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In our recent consulting assignment, we conducted a market research on active ingredients used in the nutraceutical industry. In general, the nutracutical industry is segmented into digestive health, immune support, weight control, heart health, beauty from within (nutricosmetic), heart health and cognitive (brain) health.  

This article covers the active ingredients used for heart health. The following article will touch on active ingredients for cognitive (brain) health.   

Sales of heart health foods and beverages are rising rapidly. Unlike other health product such as digestive health, consumers of heart health products are not offered “instant” gratification, a visible result within a couple of months, but only a promise of a long-term health benefits. According to the World Health Organization (WHO), by 2030, almost 23.6 million people will die from cardiovascular diseases, mainly from heart disease and stroke, making heart health products a must-have and a key food and drink development area. It has taken years to build solid clinical basis for these ingredients and their ability to support heart health.   

Diet can have a considerable impact on heart health, as it is linked to diabetes, elevated blood pressure and elevated cholesterol levels, the major risk factors in developing cardiovascular diseases. There are three main factors in the expansion of the health and wellness sectors, and they are:

1. Consumers are moving away from treatment
   to prevention.
2. When supplementing their diets,
   consumers tend to favour food and drinks over pills or capsules.
3. With increasing education about the role
   of functional ingredients, consumers more frequently build their diets around
   health conditions.   

The major movements towards nutraceuticals (including fortified/functional foods and beverages, and vitamins and dietary supplements), focuses on adding purportedly beneficial ingredients to a diet to achieve the specific health function claimed by the product. Nutraceuticals represent a key focal point for product innovation.    

The impact of diet on cardiovascular disease risks is shown in the table below.

Diabetes Obesity is an important risk factor for the development of diabetes and cardiovascular disease. Weight management and reduced intakes of fat, sugar and carbohydrate foods offer easy solutions, which can lead to the maintenance of good heart health.

Hypertension The risk of elevated blood pressure and hypertension is determined by genetic background, as well as many different environmental factors, including nutrition. Excess weight, alcohol consumption, physical inactivity, stress and, in some individuals, a diet rich in salt may lead to increased blood pressure.

Hypercholesterolaemia Elevated blood cholesterol is strongly associated with cardiovascular disease risk, as it promotes plaque development in arteries, which leads to heart attack, stroke and peripheral vascular disease. Reducing dietary intake of saturated fats and cholesterol, and consumption of plant sterols, beta-glucans and other ingredients can help reduce cardiovascular disease risk by lowering blood levels of LDL cholesterol, the so-called “bad cholesterol”, linked to formation of plaques.

Hyperhomocysteinaemia Elevated blood levels of the amino acid homocysteine is also a known risk factor cardiovascular disease. Inadequate intakes of folic acid and/or vitamins B12 and B6 can lead to elevated homocysteine. Homocysteine is thought to increase cardiovascular risk by reducing blood vessel dilation and contributing to blood clot formation.

Ingredients used in heart health

There are a number of nutritional ingredients positioned for heart health, which are listed below.  

Ingredient	Heart health benefits	Best fortified/functional source
Plant sterols/stanols	Average cholesterol reduction of 7-10%.	Spreadable oils and fats, yoghurts
Omega-3	Reduction of blood pressure, lowering of triglycerides,	Milk, infant formula, spreadable oils and fats, bread, yogurt.
Beta-glucans	Regular consumption of beta-glucans contributes to maintenance of normal blood cholesterol concentrations.	Oat, barley
Dietary fibre	Reduced risk of coronary heart disease.	Bakery products and pasta
Peptides	Blood pressure lowering in hypertensive individuals.	Yoghurt
Squalene	Can reduce cholesterol	Bread and breakfast cereals
Antioxidants	Anti-inflammatory, beneficial to heart health.	Chocolate, tea, red wine and other sources. Palm fruit juice would be a new source.
Soy protein	Reported to reduce cholesterol by 3%.	Food and drinks with soy protein.

Companies involved in heart health ingredient market

There are many companies involved in the heart health nutritional ingredient market. These include Naturex SA, Ocean Nutrition Canada, Martek Biosciences Corporation and Cargill. These manufacturers also produce ingredients which are also targeted at cognitive health market. There is a high level of threat from product substitution in the heart health ingredient market. The increasing demand for heart health ingredients has resulted in a large number of ingredients competing for market share. The competition is keen in such segments such as fatty acids, vitamins and mineral supplements, antioxidants, botanicals and herbs.

Moreover, majority of the ingredients’ efficacy and safety, except a few, are backed by limited science. Additionally, consumers are confused by the offering of such ingredients in the market place. The omega-3 ingredient market is continuously undergoing consolidation. One large acquisition exercise was made by DSM which acquired Martek Biosciences in 2010. The latter was the first company to commercialize DHA produced from sources other than fish oils.    

Ingredient market for heart health

According to market research company, Bekryl.com, the ingredient market for heart health was estimated to be US17,000 million in 2019. This market is growing at 7 per cent per year and forms the largest market for ingredient in the nutraceutical industry.  

Many years ago, a Malaysian herb was touted as a remedy for all types of aliments common among Malaysians. The entrepreneur who promoted the herb made a lot of monies for quite a while.

Now, a similar herb (weed) is being marketed as medicines and wellness products to remedy various types of ailments common among Europeans, Americans and Canadians. The herb (weed) is cannabis.     

An interesting article by John Arlidge in the Sunday Times on November 17^th, 2019  noted that cannabis-based products are getting a lot of consumers’ attention.     

It was reported Mike Abbott used to be a north London policeman who arrested people for smoking marijuana, but at 3.00 pm on a warm Tuesday afternoon he takes me to buy cannabis in Camden Town. “I know it’s legal, but it still feels a bit odd,” he says as he examines the cannabis oils in the LDN CBD store, before recommending I buy the 5% strength bottle. At £35 for just 10 ml, it had better be good.

