POINTERS: Palm Kernel Cake: Inherent Properties Raise Global Feed Market Opportunities

Palm Kernel Cake (PKC) has moved up steeply in the value chain. From an average annual price of US$50/MT that was traded in 1999, the price of PKC has increased by approximately four times to average at US$212/MT in 2012. Research into the applications for PKC, backed by product promotions and the advertising of its inherent properties, has made possible the price jump. These efforts have both introduced new applications and opened up new markets for PKC at a good price, with the good commercial values in PKC supporting this price movement. From the business angle, PKC is currently the most competitive oilmeal traded in the market. At the end of December 2012, PKC traded at US$212/MT and this is a steep discount of US$315/MT off soymeal, which was priced at US$563/MT. Users of PKC are guaranteed availability of supply throughout the year because it is obtained from a perennial crop and PKC appears to be environmentally greener, compared with the other major oilmeals that are derived from seasonal crops. From the nutritive angle, PKC is rich in protein and carbohydrate content. As such, PKC is generally classified as an energy- and protein-based feed ingredient. PKC has a beta-carotene content of 4.3-11.8 mg/kg; 0.35 mg/kg of Vitamin E; and it is free from aflatoxin, toxic metals, heavy metals, pesticides and dioxins. Fresh PKC has on average 10% palm kernel oil. PKC is occasionally extracted to yield kernel oil to increase its product value. Protein-wise, the total amino acid content of PKC has a high bypass rate of 65% to 75%, implying that it has high protein absorption. Samples of global feed formulation we have collected show that PKC has been used in many countries and for many types of animals, such as freshwater fish, beef cattle, dairy cattle, sheep, swine, broiler and layer chicken. Growing populations and affluence are other factors that help the PKC price to increase. This is based on the reasoning that meat is more desirable compared with vegetable-based food, because vegetable food is relatively more dull and bland. Despite the current low usage of PKC, it is expected to gain more dominance in the global market as a result of its attractive pricing and inherent properties. For example, in China and Europe, PKC accounts for only 0.4% and 1.8% of the compound feed formulation. Globally, it accounts for only 2.3% of the oilmeals usage.

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Questions & Answers (22) :

Wing Cheong Wong

11 years ago

Thanks for the information.

LIM TECK CHAII

11 years ago

Thank You Mr. Wing Cheong Wong for the question. There are ongoing sales of PKC at a low oil content of 2%. These are purely those PKC which are produced from the solvent extraction method. Technically, this type of PKC should be priced less compared to those PKC which is extracted through the screw press method which offers between 8%-10% oil content. However, the feedbacks I got from the market is that, although it has lower oil content, it can still be sold at a comparable price. This is because some buyers stress on the protein content not the oil content.

Wing Cheong Wong

11 years ago

Hello, thanks for the informative presentation. I would like to find out, as we normally press th PKC for PKO and the remaining content is approx. 8 - 10%. There is possibility of extracting the oil content down to less than 2% in PKC. Would that be affecting the value of the PKC with such low oil content? Thanks.

LIM TECK CHAII

11 years ago

Thank you Mr. Arthur for the question. With regards to international competition, MPOC has market intelligence information on competing Malaysian Palm products and grants. On information, MPOC has representatives globally and locally to provide information on competing products. These information are disseminated to the Malaysian palm oil players through seminars, the website and publications such as FORTUNE and GOFB. On grants, MPOC has CARES, POTAP, PRIME and Buyers sellers mission. This is aim at supporting Malaysia’s palm oil players marketing efforts overseas. Besides, MPOC is constantly promoting the positive image of Malaysian palm oil overseas. This includes countering NGO’s negative campaign against Malaysian palm oil. In addition, MPOC organises official programmes to address trade issues not favourable to Malaysian palm oil. (The answer provided reflects the view of the writer.)

Arthur

11 years ago

Dear Sir, Compeion in the market place for palm products is intense. How do you see MPOC's role in helping the palm oil players in handling compeion in the international market?

LIM TECK CHAII

11 years ago

Thank you. En. Jaafar. Halal certification requirement for livestock market starts from slaughtering of animals to the handling of cut meal. The non-food component covers packaging material and handling of the meat. Not yet reach animal feeds. As such, there is no issue relating to halal certification for PKC-based feed ingredients. In future, if customers needs halal feeds as consideration for livestock feeding, then there is a need for this compliance.

LIM TECK CHAII

11 years ago

Sorry Aaron. I did not earlier address your issue on animal and human nutritionist view on fats. Suffice to say that in animal nutrition, the focus is to fatten the animal so that it will grow fast and performed. On this note, I must say that I do not know the scope of pets. For pets, the emphasis may cover healthy living just like nutritionist concern for human.

LIM TECK CHAII

11 years ago

Thank you, Mr. Tan Tai Hock. As you have pointed out, there could be problem of eating stress. Based on the paper argument, for economic use of PKC-feed ingredients, animal needs to eat more to get the same amount of metabolizable energy and crude protein compared to those animal that is being fed with soymeal based feed ingredients. Despite the fact, there are rooms for PKC in livestock feed formulation as compound feeds do not use 100% of PKC or soymeal as feed ingredients. In feed formulation, other popular ingredients added are foliages, vitamins, energy supplements etc. etc. The final composition needs to be comfortable to the animal i.e. the Central Nervous System (CNS: hypothalamus) will not send negative signals to the animals to reject the food.

