Global Vegetable Oil Demand & Supply

51.9

45.4 25.3

25.1

16.4

10.951.6

47.6 26.0

26.3

16.7

11.151.2

48.5 26.6

26.8

16.9

11.1

EU-28 US China Latin America India Africa

Vegetable Oil Demand per Capita (kg)

2016/17 2017/18 2018/19

106 136 173

189

199

214 241 270

111 141 180

190

198

214 242 272

6.57.0

7.4 7.6 7.6 7.88.2 8.6

0.0

2.0

4.0

6.0

8.0

10.0

0

50

100

150

200

250

300

350

2005 2010 2015 2017 2018 2020 2025 2030

bnmn MT Vegetable Oil Demand & Supply vs Population

Demand Supply Population (RHS)

Source: LMC Oilseeds & Oils Report, United Nations, USDA

Demand/Capita (kg)

16.2 19.6 31.527.525.123.4 29.526.0

13.4

4.2

3.4 4.1

7.1

6.1

12.9

4.8

3.6 4.3 6.9

6.2

12.6

4.3

3.9

4.3

7.8

6.2

EU-28 US China Latin America India Africa

Palm Oil Demand per Capita (kg)

2016/17 2017/18 2018/19

Population Growth is a Key Driver

• The global palm oil supply is expected to reach more than 77 mil MT by 2020 from the 70 mil MT in 2019, driven by robust long term fundamentals.

• Malaysia and Indonesia are anticipated to remain as major suppliers, with production expected to reach more than 66 mil MT by 2020.

• Population growth remains key in driving palm oil demand in the long run, especially in Africa and the Asia Pacific

Key Highlights

1

Global Demand of Vegetable Oil by Sector

137 142 147 150 174 20040 44 46 50 50

55

2017 2018 2019 2020 2025 2030

Food Non-food

• Global Vegetable Oil Consumption is expected to grow at CAGR 2.9% from 2017 to 2030, with overall demand increasing

Source: LMC Oilseeds & Oils Report

13

2.8

13

7.2

14

1.8

14

6.5

15

0.5

31

.8

36

.2

32

.4

32

.0

32

.3

14

.6

13

.9

14

.5

15

.7

16

.4

2019 2020 2021 2022 2023Food Policy-Driven Biofuels Other Industrial

Global Vegetable Oil Consumption (Food & Non-Food), mil MT2017-2030

Key Highlights

Global Demand for Vegetable Oil by Sector, mil MT2017-2030

• Global demand for vegetable oil is mainly driven by food

• Biofuel demand is expected to slowdown as food-based feedstock becoming politically unpopular.

2

Demand Drivers of the Global Oil Palm Plantation and Edible Oils Industry

Competitive Pricing of Palm Oil and

Price Affordability of Edible Palm Oil

Increased consumer

awareness on food sustainability

Wide Range of Uses for Palm Oil, Palm

Kernel Oil and their Related Products

Growing Demand for Food due to

Increase in Population

Increased in Biodiesel Demand

CSPO sales grew at a CAGR of

21.9% between 2010 and 2018, driven by a direct consequence of the sustainability commitments of FMCG companies

By 2020, CSPO sales is

estimated to reach c.

11.0 mm MT

To increase by

60%By 2050 to meet

increase in energy intake demand(from 2005 – 2007)

Average daily energy supply expected to increase by 11% during the same period

Type of OilPrice

(USD/MT) in 2018

Palm Oil 535 – 709

Soybean Oil 728 – 871

Coconut Oil 787 – 1,394

Palm Kernel Oil 708 – 1,265

Sunflower Oil 703 – 806

Rapeseed Oil 793 – 854

Groundnut Oil 1,433 – 1,477

The physical and chemical characteristics of oil palm products and their derivatives allow them to be applied in a

wide variety of both food and non-food end-user industries

Lower oil reserves and increased in oil extraction cost has

driven the global demand for palm oil for the

production of biodiesel

By 2052, it is estimated that oil reserves may no

longer be able to support the global economy

Source: World Bank, RSPO3

Key Trends Over the Next 5 Years

Customer

• Focused on improving sustainability practices within our supply chain• Increasing consumer awareness and sustainability commitments from multinational

conglomerates has driven market demand for sustainably produced palm products over the last few years

• Customer engagement models need to evolve and leverage on different social media platforms.