Abbott is not just there to help me. He is checking out the competition. He has had something of a career change after leaving the London Metropolitan police, and is now in the marijuana business himself. He joined a Manhattan-based medical cannabis start-up called Columbia Care and has risen to be chairman. The firm makes and sells cannabis-based medicines, which, under doctors’ orders, can be used to treat conditions such as epilepsy. Separately, it makes over-the-counter wellness products — oils and creams — that users say help with everything from anxiety to irritable bowel syndrome.

It’s tempting to dismiss men like Abbott as potheads with a dream — but that could be a big mistake. Marijuana-based prescription drugs and wellness products are growing like weeds. About one in 10 British adults have tried them, according to surveys conducted this summer by Dynata and YouGov. Some analysts reckon the products are more popular than vitamin C supplements. The consultancy Prohibition Partners claims the sector as a whole could be worth up to £100 billion in Europe within the next 10 years. That would put it on a par with the brewing industry.

Britain is emerging as a cannabis research and development hub, thanks to its strong medical research and pharmaceutical sectors. One Cambridge-based firm, GW Pharmaceuticals, is the world leader in licensed prescription cannabis medicines. It has created two drugs that have been approved for use to treat multiple sclerosis and two severe forms of childhood epilepsy, earning it a market capitalization of more than £3.5 billion. Chris Tovey, its chief operating officer, describes the medical marijuana sector as “amazingly exciting for the UK”.

So what exactly are the new marijuana products that are generating such high hopes? First, it’s perhaps best to say what they are not. They are not about smoking weed. Indeed, most people in the medical and wellness cannabis business are at pains to distance themselves from bongs and Rizlas because most argue that the superstrong “skunk” sold illegally by many dealers contains dangerously high levels of delta-9-tetrahydrocannabinol (THC). That’s the psychoactive compound in the cannabis plant that gets you high, but which can also lead to mental health problems such as anxiety and paranoia, and may increase the risk of schizophrenia and bipolar disorders. For these reasons, cannabis remains a class B drug in Britain, possession of which can lead to a jail term of up to five years.

There are two main types of cannabis product that can be consumed legally in various countries. At the formal end of the sector are licensed cannabis-based drugs — usually solutions or oils — that can only be prescribed by specialist doctors. These contain strictly controlled amounts of THC as well as cannabidiol (CBD), which is one of more than 100 active chemical compounds found in the cannabis plant.

Two of the most important cannabis-derived drugs, made by GW Pharma, are Epidiolex, for epilepsy, and Sativex, for multiple sclerosis. Epidiolex is licensed for use in America and, since September, in Europe, including the UK. Sativex is also licensed for use here. Before other cannabis-based drugs can be formally approved in Britain, the Medicines and Healthcare products Regulatory Agency and the National Institute for Health and Care Excellence say more evidence of their safety and effectiveness is needed. Nevertheless, some families can obtain a special licence to use them. Charlotte Caldwell, the mother of Billy Caldwell, a 13-year-old boy with severe epilepsy, became a test case last year when she tried to bring cannabis oil from Canada through Heathrow airport to treat her son’s seizures. She was prevented from doing so. But when Billy’s seizures worsened and he was hospitalized, Sajid Javid, then home secretary, granted his family an emergency licence to use the drug.

At the other end of the scale are cannabis wellness products. They contain CBD but zero or minuscule amounts of THC. That makes it legal to sell them over the counter here, in America and in many other countries. They include vape pens, pills, chocolates, truffles, gummies (chewable sweets), marshmallows, beers, lotions, oils, coffee, cosmetics, blemish creams, juices, bath bombs and spring water. There’s even a cannabis hot dog. These products took off in America after the legalization of recreational cannabis in some states created a consumer appetite for all manner of new products and the craze soon crossed the Atlantic.

Their manufacturers and retailers claim the products are non-toxic, non-addictive and have few or no side effects. Many retailers — even though the lack of scientific proof of their effectiveness means they are not supposed to — suggest to buyers when they visit CBD shops that these products can treat a large number of ailments including pain, anxiety, depression, diabetic complications, Crohn’s disease, insomnia, irritable bowel syndrome, skin complaints, menstrual pain, arthritis, post-traumatic stress and migraines.

It’s the idea that extracts from a single plant can create both prescription drugs that can treat something as life-threatening as epilepsy and also freely available wellness products for everything from period pain to restless leg syndrome that is getting everyone so excited. “Cannabis is the most broadly therapeutically useful substance, more even than aspirin,” argues Cam Battley, chief corporate officer of Canada-based Aurora Cannabis, the world’s largest medicinal cannabis company, which has 2,800 employees in 24 countries.

Can this be possible? Even cannabis evangelists concede much more research is needed. However, it is beyond doubt that we are biologically primed to respond to cannabis. We have native cannabinoid receptors in our body, forming something doctors call the endocannabinoid system. It’s one of the mechanisms our body uses to regulate how and what we feel — everything from anxiety to physical pain. Get the balance of THC and CBD right in a powerful prescription drug and it can be used to treat serious illness. Get the right amount of CBD in a wellness oil or cream and it can help to create a “full body and mind effect” to help ease everyday aches and pains. Or so the cannabis enthusiasts say.

Anthony Atterbury, 51, is one. He was a senior firefighter in the West Midlands, but had to quit when he contracted multiple sclerosis. “The chronic back and leg pain was unbelievable,” he frowns. “I had to use a wheelchair. I used to go out and save people’s lives!” Doctors prescribed antidepressants and painkillers, “but they left me tired and weak”. Then a friend suggested he try CBD. He started taking one gummy a day infused with 25mg of CBD. Within three days, “the pain reduced by 70%. I could stand unaided for the first time in a year.”

It’s not hard to see why such sufferers, who will try almost anything to relieve chronic pain, might become cannabis converts. It’s less obvious why cannabis-based products should have taken off so rapidly in wider society. The answers emerge when I attend Cannabis Europa, a conference for anyone in the marijuana game — prescription drug or wellness product — that was held in London this summer for the second time. Talking to delegates and attending lectures and business pitches, it soon becomes clear that cannabis combines three of the most powerful forces in consumer society and modern business.

