Several factors have influenced the improvement in prices and production volume of palm oil, which in 2023 exceeded US$1.6 billion, becoming the second foreign exchange-generating product of the 25 main export goods, according to records. foreign trade closure officials.
Figures indicate that the production of crude palm oil was one million 100 thousand metric tons last year, positioning Guatemala as one of the key players in the industry, but for this harvest a severe reduction is noted.
Producers already foresee a possible contraction of 20% of annual production, associated with the effect of the phenomenon The boy, that will impact the production of the fruit to extract the oil, and the chain is realistic in this situation.
During this week, Antigua Guatemala is the headquarters of the IV Palmero CPAL Congress, which brought together more than 640 participants from 16 countries, and the trends of the sector, progress and challenges, as well as sustainability and the exchange of information; the activity that concludes today.
Expectations
José Santiago Molina, president of the Guatemalan Palm Growers Guild (Grepalma), indicated that there are several factors that explain the growth registered in 2023 in terms of the volume and foreign exchange generating amount of palm oil exports, something that will not be repeated. in 2024.
Molina commented that the pandemic and, more recently, the conflict between Russia and Ukraine, have affected international prices of commodities, that generally vary depending on the price of oil, but palm oil, which has several uses, has not been so affected, and “fortunately for the oil markets, that conflict between Russia and Ukraine hit sunflower production in the world, which generated a shortage, and began to generate demand for palm in the countries that produce it.”
“What we are seeing is that the demands for the multiple uses of palm oil have managed to keep the price at an average that allows us to move forward, grow and that allows new producers to switch to this permanent crop, which is very good.” managed is profitable,” said the manager.
“We have seen that in January and February the drop in production has been more drastic”
José Santiago Molina, president Grepalma
Among the uses, in addition to the food industry in which this raw material is used, is the manufacture of cosmetics, soaps, biodiesel, agrochemicals, among others. In 2023 the average for a metric ton of palm oil was US$953 and so far in 2024 it is US$985 in the spot market.
Currently, palm production is 180 thousand hectares, but there is opportunity for 800 thousand hectares, according to the Ministry of Agriculture, Livestock and Food (Maga).
Molina asserted that with only 180 thousand hectares Guatemala is the sixth producer worldwide, and the second producer in Latin America, and if 800 thousand hectares are achieved, the contribution to the Gross Domestic Product (GDP) would be much greater, and above all the tasks that are done in the communities that benefit from the investment of this industry.
The president of Grepalma recalled that the product is the number one export product to markets in Europe and Mexico.
Low production
Regarding palm oil production projections, the manager assured that the estimates are not favorable, and this is due to the presence of the phenomenon. The boy which began to affect from June 2023 to date, and a 20 percent decrease in fruit is estimated.
“We have seen that in January and February the drop in production has been more drastic. I do not believe that production will reach one million 100 thousand tons; “He doubted that we will reach 900 thousand tons in 2024, which is the estimate,” remarked the president of Grepalma.
He stated that for the plantations where there is irrigation there will be no problem, because the water is replaced, but the inconveniences are where there is no irrigation, which is in most of the country, including the Transversal Strip of the North, the South of Petén, the Polochic Valley and the Motagua Valley.
Furthermore, this year the phenomenon is expected The girl, with excess water, so the plantations have been designed with adequate drainage systems.
This climatic phenomenon would be occurring in July or August of this year, according to sector analyses.
Challenges
The sector also faces challenges, especially in the infrastructure part, specifically in the state of the roads, both dirt and paved, since transportation services charge more than the world average for the export of raw materials. .
Another problem is the inefficiency at the Santo Tomás de Castilla National Port Company (Empornac) in Izabal, where the export product comes out and where the prices are not competitive compared to other port terminals for the services required.
Annual growth
In 2023, it grew by an additional five thousand hectares and the same amount is expected for this year.
When talking regarding growth for the next five years, the Grepalma manager emphasized that it depends on international prices, the interest rates of the financial system, and other indicators that have to do with producers’ decision-making.
Growth area
Currently, the areas of growth in palm cultivation are in the north of the country, especially in the land for livestock use in Petén, the Northern Transversal Strip that goes from Izabal to Quiché, these are sectors where there is a lot of opportunity.
In Izabal, cultivation is very advanced, but it is also a sector of opportunity, and on the South Coast, there is competition with other crops such as sugar cane and banana, due to the quality of the soils, and where the values of the earth are much larger.
Reach Colombia
The agroindustrial sector also has a program in the short and medium term, and one of the objectives is to increase the crop area.
The leading producer of palm oil in Latin America is Colombia, with 500 thousand hectares, but the main producers worldwide are in Asia, including Indonesia, with 11 million hectares; Malaysia, with six million hectares and Thailand, with two million hectares.
In productivity, palm oil averages 26.7 tons of fresh fruit bunch per hectare per year, and 5.9 metric tons of crude palm oil per hectare each year.
Molina concluded that in Guatemala there are good soils, good farmers, better practices and well nourished crops, which generates a good climate to continue with the investment.
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