reasonable returns to farmers and processors, the
high quality edible oil and a plentiful and dependable supply of crop at
Rapeseed oil is the third largest source of edible oil after soybean oil and palm oil
and the second most widely traded oil in the world. It has a low saturated fat
content of 6.8% and is primarily used as cooking oil. Rapeseed oil is widely
produced in EU countries like France, Germany, UK, Belgium and The
Netherlands and is heavily subsidised.
Sunflower oil is the fourth largest source of vegetable oil. The increasing output is
due to plant agronomic characteristics and an increasing demand for
polyunsaturated oils. The high digestibility and high vitamin E content makes it
popular oil in the health food sectors. Sunflower oil is mainly used in the following
food products: margarine, salad oil and cooking oil, as it does not affect the
natural flavours of foods cooked in it. Sunflower oil is widely produced in EU
countries like France, Spain, Germany, Italy and The Netherlands.
Upcoming products in a smaller niche market for high quality oils (both cold and
hot use) are olive oil and groundnut oil (peanut or arachide oil).
First of all, the markets for vegetable oils can be segmented in principally the
food industry and the cosmetic industry, of which the first covers the majority of
The two major end-users of the food industry are:
1. Ready-meals industry.
2. Other food industries, such as canned or bottled food, pet food, confectionery,
bakery and baby food industries.
The major end-users of the cosmetic industry are:
1. Processing industry:
- Natural cosmetic and cosmeceutical products (soaps, shower and bath
gels, milks and oils etc.)
- Beauty and personal care product manufacturers (skin care, suntan, etc.)
- Hair care product manufacturers (shampoos, styling products, colouring
2. End-product manufacturers
- Nut and seed oil producers (cold pressing, expeller pressing, CO2 super
critical extraction, de-fatting, etherification, hydrogenation, refining,
- Wholesale distributors with value-add capabilities (blending, milling,
sieving, density adjustment, formulation, granulation, particle engineering,
trituration, contract manufacturing)
Secondly, vegetable oils can be distinguished as standardised and genuine &
authentic vegetable oils. The first mentioned and most important on the EU
market, concerns refined vegetable oils. The market for genuine and authentic is
far smaller but is becoming increasingly explored.
Finally, the market for vegetable oil products can also be segmented according to
whether the products are grown by organic farming/production (basically:
growing without use of artificial fertilisers, herbicides, pesticides) or by
conventional farming. Organic products still account for a small share of the total
market, but this is steadily increasing.
In the larger EU, and likewise in the Netherlands, trading in vegetable oils is
based on forward contracts (12 months) and spot contracts (3-4 months). Paris is
the main exchange for rapeseed oil, Kuala Lumpur for palm oil and Chicago for
soybean oil. Vegetable oils can also be exported unsold to, for instance,
Rotterdam. On arrival, the oil is stored in tanks until a buyer is found. In this case,
the buyer purchases the vegetable oil „ex tank‟. Forward trading on the major
exchanges forms an important part in the buying and selling of vegetable oils.
Apart from palm oil, the other vegetable oils are usually shipped as „crude‟ to the
EU. Palm oil is often refined, bleached and deodorized in the exporting countries.
The following parties are involved in the import and distribution of vegetable oils
in the EU:
Shippers of crude and refined products
Exporters in producing countries who produce and export crude and refined
product (only palm oil) to EU countries or who purchase from crude products
producers to ship to EU countries.
Traders in crude and refined products
Traders buy and sell crude and refined products (palm oil) for their own account
and re-sell/re-export these to the processing industry.
Brokers are intermediaries in the buying and selling of orders on behalf of a
customer. Their income consists of a commission on the price. They do not take
title to the products, nor do the products physically pass through their hands.
Brokers are well-informed sources in respect to market trends, price levels and
availability. Due to concentration in the sector, the number of brokers is declining.