The first is disruptive technology. The conference hall on the South Bank was crammed with scrappy young entrepreneurs dreaming of getting rich by creating the perfect “cure all”. That’s the reverse of the norm. The drugs market tends to be the preserve of giants such as GlaxoSmithKline and AstraZeneca because it usually takes years and billions of pounds to develop, test and patent drugs. Cannabis is more of a level playing field because the plant occurs naturally, which means almost anyone can get a licence to extract oil from its leaves and create a CBD product without infringing patent law. Finding backers is easy, especially in London, where venture capitalists are always looking to invest in “the new, new thing”. There’s big money to be made. The mark-up on CBD-infused products over “normal” ones — CBD water versus mineral water, for instance — can be tenfold.

The second force the cannabis sector is harnessing is women. They drive three-quarters of health and wellness spending and anecdotal evidence suggests that rises to 80% when it comes to CBD. Women are also behind two-thirds of wellness marijuana retail start-ups. Outside the conference I meet Floriane von der Forst and Marisa Schwab, who set up a CBD retail brand called the Chillery in London last year after getting bored of working for big corporations. “Women find the most uses for cannabis products because they help with problems many think conventional companies have failed to solve,” Schwab says. She lists some of them: stress, sleep issues, chronic pain and skincare. “It also aids relaxation, which can help with sex,” von der Forst adds with a smile.

The third force is the growing consumer desire for “natural” products. Makers and retailers at the conference stress the earthy properties of cannabis, especially in wellness products. They boast of “single origin”, “small batch” treatments. This plays well with younger consumers who increasingly crave “clean”, environmentally friendly wellness and are turning away from the traditional “toxic” products that many older consumers use to take the edge off the stresses and strains of modern life — alcohol, tobacco and sleeping pills. “Plants not pills is the oft-heard mantra,” says George McBride, founder and CEO of Hanway Associates, a consultancy that advises entrepreneurs in the medical and wellness cannabis sectors.

All the hype, the notion that prescription and wellness marijuana products are right for now, raises a tricky question, however. Could all these products — apart from the most rigorously tested cannabis medicines — merely be the latest fad imported from America: the new avocado toast? Do they — can they — really do all the things their proponents claim?

Philip McGuire at King’s College London has some of the answers. The professor of psychiatry and cognitive neuroscience works in the perfect spot for his studies. The nearest Tube station to KCL is Brixton, where the concourse smells like a 1960s student party. He has been conducting clinical trials on the effect of CBD on patients with psychosis, or people who are vulnerable to psychosis, for more than a decade. He describes the results as very encouraging. “We’ve done two phase II trials and in both we found that CBD reduced psychotic symptoms,” he says. Better yet, there were none of the common side effects of mental health treatments, such as weight gain or loss of libido. “That’s a big deal.” He adds that there’s evidence that CBD-based prescription drugs may be useful for treating anxiety. “One of my colleagues, Professor Jose Crippa, did this sadistic experiment where he told people, ‘OK, you have to give a lecture that will be videotaped and then analysed by a psychologist.’ Very stressful. Giving people CBD beforehand reduced their anxiety.” Other studies suggest CBD reduces drug-seeking behaviour. A breakthrough drug here could be hugely significant in tackling the opioid abuse epidemic.

So far, so exciting. But there are many issues to resolve before anyone can be sure that cannabis products deliver what their backers claim. Product standards and consistency in the wellness sector are woeful to non-existent. The Centre for Medicinal Cannabis, a trade body, suggests that more than half of the most popular CBD oils sold at high-street chemists, in health shops and online in Britain do not contain the level of CBD promised on the label. One product sold at a high-street shop was found to contain no CBD at all.

Some scientists worry that consumers may confuse low- or no-dose products with high-dose pharmaceutical ones. “The promise of new drugs could be spoilt by people trying high-street treatments that contain a minuscule amount of CBD and saying, ‘I tried cannabis products. They’re useless. Forget it,’ ” McGuire says.

Other scientists take a tougher line: they argue further research will show that the trumpeted benefits of CBD, outside of government-approved medicines, are merely hot air. Dr Andrew Moore, who has spent 40 years researching pain and pain management at Oxford University, warns that the studies conducted on cannabis wellness products so far are limited, poor quality, unreliable and fail to prove that CBD can do what people claim. “I devoutly want it to be a silver bullet, but I think it is snake oil,” he says. “The science isn’t there and the higher quality the research is, the more it demonstrates that these things do not cure people’s ills. It doesn’t work.”

Moore dismisses conferences such as Cannabis Europa as “more like religious events than medical conventions” that “generate appalling froth”. He goes on to issue a telling warning: “We don’t know what the long-term effects of using these treatments may be. Look how long it took us to work out how bad tobacco is for us — three generations. We could be making the same mistake.” Worryingly, the US regulator, the Food and Drug Administration, warned recently that CBD could cause liver damage and has ruled that it is illegal to sell any food or drink to which CBD has been added. An Australian study published last month found some positive results for pharmaceutical THC/CBD products, but overall “little evidence” that they were effective for treating mental disorders. If Moore’s fears are realised, a large number of entrepreneurs and investors might find out the hard way that cannabis is another speculative bubble: the wellness version of Bitcoin.

With so much uncertainty, what does the future hold? One thing is clear: the hype is unlikely to abate. Indeed, the cannabis industry is attracting some powerful new backers. The investment arm of the Church of England recently relaxed a self-imposed ban and is investing in medical marijuana. Edward Mason, head of responsible investment for the Church Commissioners’ fund, which is part of the church’s £12.6bn investment portfolio, says: “We are content with it being used for proper medicinal purposes.” That sounds like approval, of sorts, from on high.