Market & Technology

• The increasing uncertainty of market conditions means businesses can no longer expect revenue growth to be driven primarily by the organic expansion of its existing operations, thus driving businesses to focus on diversification into new products, technologies and markets

• The palm oil industry will continue to face challenges in terms of constantly changing consumer preferences, sustainability requirements, extreme weather conditions, market volatilities and geo-political factors

• Disruptive technologies are pushing companies to innovate and leverage on technology advancements to enhance products, services and customer engagement

• An increasing number of working millennials have also contributed to the changing demographics of consumers and employees

4

Vendor DemographicNote: Shown here are the Addressable Spend (Centrally Procured), top categories.

0 10 20 30 40 50 60 70

Fertilizer

Agrochemicals

Diesel

Lubricants

Truck (Cargo / Tipper)

Tanker

Replanting Works

CAPEX

Weighbridge MRO

No. of Vendors in Top Centrally Procured Categories (Sub-Sector)

Bumi Non-Bumi Foreign

50% Bumi

17% Bumi

100% Bumi

24% Bumi

27% Bumi

31% Bumi

18% Bumi

100% Bumi

5

Vendor Gap AnalysisNote: Gap Analysis done for those vendors under BVDP only.

No. Area Remarks

1 Skill Vendors under the BVDP in general have no issue on performance with regards to the skills required to undertake given jobs. Each vendor has the required certification / licenses in order.

2 Technology Adoption

In their respective fields of work, the vendors generally have adopted readily available technology such as GPS tracking (transportation), use of drones (replanting), and digital weighing systems (weighbridge). There are certain technologies (such as smart reporting, biometric security etc.) which are being explored by the vendors but have not been used as of yet – these however are more “nice-to-haves” and does not directly affect their operations.

3 R&D and Innovation

With respect to the current fields of work for the vendors under BVDP at SDPB i.e. transportation, replanting & weighbridge, there is little R&D and innovation which takes place. The vendors in general are at par with other players in their field.

4 Capacity & Market Penetration

Most of the vendors are operating at full capacity of their equipment / staff. They have room for growth, but would require heavy investment (e.g. new lorries / equipment). In general, the vendors have served a few big players in the palm oil plantation industry, and a number of smaller players. Their market is mostly localized at specific states / regions.

6

Issues and Challenges in Vendor Development Programme (VDP)Note: Stated are the three (3) main issues only.

Vendor mentality and mindset towards development / growth / expansion

Vendor commitment and participation in events / trainings and information visibility (vendors do not update frequently even though reminded multiple times)

Less focus on Plantation industry in current anchor setup e.g. only SDPB. Need clearer direction on Plantation Industry Vendor Development.

7

VDP PrioritizationNote: Plotted are those top categories in Addressable Spend.

Low High

High

Value / Cost

Risk / Effort

Fertilizer

Agrochemical

Transportation

DieselLubricant

CAPEXReplanting

VDP Prioritization given to vendors in

the quadrant of High Value/Cost and

High Risk/Effort.

8

Expected Outcome - Updates

To increase number of Global, Regional & National Champions

• None yet (est. 2015)

To increase number of Local / Bumiputera vendor in sub sectors

• Active encouragement and communication for vendor registrations

• Procurement bumiputera policies in place for tenders (participation and award)

• Procurement spend carve-out policies currently in draft

To decrease gap

• Bumiputera Vendor Development Programme (BVDP)

• Trainings and Consultations

• Assessments and Evaluations

9