Palm Oil

This is what WWF says:

Palm oil is the most widely consumed vegetable oil on the planet, and it is in about half of all packaged products sold in the supermarket. While palm oil is the most efficient source of vegetable oil, its rapid expansion threatens some of the planet’s most important and sensitive habitats. 

Palm oil grows in tropical rainforests, and the uncontrolled clearing of these forests for conventional palm oil plantations has led to widespread loss of these irreplaceable and biodiverse rich forests. Plantations have also been connected to the destruction of habitat of endangered species, including orangutans, tigers, elephants and rhinos.

The good news is you don’t have to give up products containing palm oil! It can be produced in a responsible manner that respects the environment and the communities where it is commonly grown.

It is good news that WWF recognises that palm oil can be produced without destroying tropical rain forests. The industry is essential to the Indonesian and Malaysian economies accounting for 12% and 9% of their exports respectively, providing employment for millions and driving economic growth and tax revenue.

Have no qualms about investing in a palm oil producer that is recognised for its excellent environmental, social and ethical plantation practice. Indonesian producer MP Evans ticks all the boxes. It costs them about $380 a tonne to produce and they sell it for about $750. As young palm oil plants mature their yield improves. They are adding to their plantations by planting and by acquisition of other estates.

Their interim report for the first six months of 2017 is impressive.

26% increase in crop as young plantings continue to mature

56% increase in production of crude palm oil

Operating profit for the period more than tripled to US$18 million (2016 US$5 million)

Profit of US$68 million following sale of Agro Muko joint venture

Average CPO price of US$735 per tonne, 10% higher than first half 2016

Oil extraction at good levels despite flooding in Kalimantan

1,370 hectares of new planting, including smallholder areas

Interim dividend of 5.00 pence per share (2016 – 2.25 pence per share)

If you can stand any more good news, their palm oil production is expected to double by 2020. MP Evans fought off a takeover bid at the end of last year from a bigger competitor and they look an even more attractive takeover target today. It looks as if shareholders will have to contend with either income tax or capital gains tax bills.