Mohammad Jaaffar Ahmad

11 years ago

Dear Mr. Lim, congratulations to MPOC for becoming technical savvy in your promotional roles now. First, can you confirm whether PKC industry is a 'halal industry'?. If yes, does PKC manufacturers are required to have halal certification. Malaysian refiners are required to have halal certificate and to also ensure their feedstock sources such as CPO suppliers are halal certified also. Do you know whether such requirement is also imposed on CPKO suppliers (which produced PKC as their by-product).? Please do not ask me to check with either JAKIM and/or MPIC. What is MPOC views on this? Isn't the Malaysian Palm Oil Industry is halal? Does we need to get halal certification at every stage of production? Your comments please. TQ

Tan Tai Hock

11 years ago

Dear Sir/Madam. I am looking at the nutritive profile of soymeal and PKC. You argue that an per USD basis, PKC is comparable to soymeal in terms of metabolizable energy and crude protein content. It also mean that livestock has to eat more frequently to get the same metabolizable energy and crude protein if PKC-based feed ingredients is use. However, there are eating stress and it may spoilt the livestock appee. Any views on this matter?

LIM TECK CHAII

11 years ago

Thank you, Mr. Frankie Yap for the question. Certification are meant to generate buying interest for sustainable palm oil and importers may require different type of certificates for different markets and clients. Some may want government backed certification while others would want private sector drawn up certificate. The final message is that your buyers need check out on their customers needs in order to decide which is the most appropriate certificate to use.

LIM TECK CHAII

11 years ago

Thank you. En. Ahmad. The value concept in this promotion and marketing effort is that it helps to create better price for PKC. Possible benefits to the palm oil industry is that it skewed the clientele mix of PKC to buyers who are willing to pay higher price, moving PKC sale to the more expensive segment of the feed market and provide opportunities for Malaysian PKC sellers to capitalised on the opportunities to sell the product at better price. In short, efforts are targeted at adding value to Malaysia’s PKC output.

Frankie Yap

11 years ago

I am a trader of various palm products. The industry has developed sustainable certification schemes to support the business and I understand that there are more in the pipeline. Any suggestion on the pathways for buyers to choose the most appropriate certification?

Ahmad Borhan A Nordin

11 years ago

Dear Lim, The Malaysian palm oil output as well as PKC is rather limited as there is no much land area for expansion. Despite the limitation of supply and , demand from local livestock industry keep increasing, efforts are being made to do PKC promotion in various countries. Do you have any comments on the matter.

LIM TECK CHAII

11 years ago

Thank you. Mr. Ng. High fibre makes PKC texture a bit rough and could lead to difficulty in chewing for smaller animals. Problem is aggravated with the presence of kernel s. The content is considered too high for non-ruminants if it is more than 3 percent of normal diet. ( Information from Dr. Wan Zahari). Smaller animals such as fish can only be fed with good quality PKC based feed ingredients. For high quality PKC based feed ingredients, the PKC used is biotechnologically treated using microbes, enzymes, fungi etc. to reduce the s and fibre content apart from increasing its protein content. The conclusion is that smaller animals such as fish can be fed with high quality PKC based feed formulation only.

LIM TECK CHAII

11 years ago

Thank you Kasena Lee. Cows feed with gr alone will register minimum performance (e.g. growth, milk production etc.) The performance of the cows will improve if concentrates such as PKC are added into the feed. PKC's inherent properties and commercial values as an ingredient for producing animal feeds can be found in the presentation.

Kasena Lee

11 years ago

My uncle has a few cows. We feed it with gr and the cows takes occional vaccination to keep it healthy. Will compound feed improve the performance of the cows.

Ng Kian Seng

11 years ago

Dear sir /madam. I am a student of animal science. I heard from the market that the grain structure of PKC is rough. I would presume it is only suitable as an ingredient to make animal feed meant for large animals who has bigger mouth and throats such as cows, sheep etc. But your paper shows that animal as small as fish can also use PKC. Any comments. What is the reality?

LIM TECK CHAII

11 years ago

TQ Anna for the question. In essence, the 3P’s concept referred to in this paper covers environmental preservation, improving the livelihood and welfare of the people while making profits. I can only say that PKC is produce from sustainable sources but I am not sure whether it conforms to organic farming techniques which will make it qualifies to be considered as an acceptable food source for livestock farming. You may want to explore the issue further.

LIM TECK CHAII

11 years ago

TQ , Aaron for the question. Yes, fats is very important for animals. In metabolic process, fats provide the essential fatty acid for cell formation. It makes feeds more palatable to animals. Besides, fats cushion vital organs, like the kidneys, and serves as insulation, especially when it lies just beneath the skin. In addition, fats and oils are added to feeds to reduce incidence of abdominal bloating when livestock consume finely processed feeds. Normally, fats and oils are added at the rate of 2 to 5 % of the diet’s total dry matter. Higher inclusion can lead to fibre indigestion. ( Information provided by Dr. Wan Zahari Bin Mohamed).

Anna

11 years ago

Dear Sir, Can you give me a description of what 3P's, e.g. People, Planet and Profit covers? In livestock, an important aspect of the business is organic farming. How does PKC fit into the framework?

Aaron

11 years ago

Fats are an issue in humans. Is it an important consideration in animal diet?