The language of Cannabis

CBD: Cannabidiol is one of 100-plus active chemical compounds found in the cannabis plant. By itself it does not cause a “high”. It may help treat conditions such as chronic pain, insomnia and anxiety, although scientists say more evidence is needed. It is found in wellness products, mainly oils and creams, plus some licensed prescription drugs that can help treat epilepsy and multiple sclerosis

THC: Delta-9-tetrahydro-cannabinol is the principal psychoactive compound found in cannabis leaves. It creates a high, but if consumed in large quantities can also cause anxiety or more serious mental health problems. Barring some licensed prescription drugs, products containing more than 0.2% are illegal in the UK

Bog: Bog is a filtration device generally used for smoking cannabis, tobaccos or other herbal substances.

Rizla: Rizla is a brand of rolling papers  and other related paraphernalia in which tobacco or cannabis is rolled to make handmade joints or cigarettes.

Skunk: Skunk is a selection of selectively  bred cannabis strains, which scent comes  from naturally occurring acids that are reminiscent of barnyard animals. It also acts as natural insecticide.

Business Overview of Aurora Cannabis Inc. (extracted from its annual report)

Aurora was incorporated under the Business Corporations Act (British Columbia) on December 21, 2006 as Milk Capital Corp. Effective October 2, 2014, the Company changed its name to Aurora Cannabis Inc. The Company’s shares are listed on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”) under the trading symbol “ACB”, and on the Frankfurt Stock Exchange (“FSE”) under the trading symbol “21P”. The Company’s head office and principal address is Suite 500 – 10355 Jasper Avenue, Edmonton, Alberta, Canada, T5J 1Y6. The Company’s registered and records office address is Suite 1500 – 1055 West Georgia Street, Vancouver, BC.

Aurora is one of the world’s largest and fastest growing cannabis companies. The Company has grown both organically and via strategic acquisitions with the vision of creating a world-class cultivation platform producing consistent high-quality cannabis for both the global medical and the Canadian consumer use markets. Underpinning this vision is Aurora’s differentiated, purpose-built growing facilities, which we believe are the most technologically advanced indoor agricultural growing facilities in the world. These facilities consistently produce high-quality cannabis at scale, with lower risk of crop failure which allows the Company to achieve industry-leading cash costs to produce per gram. We also recognize the need for robust research into the myriad of potential medical uses of cannabis, and as such, have built a leading plant and human science team. With leadership established in the Canadian market, the Company is rapidly growing its international footprint to address the growing number of jurisdictions legalizing medical cannabis use and, to a lesser extent thus far, for adult consumer use around the world. Aurora has established operations in 25 countries around the globe and expects to increase this international footprint as government legislation permits.

The Company’s principal strategic business lines are focused on the production, distribution and sale of cannabis and hemp products in Canada and internationally. Aurora currently views its primary market opportunities as follows:

• Global Medical Cannabis Market:

Production, distribution and sale of pharmaceutical-grade cannabis products in countries around the world where permitted by government legislation. Currently, there are 50 countries around the world which have implemented some form of access to cannabis for medical purposes, and Aurora’s current principal markets include Canada, Germany, Denmark, Italy, Poland and Australia;

• Global Consumer Use Cannabis Market:

Currently, only Canada and Uruguay have approved regulated consumer use of cannabis. Aurora has established operations in both countries. However, the Company believes that the increasing popularity of medical cannabis globally will eventually lead to increased legalization of adult-use consumer markets. Aurora believes its investment in international infrastructure and leading global market position today uniquely positions the Company to capture these opportunities as legalization evolves globally; and

• Global Hemp and Hemp-Derived Cannabidiol (“CBD”) Market:

The Company expects consumer demand for products including hemp or CBD derived from hemp plants to be an exciting growth opportunity in the coming years. In order to capitalize on this market potential, the Company has begun to establish Aurora Hemp – an integrated business unit to execute the global hemp strategy. Aurora Hemp will address both food-based hemp opportunities as well as hemp-derived CBD market opportunities. At the core of this CBD strategy is a commitment to scientific research to examine the use of CBD-derived from hemp as an effective treatment for pain, inflammation, wound-healing and recovery driven by the Company’s partnership with the Ultimate Fighting Championship (“UFC”). The Company believes that the most important near-term market opportunity for hemp and hemp-derived CBD is in the U.S. The Company expects to invest in growing its hemp-market infrastructure in the U.S. both organically and via acquisition as market opportunities develop.

Global Hemp and Hemp-Derived Cannabidiol (“CBD”) Market: The Company expects consumer demand for products including hemp or CBD derived from hemp plants to be an exciting growth opportunity in the coming years. In order to capitalize on this market potential, the Company has begun to establish Aurora Hemp – an integrated business unit to execute the global hemp strategy. Aurora Hemp will address both food-based hemp opportunities as well as hemp-derived CBD market opportunities. At the core of this CBD strategy is a commitment to scientific research to examine the use of CBD-derived from hemp as an effective treatment for pain, inflammation, wound-healing and recovery driven by the Company’s partnership with the Ultimate Fighting Championship (“UFC”). The Company believes that the most important near-term market opportunity for hemp and hemp-derived CBD is in the U.S. The Company expects to invest in growing its hemp-market infrastructure in the U.S. both organically and via acquisition as market opportunities develop.

 The U.S. represents the largest cannabis and hemp-derived CBD market globally and as such, Aurora is committed to establishing a substantial operating footprint in the U.S. As part of the U.S. market strategy, we are considering how various state and federal regulations will affect the Company’s business prospects. A number of alternatives to grow our presence in the U.S. market are under evaluation and the Company is committed to only engage in activities which are permissible under both state and federal laws. We believe there are currently market opportunities that are legal at both state and federal levels that can add operating cash flows and become critical pillars of Aurora’s strategy and long-term success.

Market Capitalization of the Four Largest Cannabis Companies

Companies	Market capitalization in US$ billion
Canopy Growth	5.38
Aurora Cannabis	2.72
Cronos Group	2.18
Tilray	2.00

Source: Yahoo Finance as at November 15th, 2019

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Three countries namely Indonesia, Malaysia and Thailand produce the majority of the world’s palm oil production. In addition, palm oil is one of the major edible oils traded in the global oils and fats market. Palm oil and its products have extensively been used in the food as well as the manufacturing industries. In terms of supply, the oil palm is known to be the most efficient producer of oil compared with other oil crops. A report by staff of Malaysian Palm Oil Board [1] notes that palm oil production is strongly influenced by weather patterns.