Processors of crude and refined products
The processors (crushers and refiners) produce vegetable oils as ingredients for
making a wide variety of end products in the grocery, compound feed and
Apart from processing, multinational companies like Cargill and ADM are also
actively involved in trading. Due to increasing concentration and consolidation,
large processors in the EU have direct contracts with suppliers in developing
countries, thereby reducing the role of middlemen like brokers and traders.
The following is representation of the distribution chain of vegetable oils and fats.
Traditional crushing and refining takes place at different locations, but the trend is
to bring them closer together. Due to new technology, refiners can handle a
variety of oils instead of just one. After refining, the vegetable oil is bottled for
human consumption (cooking oil) or shipped in bulk to the final processing
industry. The latter uses the refined oil in a variety of grocery, compound feed
and technical products.
Rotterdam is the main trading centre for the EU vegetable oils and fats trade.
From here it is distributed by vessel, inland barge or truck to storage facilities and
customers. Rotterdam is strategically located to serve continental EU countries
with perfect port and infrastructural capacities, a multi-language business
community and a well-established trading community.
Trade in the EU
Total imports of vegetable oils by EU member countries (EU-15) amounted to €
6.4 billion or 8 million tonnes in 2003. Between 2001 and 2003, imports
increased by 22 % in terms of value, but increased by only 8 % in terms of
The leading EU importers are Italy, Germany, The Netherlands, France, the
United Kingdom, Belgium and Spain.
The consumption of vegetable oils in the EU has been stable over recent years.
Only in the case of palm oil, mainly used in the processing industry, can a
considerable growth be observed. Among the oils that are interesting for non EU
countries, palm oil is by far the leading oil, followed by olive oil and coconut oil.
Demand for selected vegetable oils in the EU member states, 2000-2002,
The Netherlands, the UK, Germany and France are the leading EU markets for
palm oil, respectively accounting for 20, 18, 17 and 14 percent of total EU
Imports of vegetable oils by EU-15 countries, 2001-2003, € million / 1000
Following is an overview of countries of origin of products similar to palm oil.
The EU also produces vegetables oils. EU production of vegetable oils
decreased somewhat between 2000 and 2002, amounting to 12.3 million tonnes
in the latter year (FAO, 2004). The EU accounted for 9 percent of global
production. The leading EU producer was Germany, accounting for 23% of EU
production, followed by Spain (20%), France (10%), The Netherlands (9%), Italy
(9%) and UK (6%).
The main vegetable oils produced in the EU are rape/mustard oil, soybean oil,
olive oil and sunflower oil. Except for sunflower and olive oil, the greatest amount
of raw material for vegetable oil comes from non-EU countries. No production of
palm oil takes place within the EU.
Between 2001 and 2002, EU production of olive oil decreased by about 25 % but
increased by the same percentage in the subsequent period, reaching almost 2.3
million tonnes in the 2003. In the same year, Spain was the leading EU producer
of olive oil, accounting for almost 60 % of total EU 2003 production, followed by
Italy (24%) and Greece (16%).
Between 2000 and 2002, EU production of peanut oil increased by almost 60 %,
reaching 75 thousand tonnes in the latter year (FAO, 2003). The leading EU
producer was The Netherlands, accounting for 83 % of EU production.
Trade in the Netherlands
The Dutch oils and fats industry consists of oilseed crushers (4 companies),
animal fat producers (9), refiners and hardeners (11), animal rest-products
destructors, oleochemical industry, margarine and vegetable oil producers (10),
sauce producers (48), oils and fats recyclers (8), traders (362), and storage and
bottling facilities (6). According to data given by the MVO (see appendix), the
total Dutch oils and fats industry contains 410 companies (end 2003).
