This article considers the recent trends in the palm oil market balance and the future prospects for palm oil fundamentals. The article finds that there exists potential for the demand for palm oil and its products to increase quite steeply, partly due to emerging demand as a relatively cheap biofuel (whether as palm biodiesel or for direct burning), and partly due to its price advantages in edible applications. In terms of supply, as long as there is willingness to plant more area with oil palm in environmentally sensitive areas, there will be continued growth in the oil palm industry. This development is likely to be led primarily by Indonesia with increasing areas planted with oil palm, notably in Kalimantan, and by continued yield improvements in Malaysia.

The present paper reports on results obtained as part of the economics module of the LIPGENE project. It reviews recent trends in obesity in the fifteen member states of the EU (the member states before enlargement in 2004) and concludes that in 2002 for both adult men and women at least half the fifteen member states of the EU had obesity levels of >20 %. In the same year the total direct and indirect annual costs of obesity in the fifteen member states of the EU were E32 800 · 10 6 . The provision of 'healthy' foods with an adapted lipid profile provides one means of mitigating the impact of obesity. However, there are extra costs associated with the supply of such foods, via additional costs of food ingredients, identity preservation costs for premium-value food products and the penalties caused by the inability to exploit economies of scale. The limited scale of the markets for healthy foods is caused by their high selling prices. Also presented is an analysis of the costs of subsidising, throughout the EU, ingredients that improve the fatty acid profile of beef, eggs, poultry meat and low-fat spreads, so that healthier versions of these products sell at the same price as traditional alternatives. The total costs of such subsidies for these four food products would have been E10 · 10 9 /year in 2002, which was 30 % of the direct and indirect costs of obesity.

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