According to a report on potential impact of climate change on oil palm cultivation [2], funded by University of York, United Kingdom, global weather patterns and sea levels are changing because of increasing temperatures caused by human activities releasing greenhouse gases into the atmosphere.  

Carbon dioxide has been the main cause of global warming to date, mainly released into the atmosphere from the use of fossil fuels and land use change such as deforestation, although other greenhouse gases such as methane are also significant contributors [3]. Greenhouse gas emissions and temperatures will continue to increase throughout the 21^st century. This will cause higher frequency and intensity of extreme weather events such as heat waves, drought and sudden heavy rainfalls. Sea levels are also continually rising with temperature increase.

How will climate change affect where oil palm is grown?

Oil palm requires high temperature, rainfall and sunlight levels as shown in the table below.

Key components of climate which determine the suitability of location for growing oil palm

Component of climate	Optimal range for oil palm	Range of extreme values which oil palm tolerates
Temperature	Mean annual temperature of 24-330C	15-380C. Cold-tolerant varieties may tolerate 120C
Rainfall (mean annual rainfall)	2,000-2500 mm	1,250-6,000 mm
Seasonality of rainfall	Minimal: no months with less than 100 mm rainfall	Up to 6 months with less than 100 mm rainfall; tolerates temporary flooding
Sunlight (solar radiation)	15-17 MJm-2per day	7-21 MJm-2per day

Source: [2]

Oil palm yield is limited by the length of annual dry season, so areas with constantly high rainfall throughput the year have particularly high yields, such as in parts of Southeast Asia. Although much of the tropics is climatically suitable for oil palm, there is relatively low availability of land for planting globally, given other land uses and restrictions such as no planting on high carbon stock areas [4].

Where will oil palm grow in the future?

Climate change will directly affect where oil palm is grown, because the locations of areas suitable for growing oil palm will shift over the 21^st century [5]. Temperatures will become too high, and drought risk will increase, so by 2100, there will likely be around three-quarters less land which is highly suitable for growing oil palm [6]. A particularly severe loss of suitable land is predicted for Thailand, Columbia, and Nigeria, which are all significant oil palm growing nations, and parts of Indonesia and Malaysia will also become less suitable.

Currently, areas at high elevation and latitude (far from the Equator) too cold for growing oil palm, but as temperatures become warmer, those may become newly suitable [5]. However, this will not be sufficient to compensate for the total loss of suitable areas for growing oil palm. Warner temperatures, and in some instances wetter climates, will improve the suitability of areas such as northern Argentina, parts of southern Brazil, South Africa, Madagascar, and highland areas of Malaysia and Indonesia throughout the 21^st century [6].

How will climate change affect oil palm yield?

Climate change will have multiple effects on oil palm yield, depending on the specific climatic conditions at a location, and changes to pests and diseases of oil as shown below.

How factors which determine oil palm yield will change over the 21^st century, how this will effect oil palm yield

Factors which affect oil palm yield	Expected changes over the 21st century	Impacts on palm oil yield
Rainfall: total per year	Depends on location. May increase or decrease	Gain in yield likely if total rainfall increases provided this does not cause prolonged flooding. Loss of yield likely if total rainfall decreases.
Rainfall: seasonality	Rainfall will become less regular: dry periods will become more intense and flooding will occur more regularly.	Severe loss of yield.
Temperature	Increase	Loss of yield likely (mainly because soils become drier.
Carbon dioxide	Increase	Gain in yield
Sea levels	Increase	Severe loss of yield in costal plantations
Pests and diseases	Various changes	Uncertain
Pollination	Various changes	Uncertain

     Source: [2]

However, we do not know how the combination of these effects will affect oil palm yield overall, and whether  the positive effects on oil palm yield will compensate for the negative effects.

Impacts on changes in rainfall

The most important factor determining oil palm yield is the availability of water in the soil, which largely depends on rainfall, but is also affected by the temperature and other factors such as soil type. When there is less rainfall, there is also greater risk of fire, as seen during the recent El Nino events in Indonesia, which is a hazard for workers, in terms of air quality, and causes loss of yield [7].

Although there is low confidence in predictions of future rainfall in specific locations, there is more confidence in changes at a large scale. The risks of drought and flooding will increase across the tropics throughput the 21^st century given that the effects of ENSO (El Nino and La Nina events) will become more intense [8]. Please also see [1] for explanation of the ENSO.

Drought frequency and intensity will increase in parts of West Africa over the coming decades and will become more likely in parts of Southeast Asia, where annual dry periods are predicted to become more intense [9]. Low-lying areas are also at risk of yield loss due to flooding [10].

Impacts of increasing temperature

As temperatures become warmer, soil water evaporated more quickly, so the impacts of dry periods become intense. The impacts of higher temperatures alone are likely to be less severe, but projections for Southeast Asia in 2100 suggest that temperatures will become too high for oil palm [5]. A small rise in temperature may improve oil palm yield, as seen on the west coast of Sabah, Malaysia [10].

Impacts of increasing carbon dioxide levels

Yields could improve by up to 75 per cent in 2100 due to higher carbon dioxide levels although this depends on the increase in temperature [5]. It is unsure whether increasing carbon dioxide levels will offset losses in oil palm yield lead caused by climate change, because the combined effects of these are not understood [11].

Impacts of rising sea levels

In Malaysia, up to 100,000 hectares of coastal plantations could be flooded in the future [12]. Coastal plantations can be managed to reduce flood risk, but the costs of this will increase in tandem with the rise in sea levels.

Impacts of changes in pests and diseases

Differing environmental conditions may be less suitable for pests and diseases of oil palm, which would allow yield to improve. However, there is particular uncertainty regarding pests and diseases in possible new locations for oil palm. When conditions are sub-optimal for oil palm such as when temperatures are high or there is limited water availability, palms may be less able to resist pests and diseases, causing yield loss.