The Dutch oils and fats industry has a strong international orientation. Especially
the oilseed crushers and vegetable oil and fish oil refiners rely heavily on imports
for their primary resources; on the other hand, the edible oil and margarines
producers are very much involved in exports. In 2003, the Dutch oilseeds, oils
and fats imports account for an amount of 2,4 billion euro, while the industry's
exports are valued at 1,6 billion euro. In 2003, 8.4 million tonnes of oil seeds as
well as vegetable and animal fats and oils were imported. Of these imports,
about two thirds were soy beans from North and South America, and 17 % were
„tropical‟ oils (predominantly palm oil) from Asia. Dutch domestic consumption of
fats and oils, margarine and butter, has – after a steady decline since the early
1990‟s – stabilised in the year 2000 at an average quantity of approximately 21.5
kg per capita (data MVO end 2003).
An important factor in the recent growth of Dutch imports of palm oil from
Malaysia is the recent acquisition of two Dutch vegetable oil refineries by
Malaysian companies. The takeover of Unimills BV by Golden Hope Plantations
Bhd in 2001 and of Loders Croklaan BV by IOI Corporation Bhd in 2003, which
allows the Malaysian companies Golden Hope and IOI a more downstream
control of the distribution of palm oil, has certainly contributed to an increase of
Dutch imports of palm oil from Malaysia.
Dutch imports of palm oil under SITC 422 in million euro, and % change to
2001 187.3 mln 164.9 %
2002 201.0 mln 107.4 %
2003 248.8 mln 123.8 %
Jan-Oct 2004 200.6 mln 99 %
Source: CBS, Central Bureau of Statistics, the Netherlands
The EU (of which the Netherlands is one of the founding members) has very
strict regulations with regards to the import of food products.
There is no general EU regulation for vegetable oils. (In The Netherlands, the
Commodity Board for Margarine, Oils and Fats has compiled the M.V.O.
Regulation 1975, Edible Oils and Fats.) However, European food safety
legislation is legally binding for all member states of the European Union. It aims
to guarantee a high level of protection for consumers. It is directed at minimizing
risks and covers all sectors of the food chain, including primary production, food
processing, storage, transport and retail sale. The basic principles of European
food legislation are in the General Food Law (see
pdf). The provisions of the General Food Law concerning import, the reporting
obligation and traceability will enter into force on January 1 st, 2005. Other parts of
the General Food Law have already entered into force.
To ensure traceability and the safety of food and feed products operators have to
know from whom they bought their products and to whom they sold their
products. Food business operators have to be able to report this information to
the competent authorities within a short period of time. The European
Commission discusses on how they should further work out this obligation.
The European Council Regulation 2375/2001 establishes a maximum level of
dioxins (PCDDs + PCDFs) permitted in vegetable oils. The dioxin level is
expressed in WHO toxic equivalent factors (TEFs) (0.75 pg WHO-PCDD/F-
TEQ/g fat). This maximum level will be reviewed by the end of 2004.
The world-wide oils and fats trade also has established its own set of grading and
quality standards. These are laid down in a range of standard contracts issued by
the Federation of Oils, Seeds and Fats Associations Ltd. (FOSFA) in London.
Contracts include well defined product descriptions for each type of product.
Depending on the type of vegetable oil, these specifications include:
• Fatty acid composition per region and country of origin
• Iodine value per region and country of origin
• Sterol composition
• Enrichment factors
• Slip melting point
• Fatty acids at the 2-position %
Furthermore, the EU regulates the use of pesticides and sets Maximum Residue
Levels (MRLs) for pesticides on crops. MRLs are based on Good Agricultural
Practice and a scientific risk assessment. They represent the maximum amount
of residue that might be expected on a commodity if Good Agricultural Practise is
followed. Directive 90/642/EEC
.pdf sets Maximum Residue Levels for about 150 active substances on raw
agricultural products. Palm fruits are not mentioned as a separate product. They
resort under the category of oilseeds. The MRLs set for the category "other
oilseeds" apply to palm fruits. All the MRLs for this category are set at the limit of
detection. Residues of the listed pesticides are not allowed to be found on palm
fruits. MRLs for processed products, like palm oil, have to be derived from the
MRLs for raw products. If no residues are allowed to be found in palm fruits, no
residues are allowed to be found in palm oil. The use of pesticides is being
harmonised in the EU. On the basis of directive 91/414/EEC
.pdf the European Commission reassesses all the pesticides currently in use in
the European Union. For pesticides reassessed positively a number of uses and
if necessary MRLs can be registered. These pesticides and the conditions for
their use are listed in Annex 1 of this directive (so-called Annex 1 pesticides).
