Malaysia is exploring options for wheat and rice imports from India against export of palm oil under a barter deal, Malaysia’s Minister of Plantation Industries and Commodities Bernard Dompok hinted on the sidelines of the Malaysia-India Palm Oil Trade Fair & Seminar, 2012, here on Thursday.
Dompok said his ministry saw immense opportunity for such a deal, which he would discuss with his cabinet colleague in charge of foodgrain. “I am not in charge of foodgrain, but would certainly put forth this proposal to the ministry there. I, however, see a great opportunity for such a deal,” he said.
India, which meets 55 per cent of its vegetable oil requirements through imports, procured 1.82 million tonnes of palm oil products worth $1.96 billion in 2011 from Malaysia. Malaysia is the second largest supplier of palm oil to India, mostly in the form of refined, bleached and deodorised (RBD) palmolein. In turn, Malaysia imports 30 per cent of its annual rice consumption of 2.5 million tonnes from various countries. In the absence of local wheat production, it remained dependent on imports to meet the country’s demand for 1.5 million tonnes (mt) of wheat.
India’s contribution to Malaysia’s total wheat and rice supplies remains negligible, despite a glut in stocks of the two major staple foodgrain in India.
Faced with major storage problems, resulting in spoilage, food minister K V Thomas had early this week urged his Malaysian counterpart to lift more wheat and rice from India against exports of palm oil under the barter deal.
Such a deal would make sense for both countries, said an analyst, especially for India, which is struggling to manage its burgeoning foodgrain stocks due to lack of adequate storage facility. Also, the risk of rupee fluctuation would be mitigated. For Malaysia too, India would be an assured supplier of wheat and rice.
Globally, the prices of crude palm oil have declined 14 per cent. But the eight per cent fall in the value of the rupee over the past two months, deprived the Indian players from benefitting from this fall in prices.
The value of bilateral trade between India and Malaysia reached a new high of $12.5 billion in 2011 and is forecast to rise to $15 billion this year.
Malaysia’s imports from India are large and diversified. These include meat and meat preparations, sugar, rice, wheat, fruits and primary and semi-finished products, such as iron, fabrics, machinery and instruments.
India, on the other hand, imports crude petroleum and petroleum products, palm oil products, electrical and electronic goods, wood products and chemical products from Malaysia.
Malaysia’s foodgrain consumption has recorded steady growth over the last five decades. From 1.6 mt in 1960, Malaysia consumed seven mt in 2011. There is some fluctuation in Malaysia’s per capita grain consumption, though. In 1971, Malaysians consumed about 178 kg of grains per person per year, which increased to 247 kg in 2011. Currently, the world average consumption of foodgrain stands at 326 kg.