Impacts of changes in pollination

Oil palm in Southeast Asia is primarily pollinated by a single species of weevil, Elaeidobius kamerunicus. The pollination activity this species changes with climate, so it is possible that the rate of pollination of oil palm in Southeast Asia will decrease under climate change [13]. Additionally, climate change could put Elaeidobius kamerunicus and other pollinators at greater risks of disease (in a similar way, that oil palm may have greater risk of disease). Just a small number of individual      Elaeidobius kamerunicus were introduced   to Southeast Asia from West Africa, so all individuals in Southeast Asia are genetically similar [13].  There is a risk that a disease which infects Elaeidobius kamerunicus in Southeast Asia could quickly and severely reduce the population, causing a sudden drop in yield. Please also see our book, The palm oil multinationals from Malaysia, available on Amazon.com.

Where should oil palm be planted?

The changes to locations where oil palm can be grown, and the potential yield losses in current plantations will enable oil palm to expand into new areas over the 21^st century. This will increase the risk of deforestation of suitable areas for planting. In particular, areas at high elevation will become suitable for growing oil palm, but in many tropical regions, the majority of large areas of forests are  also at high elevation [14]. These large areas of forest at high elevation are particularly important  for tropical biodiversity under climate change, because they are cooler than lowlands, so species can shift to these locations to avoid high temperatures [15].

For new oil palm plantations to be viable in the long-term, they should be located where there is low risk of negative impacts from climate change, and ideally where conditions for may improve. There is currently limited knowledge of where such areas coincide with low forest cover, to enable planting without deforestation. The report  suggests that the most suitable areas are likely in South America and South Africa, such as southern Brazil, and South Africa, because in Southeast Asia, highland areas will become suitable, but these areas are generally forested [6]. An analysis [16] shown below demonstrates the averages of four data sets illustrating trends in the change of suitable climate more clearly.

	Areas (km2)
Scenario	Unsuitable	Marginal	Suitable	Highly suitable
Current	3.32 x 105	6.12 x 103	7.91 x 103	1.79 x 106
2030	2.27 x 105	1.01 x 104	3.41 x 104	1.87 x 106
2070	1.39 x 105	5.67 x 104	2.71 x 105	1.67 x 106
2100	1.29 x 105	4.76 x 105	5.33 x 105	1.00 x 106

 Source; [16]

Conclusion

Climate variability does significantly influence the palm oil production patterns in Malaysia and Indonesia, the two leading palm oil producing countries in the world. Climate change may expand the areas suitable for oil palm growing such as in South America and South Africa.

References

[1]  Nur Nadia Kamil and Syuhadatu Fatimah Omar. Climate variability and its impact on the palm oil industry.

[2] Susannah Fleiss, Lead Author (2017). Potential impacts of climate change on oil palm cultivation; A science-for- policy paper by the SENsoSor programme.

[3] IPCC ,2013. Summary for Policy Makers. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.

[4] Pirker, J., Mosnier, A., Kraxner, F., Havlik, P. and Obersteiner, M. (2016). What are the limits to oil palm expansion? Global Environmental Change, 40, 73-81.

[5] Corley, R.H.V. and Tinker, P.B.H. (2015). The oil palm.5^th edition. Wiley-Blackwell.

[6] Paterson, R., Kumar, L., Shabini, F. and Lima, N. (2017). World climate suitability projection to 2050 and 2100 for growing oil palm. The Journal of Agriculture Science, 155(5), 689-702.

[7] Noojipady, P., Morton, D.C., Schroeder, W., Carlson, K.M, Hunag, C., Gibbs, H.K, Burns, D., Walker, N.F., and Prince, S.D. (2017). Managing fire risk during drought: the influence of certification and El nino on fire-driven forest conversion for oil palm in Southeast Asia. Earth System Dynamics, 8 (3), 749.

[8] Christensen, J. H., K. Krishna Kumar, E. Aldrian, S.-I. An, I.F.A. Cavalcanti, M. de Castro, W. Dong, P. Goswami, A. Hall, J.K. Kayanga, A. Kitoh, J. Kossin, N.-C. Lau, J. Renwick, D. B. Spephenson, S.-P. Xie and T. Zhou (2013). Climate Phenomena and their Relevance for Future Regional Climate Change. In; Climate Change 2013: The Physicak Science Basis. Contribution of Working Group I to the Fifth Assessment Report of Intergovernmental Panel on Climate Change.

[9] Chotamonsak, C., Salathe, E.P., Kreasuwan, J., Chantara, S. and Siriwitayakorn, K. (2011). Projected climate change over Southeast Asia simulated using a WRF regional climate model Atmospheric Science Letters, 12(2), 213-219.

[10] Wen, P.P. and Sidik, M. J. (2011). Impacts of rainfall, temperature and recent El Ninos on fisheries and agricultural products in the West Coast of Sbah (2000-2010). Borneo Science, 28.

[11] Long, S.P., Ainsworth, E.A., Leakey, A.D., Nosberger, J. and Ort, D.R. (2006). Food for thought: lower-than-expected crop yield stimulation with rising CO2 concentration. Science,312 (5782), 1918-1921.

[12] Siwar, C., Ahmed, F. and Begum, R.A. (2013). Climate change, agriculture and food security issues: Malaysian perspective. Journal: Food, Agriculture and Environment, 11(2), 1118-1123.

[13] Jackson, L., van Nordwijk, M., Bengtsson, J., Foster, W., Lipper, L., Pulleman, M., Said, M, Sanddon, J., and Vodohe, R. (2010) Biodiversity and agricultural sustainability; from assessment to adaptive management. Current Opinion in Environmental Sustainability, 2(10, 80-87.

[14] Proctor, S., McClean, C.J., and Hill, J.K. (2011). Protected areas of Borneo fail to protect forest landscape  with high habitat connectivity. Biodiversity ande conservation, 20(12), 2693.