Pesticides that have not passed the assessment are not allowed to be used
anymore. Already 340 pesticides have been prohibited this way in Europe.
Residues of these pesticides are not allowed to be found, unless there is an
import tolerance for the specific pesticide in palm oil.
On 27 February 2001, the Commission issued a White Paper on a Strategy for a
future Chemicals Policy. This has subsequently been developed and extensively
discussed with major stakeholders, resulting in the release on 29th Oct 2003 of
the Commission's proposal (REACH). Under REACH, enterprises that
manufacture or import more than one tonne of a chemical substance per year
would be required to register it in a central database. REACH would furthermore
give greater responsibility to industry, to manage the risks from chemicals and to
provide users in the supply chain with safety information on the substances. The
proposal is now being considered by the European Parliament and the Council of
the EU for adoption under the so-called co-decision procedure. During this
interim period (2004-2006), starting after the Commission adoption and
continuing until the Regulation enters into force, different preparatory actions will
take place in order to be able to effectively and efficiently administer the new
chemicals legislation immediately when it enters into force.
For exporters of vegetable oils, it is important to stay well informed on the
developments concerning REACH. For easy reference on developments and
updates please check: http://ecb.jrc.it
Apart from general trade barriers as above mentioned food laws, there is a
campaign by some environmental NGO‟s such as the Dutch organisation Milieu
Defensie (Environment Defence, part of the larger organisation Friends of the
Earth). These organisations argue that production of palm oil in South East Asia
is very detrimental to the local rainforests, since large areas are being claimed for
palm oil plantations. The impact on the general public, however, can be
considered as minimal. See
for more information, as provided by Milieudefensie.
Currently, import duties into the EU for palm oil and palm oil products are as
HS group GSP Tariff ACS Tariff LDC/Andes/Central Proposal EU GSP
America Tariff 2002-2004
15111090 3.8% 0% 0% 0%
15119019 4,4% 0% 0% 0%
15119099 3,1% 0% 0% 5,5%
No import quotas apply to the imports of vegetable oils into the EU.
The EU Commission and the International Maritime Organisation (IMO) in
London issue packaging requirements for crude and (semi) processed products.
Directive 96/3 EU regulates the sea transport in bulk of liquid oil and fats in
respect to food hygiene standards. As vegetable oil is transported in tanks,
labelling and marking do not apply.
IMO requirements relate to safety of the goods and vessel during transport. The
Maritime Safety Division of IMO has advised that animal and vegetable oils and
fats are, to some extent, a flammable product. For that reason, oils and fats
transported by ships are classified under class 4.2 of the International Maritime
Dangerous Goods Code (IMDG).
It is recommended that exporters comply with “IMO Guidelines for the Packing of
Cargo in Freight Containers and Vehicles”. These guidelines
http://www.imo.org/Safety/mainframe.asp?topic_id=158 also include marking and
labelling regulations, which can be obtained directly from IMO in London. See
www.imo.org for more information.
Vegetable oils and fats are shipped in tankers of 3,000 – 5,000 tonnes. The tanks
must be clean; a surveyor of the purchasing party inspects the tanks before
loading. When in order, the surveyor issues a certificate of cleanliness.
Furthermore, the shipping line must make information available about the three
previous cargoes carried. Directive 96/3 EU specifies a list of acceptable
previous cargoes. These cargoes:
should not trigger a chemical reaction with vegetable oils and fats
can be removed during the refining process
At this moment, storage in tanks at the port of destination still falls outside any
regulations. However, it is expected that regulations will be extended to cover
tank storage in the future.
