A 40% tax is levied on palm oil imports to Iran—more than any other vegetable oil

Iran Palm Oil Imports See 23% Decline - Report

EghtesadOnline: Malaysia exported 566.618 tons of palm oil products worth more than $380.58 million to Iran in 2018, which shows a 6.8% and 23.6% decline in weight and value respectively compared with the previous year.

News ID: ۷۸۴۵۷۹

18 March 2019

The imports included 487,923 tons of palm oil valued at $288.54 million, 19,066 tons of palm kernel oil worth $26.23 million, 38,666 tons of oleochemicals worth $43.1 million and 20,961 tons of other palm-oil-derived products worth $22.7 million, according to data shared by the Malaysian Palm Oil Board’s Central Asia Regional Office with the Financial Tribune.

Iran was Malaysia’s eighth biggest export destination for palm oil products in 2018.

The top 10 customers of Malaysian palm oil over the last year were India (2.51 million tons), China (1.86 million tons), Pakistan (1.16 million tons), the Netherlands (912,593 tons), Philippines (689,290 tons), Turkey (631,887 tons), the US (540,560 tons), Iran (487,923 tons), Vietnam (461,567 tons) and Japan (458,622 tons), according to Financial Tribune.

Malaysia is the world’s second biggest producer and exporter of palm oil products after Indonesia. It produced more than 21.81 million tons of palm and palm kernel oil during 2018 on over 5.85 million hectares.

The Southeast Asian country exported 24.87 million tons of palm oil products last year, which was 3.7% more than in 2017.

Dispelling Allegations

Though it is generally believed by the public that palm oil is a health hazard, increases the risk of heart and coronary diseases, and can cause toxicity, MPOB’s Regional Manager for Central Asia, Iran and Iraq Hisamuddin Mohamad Aspar said these allegations have actually no scientific basis.

“Palm oil is our main agricultural commodity and we export it to more than 150 countries. Iran is one of our biggest markets,” he told us in an interview.

Oil palm, he added, is the most productive oil crop.

It produces an annual average of 4 tons of oil per hectare. This is a substantial amount compared with other oilseeds and crops like soybeans, sunflower seeds and rapeseeds, which produce an average of 760 kilograms per hectare per year.

Aspar, who doubles as counselor for commodities in the Embassy of Malaysia in Tehran, said because the US and European countries cannot prove that palm oil consumption involves health risks, they now attack it on environmental grounds.

“This is while Malaysia has a sustainable palm oil production. We are committed to the RIO Summit 1992 and have reduced the environmental hazards of oil palm cultivation to its minimum,” he said.

MPOB’s Tehran office was established in February 2017 and is in charge of monitoring the palm oil market and related issues in Iran, Iraq and Central Asian countries like Kazakhstan, Uzbekistan and Tajikistan.

Iran Import Restrictions

A public outcry over "excessive" imports of palm oil during President Hassan Rouhani’s first term led to an agreement among private associations, Health Ministry and Agriculture Ministry to reduce the share of palm oil in total oil imports.

In 2014, after the national debate on the negative effects of palm oil on health, dairy producers were strictly warned not to use it in milk and yogurt. This is while only 2% of the dairy industry had reportedly used palm oil in their products at the time. As a result, per capita dairy consumption in Iran decreased from 110 kilograms to only 60 kilograms per year.

This prompted the government to impose restrictions on palm oil imports, based on which total palm oil import were not to exceed 30% of total import of oils and fats. As a result, Iran’s palm oil purchases dropped by 47% from 997,000 tons in 2013 to 330,970 tons in 2015.

In March 2016, the restriction was removed but was replaced with a higher import tax of 40%. Other vegetable oils are taxed at 24%.

According to a report by US-based market research and consulting company Grand View Research, Inc., Iran’s palm oil market is expected to top $600 million by 2025. Its increasing usage in cosmetics and biodiesel industries has contributed to a significant portion of market revenue in recent years.

Lower palm product prices, compared to other vegetable products such as soybean, sunflower and groundnut, have also led to higher substitution in food, beverage, cosmetics and biodiesel industries.

According to The American Journal of Clinical Nutrition, replacing trans fats with palm oil may reduce heart disease risk markers and improve blood lipids. In a 2015 clinical trial published in the journal Food and Function, both palm oil and olive oil reduced cholesterol levels by 15%.