[15] Scriven, S.A., Hodgson, J.A., McClean, C.J., Hill, J.K. (2015). Protected areas in Borneo may fail to conserve tropical forest biodiversity under climate change. Biological conservation, 184, 414-423.

[16] Paterson, R. R.M. and Lima, N. (2017). Climate change affecting oil palm agronomy, and oil palm  cultivation increasing climate change, require amelioration. Ecology and Evolution, 2017, 1-10.

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When I graduated with Chemical Engineering degree from the Birmingham University in the UK in the 1980, I chose to work with ESSO Malaysia. This was because ESSO Malaysia (now EXXON Mobil) was one of the two biggest companies in Malaysia. They paid high salaries for their engineers. The other company was SHELL Malaysia, also an oil company. Today, these two companies continue to pay good salaries but they are considered less attractive as employers under the current environment that oil companies contribute to global warming.

A new report by energy consultancy, Wood Mackenzie, forecasts that coal, oil and gas will still contribute about 85 per cent of primary energy supply by 2040, compared with 90 per cent today. The report noted that 1 terawatt of installed solar and wind capacity makes up about around 8 per cent of total power generation as of 2019.

This equates to just a fraction of total energy consumption. “The world risks relying on fossil fuels for decades to come,” the report said. It also forecasts carbon emissions will continue to rise, with growth only slowing in the 2030s. This will put the world far off course in meeting the Paris climate goals, to limit global warming to well below 2C, despite growing political momentum to prevent climate change. Energy demand, led by growing populations in emerging economies of Africa and Asia, will increase by at least 25 per cent by 2040. Yet carbon emissions would need to halve over the same period to comply with the Paris Accord, posing a huge challenge for energy systems. “This is a wake-up call for governments and the energy industry,“ said David Brown, one of the authors of the report.

While there is much focus on creating renewable electricity, Mr Brown said greater attention needs to be paid to clean up sectors like aviation and shipping. Governments also need to take the lead in developing low-carbon technologies, rather than the private sector, given the scale of what needs to be achieved.

“If the world  wants to de-carbonize, they need to take a leap, and come out with targeted policies,” he said.

The costs of renewable power is falling rapidly and it is the fastest growing source of energy  supply globally But reaching a fuel mix whereby 50 per cent or more of energy demand is derived from solar and wind would require huge changes in infrastructure—from power storage systems to modernized grids.

The issue is not generation of electricity. The move towards zero carbon in the utility industry is advancing well and will continue so long as solar and wind plus storage are significantly cheaper than making electricity by burning coal, oil or gas. It is other industries like heating and cooling buildings, shipping, air travels, cement production, and transportation that are not moving fast enough to embrace low or zero carbon technology.

One factor that could accelerate the de-carbonization of these sectors is moving some of the money currently targeted for direct fossil fuel subsidies—almost US$400 billion globally— to subsidies for renewable energies and other low carbon technologies.

Other effective strategy would be making those who emit carbon dioxide to the atmosphere pay a fee for the harm they cause. Why should industries be allowed to escape paying for proper disposal of their waste products? Is it because of all the employment opportunities they offer?

That makes sense on the surface of things but is totally false when subjected to deeper analysis. First, industries won’t cease to exist if they are required to pay for the harm they do. Second, clean technologies promise more jobs than will be lost if a carbon fee became widespread. Third, there would be no industries if most human and the other species on the Earth are wiped out by rising temperatures.

So let’s stop feeling bad about polluters.

It’s time to change our thinking and stop apologizing for wanting to keep the global temperatures from skyrocketing. We have a right to demand a clean environment, one that allows humans and all species to thrive.

What could be objectionable about that?

And, finally, don’t let little Greta Thunberg, the 16-year Swedish schoolgirl, fights climate change alone!                 

PWC, the global auditing company, regularly issued reports under the title, The World in 2050. The latest report, The World in 2020: The long-term view-How will the global economic order change by 2020? was published in February, 2017. The report showed some interesting highlights.

Among the highlights are:

1. Other than the usual countries of China, US and Japan, new countries such as India, Indonesia and Brazil are moving the GDP ladder.
2. Countries such as Pakistan, Vietnam and Bangladesh would move up the GDP ladder.
3. Nigeria would have the largest GDP in the African continent.
4. European countries such as Germany, France, Italy and Britain will move down the GDP ranking in 2050.

The projected rankings of economies based on GDP at PPP (purchasing power parity) in constant 2016 in US$ billion are shown in the table below.

2016 Rankings in constant 2016 in US$ billion

GDP PPP ranking	Country	GDP at PPP
1	China	21,269
2	US	18,562
3	India	8,721
4	Japan	4,932
5	Germany	3,979
6	Russia	3,745
7	Brazil	3,135
8	Indonesia	3,028
9	United Kingdom	2,788
10	France	2,737
11	Mexico	2,307
12	Italy	2,221
13	South Korea	1,929
14	Turkey	1,906
15	Saudi Arabia	1,731
16	Spain	1,690
17	Canada	1,674
18	Iran	1,459
19	Australia	1,189
20	Thailand	1,161
21	Egypt	1,105
22	Nigeria	1,089
23	Poland	1,052
24	Pakistan	988
25	Argentina	879
26	Netherlands	866
27	Malaysia	864
28	Philippines	802
29	South Africa	736
30	Colombia	690
31	Bangladesh	628
32	Vietnam	595

2030 Rankings in constant 2016 in US$ billion

GDP PPP ranking	Country	Projected GDP at PPP
1	China	38,008
2	US	23,475
3	India	19,511
4	Japan	5,606
5	Indonesia	5,424
6	Russia	4,736
7	Germany	4,707
8	Brazil	4,439
9	Mexico	3,661
10	United Kingdom	3,638
11	France	3,377
12	Turkey	2,996
13	Saudi Arabia	2,755
14	South Korea	2,651
15	Italy	2,541
16	Iran	2,354
17	Spain	2,159
18	Canada	2,141
19	Egypt	2,049
20	Pakistan	1,868
21	Nigeria	1,794
22	Thailand	1,732
23	Australia	1,663
24	Philippines	1,615
25	Malaysia	1,506
26	Poland	1,505
27	Argentina	1,342
28	Bangladesh	1,324
29	Vietnam	1,303
30	South Africa	1,148
31	Colombia	1,111
32	Netherlands	1,080