The grocery industry in the EU is characterized by increasing competitive
pressures and a concentration of buying power by the major multi-
European retail chains. On the demand side, consumers reveal
increasingly sophisticated needs related to the nutritional content of
products, time saving in preparation, product information and animal
welfare. Food safety issues play a particularly strong role after the
different food crises the EU has experienced during the last few years.
There exists an increasing consumer awareness of product safety, quality
and environment; hence: increasing demand for organic and fair trade
products, and an increasing demand for healthy and natural food and
In the Dutch retail sector, a price war started in February 2004 between
the large supermarket chains. This has lead to price becoming an even
more important factor than before. As a result, the assortment of
supermarkets has become narrower, with fewer types of products on the
shelves. Palm oil is rarely found as a consumer product on Dutch
Vegetable oils have made substantial inroads in the diets of Dutch
consumers. This is mainly based on a platform of healthy attributes like a
high content of unsaturated fat, having a positive effect on the reduction of
heart and cardiovascular diseases. This has contributed to increasing
popularity of olive oil and sunflower oil. Palm oil, which combines a high
level of unsaturated fats with a higher cooking temperature than olive oil or
sunflower oil, should be promoted among the Dutch public because of
these two aforementioned attributes. Especially since many Dutch
households regularly deep-fry food products such as French fries and
The use of genetically manipulated soy and maize is a contested issue in
the Netherlands. Generally, consumers are not in favour of using products
containing genetically manipulated ingredients. The EU is in the process
of preparing directives for the application of GMO‟s. Palm oil (when
promoted as a 100 % natural product) might capitalise on adversity of the
general public against genetically modified products such as soy and
maize, which currently account for two thirds of the total Dutch imports of
In April 2004, the Dutch Hotel and Restaurant Association and the
Information Desk of the Commodity Board for Margarine, Oils and Fats, in
cooperation with the Ministry of Health, have started a campaign to
promote the use of vegetable oils for deep frying in (fast food) restaurants
and snackbars. Currently. many of these establishments still use „hard‟
fats of animal origin (with their associated health risks because of the high
content of saturated fats and trans fatty acids), because they are the
cheapest alternative in the market. In a website www.friturenindehoreca.nl
(only in Dutch) it is explained why it is healthier to deep fry in vegetable
oils with their high content of poly unsaturated fats, and where to obtain
the alternatives for hard fats. At the end of December 2003, 16 % of all
fast food establishments in the Netherlands were participating in this
programme, and were awarded with a logo „verantwoord frituren‟ (which
means „responsible and healthy deep frying‟).
Palm oil, when competitively priced compared to other vegetable oils like
sunflower oil, soybean oil and arachide oil, can be a viable alternative for
the fats currently used in the Dutch restaurant and fast food sector. A
publicity campaign, aimed at promoting the health aspects of cooking and
deep frying in palm oil, could result in a higher awareness among the
Dutch public on the availability of a alternative frying oil such as palm oil,
and could lead to a higher consumption of palm oil.
