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Opportunities For Palm Oil In Central Eastern Europe

The following are most often referred to the countries of Central Europe: Austria; Hungary; Germany; Liechtenstein; Poland; Slovakia; Slovenia; Switzerland.

Eastern Europe according to the UN Statistics Division: Belarus; Bulgaria; Hungary; Moldova; Poland; Russia; Romania Slovakia; Ukraine; Czech Republic. In modern sources, the Balkan states are also referred to Eastern Europe: Albania; Serbia; Slovenia; Montenegro. Transcaucasian: Azerbaijan; Armenia; Georgia.

Palm oil import to these countries is mixed in terms of origin and applications. While some countries import palm oil in bulk for the needs of own oil and fat industry, others tend to buy finished products.

As such, we may identify Russia (1059750 tons), Poland (259140 tons) and Ukraine (220853 tons) as bulk importers of palm oil by HS code 1511. Two countries close to be listed as pure bulk buyers are Romania (55245 tons) and Bulgaria (45470 tons).

Diagram 1 – Imports in 2018 by HS 1511 Palm oil and its fractions for selected countries. Sources: UN Statistics Division

Over the period of 2014-2018 five countries – Russia, Ukraine, Poland, Slovakia and Belarus – showed average increase above 5% in palm oil import.

Diagram 2 Annual growth in palm oil import quantity between 2014-2018 (%) for selected countries. Sources: UN Statistics Division

In addition to this five, there is one bulk importer located in Transcaucasian region – Azerbaijan. In 2019 Azerbaijan imported 59,359 tons of palm oil by HS 1511. The majority of the palm oil originated from Indonesia (81.3%) and 18.6% in Malaysia. But the growth in quantity imported to Azerbaijan over the last five years (YTD) is moderate, about 3%.

Armenia and Georgia are very small buyers of palm oil in bulk by HS 1511 – both countries imported in 2019, 953 MT and 1600 MT respectively.

While some countries import palm oil in bulk others tend to purchase finished products – margarines by HS code 1517. Although Poland is a big buyer of palm oil for 1511, the country actively import margarines. Other big buyers of margarines are Hungary and Czech Republic. Having considered all above we believe that there is hidden potential in Belarus, Armenia, Azerbaijan and Georgia.

With population a of 9.4 mil people palm oil import to Belarus is relatively small. In 2019 the country imported 4,770 tons of palm oil by HS 1511 and 25,242 tons of Margarines by HS 1517. If compared to Hungary  with a 9.7 mil people, imported 27,077 tons of palm oil and 73,914 of Margarines in 2019, which is three and a half fold more than Belarus.

Armenia and Georgia are pure importers of margarines and specialty fats. Both countries rely on import because the level oil and fat industry produced in these specified countries is insufficient to fulfill the market need for specialty fats. The average imports of the three transcaucasian countries – Azerbaijan, Armenia and Georgia – is 75 thousand tons by HS 1517 Margarines. Taking the average unit value of 1,217 (USD/unit) the potential market value is over 90 million USD.

Diagram 3 – Imports in 2018 by HS 1517 Margarines for selected countries. Sources: UN COMTRADE statistics

Russia, and Ukraine are two big importers of palm oil in bulk and are highly price sensitive buyers. Countries with a mixed bag of imports are Poland, Bulgaria, Belarus and Azerbaijan. These countries buy both margarines and palm oil.

Summarizing all above in our opinion the best opportunity for palm oil is in the export of palm oil to the bulk buyers such as Russia, Ukraine, Poland and Bulgaria, However their price sensitiveness attitude is a challenge.  At the same time there are also opportunities to export palm oil as an ingredient of specialty fats under HS 1517. In this case the destinations are Hungary, Czech Republic, Georgia, Armenia, Azerbaijan, and Poland which is also a big importer of palm oil in bulk.

Prepared by Aleksey Udovenko

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