       2050 Rankings in constant 2016 in US$ billion

GDP PPP ranking	Country	Projected GDP at PPP
1	China	58,499
2	India	44,128
3	US	34,102
4	Indonesia	10,502
5	Brazil	7,540
6	Russia	7,131
7	Mexico	6,863
8	Japan	6,779
9	Germany	6,138
10	United Kingdom	5,369
11	Turkey	5,184
12	France	4,705
13	Saudi Arabia	4,694
14	Nigeria	4,348
15	Egypt	4,333
16	Pakistan	4,236
17	Iran	3,900
18	South Korea	3,539
19	Philippines	3,334
20	Vietnam	3,176
21	Italy	3,115
22	Canada	3,100
23	Bangladesh	3,064
24	Malaysia	2,815
25	Thailand	2,782
26	Spain	2,732
27	South Africa	2,570
28	Australia	2,564
29	Argentina	2,385
30	Poland	2,103
31	Colombia	2,074
32	Netherlands	1,496

Changes in Rankings of Asian Countries

Countries	Ranking in 2016	Ranking in 2030	Ranking in 2050
China	1	1	1
India	3	3	2
Indonesia	8	5	4
Japan	4	4	8
Saudi Arabia	15	13	13
Pakistan	24	20	16
Iran	18	16	17
South Korea	13	14	18
Philippines	28	24	19
Vietnam	32	29	20
Bangladesh	31	28	23
Malaysia	27	25	24
Thailand	20	22	25

Note: PPP (purchasing power parity) estimates of GDP adjust the price level difference across countries, providing better measure of the volume of goods and services produced by an economy as compared to GDP at current market exchange rate, which is a measure of value. Essentially GDP PPP controls for different costs of living and price levels, usually relative to US dollar, enabling more accurate estimate of a nation’s level of production.

Observation

In 2050, two Asian countries, China and India, would occupy the top two spots in GDP ranking. In addition, Indonesia would move from 8th spot in 2016 to 4th spot in 2050. Japan, which occupied 4th spot in 2016 would drop to 8th spot in 2050.

Our country, Malaysia, would slightly improve its spot from 27th in 2016 to 24th in 2050. The greatest mover would be Vietnam, moving from 32nd spot in 2016 to 20th spot in 2050.

Please click below for the full report

Introduction

The World Trade Report 2018 (The Report), published by World Trade Organization, examines how digital technologies are transforming global commerce. The Report describes four digital technologies, namely artificial intelligence, the Internet of Things , additive manufacturing (3D printing) and blockchain, which have been achievable by the exponential rise in computing power, bandwidth and digital information.

The key findings of The Report are:

1. Digital technologies are reshaping consumer habits by shifting purchases online through the widespread use of internet-enabled devices which provide consumers with direct access to online markets.
2. It is estimated that, in 2016, the value of e-commerce transactions totaled US$27.7 trillion, of which US$23.9 trillion was business-to-business e-commerce transactions.
3. Digital technologies allow for easier entry and increased product diversity, making it easier for firms to produce, promote and distribute their products at a lower cost.
4. Digital technologies give rise to opportunities and challenges that may require the consideration of governments and international community in areas as diverse as investment in digital infrastructure, human capital, trade policy and regulation.

The Report also highlights that new technologies are likely to change established trade patterns as the importance of traditional sources of comparative advantages changes and new sources emerge.

Digital economies are likely to reinforce the importance of skills and capital endowment, as they are capital-intensive and skill-intensive. Artificial intelligence, 3D printing and advanced robotics could reduce the role of labour as sources of comparative advantages.

In contrast, physical infrastructure, border processes and geographical factors might become less relevant, which would benefit remote or landlocked economies, as well as economies with less-developed physical infrastructure and custom procedures. 

Energy infrastructure will also become an important factor in defining comparative advantage in digital-intensive sectors, because the services that support digital technologies depend on storage devices, power supplies and cooling systems that consume vast amounts of energy.

Another factor that could become more important for trade patterns in the digital age is market size. Digital technologies benefit from access to large amounts of information, which may be advantageous to large developing countries like India, Indonesia and Nigeria.

With regard to institutions, the digitalization of trade may magnify their importance for comparative advantage, given that data privacy and intellectual property rights regulation rely on credible enforcement. However, new technologies may reduce the role of institutions for comparative advantage.

In addition, to these traditional sources of comparative advantage, new services will arise for trade digital-intensive products. The regulation of intellectual property rights, data flows and privacy are likely to be of particular importance, as well as the quality of digital infrastructure, since reliable and fast network access is becoming a necessity for conducting businesses.

Advantages and Opportunities    

The advantages of digital technologies bring about opportunities and challenges for developing and developed countries alike. For instance, as digitalization increases the complexity of tasks performed by workers, developed economies may strengthen their competitive advantage in skill-intensive sectors. However, as new technologies diminish the importance of physical infrastructure, developing countries may also gain competitive advantage in the sectors most affected by the shift from physical to digitalization of trade.

For a country like Malaysia, which depends on labour-intensive export manufacturing sectors, 3D printing, in the long run, may substitute for traditional manufacturing methods, such as assembly of products. It would reduce the need for outsourced production and assembly, the number of production steps, and the need for inventory, warehousing, distribution, retail centres and packaging.

Value chain in a world of pervasive 3D printing may not only become shorter—with the emergence of production centres near every large customer base or near centre of innovation—but they might also look very different, being mostly based on cross-border exchange of data, in the forms of designs, blueprints and software, rather than on exchange of cross-border of materials services.

The Report is a must-read for business leaders and officials of government. The Report is enclosed below.

World Trade Report 2018