APPENDIX 1 - TRADE ASSOCIATIONS
Federation of Oils, Seeds and Fats Associations Ltd. (FOSFA)
Address: 20, St Dunstan Hill, London EC3R 8NQ, United Kingdom
Telephone: +44 (0)20 7 283 5511/2707
Fax: +44 (0)20 7 623 1310
Federation of Seed Crushers and Oil Processors (FEDIOL)
Address: Ave. de Tervuren 168, Box 12, 1150 Brussels
Telephone: +32 (0)2 771 53 30
Fax: +32 (0)2 771 38 17
Oils, Fats and Oilseeds Brokers’ Association (OFOBA)
Address: P.O. Box 190, 3000 AD Rotterdam
Telephone: +31 (0)10 4042111
Fax: +31 (0)10 4042333
Netherlands Oils, Fats & Oilseeds Trade Association (NOFOTA)
Address: P.O. Box 202, 3000 AE Rotterdam
Telephone: +31 (0)10 4430622
Fax: +31 (0)10 4678761
Vereniging Nederlandse Fabrikanten van Eetbare Olien en Vetten
(Association of Dutch Seed Crushers and Oil Processors)
Address: P.O.Box 3095, 2280 GB Rijswijk
Telephone: +31 (0)70 3905263
Fax: +31 (0)70 3191329
Commodity Board for Margarine, Oils and Fats
Address: P.O.Box 3095, 2280 GB Rijswijk, The Netherlands
Telephone: +31 (0)70 319 51 95
Fax: +31 (0)70 319 51 96
APPENDIX 2 - TRADE FAIR ORGANISERS
Frequency: biennial (2005 Cologne)
Address: Köln Messe, Messeplatz 1, 50679 Cologne, Germany
Telephone: +49 (0) 221 821 0
Fax: +49 (0) 221 821 2574
Food and beverages
Frequency: annual (November 2-4, 2005)
International Trade Fair for Fats & Oils and related Technologies
Frequency: annual (February 24-27, 2005, Nurnberg)
Address: Industriestrasse 12, 91186 Büchenbach, Germany
Telephone: +49 (0) 91 714011
Fax: +49 (0) 91 714016
Certified organic food and beverages
Frequency: biennial (2006 Paris)
Address: 1 Rue du Parc, 92593 Levallois-Perret, France
Telephone: +33 (0) 1 49 68 54 99
Fax: +33 (0) 1 47 31 37 82
Food and beverages
Health Ingredients Europe
Frequency: biennial (alternate with Food Ingredients Europe)
Address: P.O.Box 200, 3600 AE Maarssen
Telephone: +31 (0)346 55 94 44
Fax: +31 (0)346 57 38 11
Food ingredients, semi finished products, product development and quality
Natural Products Expo Europe
Penton Media Europe Ltd
Frequency: annual (June 15-16, 2005, Amsterdam)
Address: 61 Southwark Street, London SE1 0HL, United Kingdom
Telephone: + 44 (0)20 7620 0001
Fax: + 44 (0)20 7401 3966
Organic and natural food and beverages and food supplements
APPENDIX 3 - TRADE PRESS
Ista Mielke GmbH
Address: Langenberg 25, 21077 Hamburg, Germany
Telephone: +49 (0)40 7610500
Fax: +49 (0)40 76105090
Publishes “Oil World Weekly”, “Oil World Monthly” and “Oil World Annual”
Commodity Board for Margarine, Oils and Fats
Address: P.O.Box 3095, 2280 GB Rijswijk, The Netherlands
Telephone: +31 (0)70 319 51 95
Fax: +31 (0)70 319 51 96
Publishes “MVO Magazine” on a weekly basis
The Public Ledger
Address: 80 Calverly Road, Turnbridge Wells, Kent TN1 2UN, United
Telephone: +44 (0)1892 53 38 13
Fax: +44 (0)1892 54 48 95
Publishes “The Public Ledger” on a weekly + monthly basis
DMG World Media (UK) Ltd.
Address: Queensway House, 2 Queensway, Redhill, Surrey RH1 1QS,
Telephone: +44 (0)1737 76 86 11
Fax: +44 (0)1737 85 54 70
E-mail: oilsand firstname.lastname@example.org
Publishes “Oil & Fats International” on a weekly basis
APPENDIX 4 - OTHER USEFULL ADDRESSES
Address: Schweden Platz 2/39
Telephone: +43 1 5338474
Fax: +43 1 5338486
E-mail: email@example.com or firstname.lastname@example.org
Contact person: Mr. Zainuddin Hassan
Address: Innsbruckweg 226
3047 AH Rotterdam
Telephone: +31 10 4627759
Fax: +31 10 4627349
Contact person: Mrs. Roseliah Taha, Trade Commissioner