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FUTURE-PROOFING PALM OIL FROM ADVERSE WESTERN PROPAGANDA

 


THE notoriety of developed economies against palm oil – the most produced, consumed and traded edible oil – all in favour of protecting the soybean trade (the second most-produced edible oil) is well-known. The European Union (EU) Parliament has voted for palm oil-based biofuels to be banned entirely by 2021. In contrast, other crop-based biofuels will be capped at 7%
and enjoy a gradual reduction to 3.8% by 2030.


Such a ban is linked to the EU’s belief that oil palm cultivation is responsible for deforestation. Another trade ban that has often affected Malaysian palm oil export is the US Customs and Border Protection (CBP), curtailing palm oil import into the world’s largest economy based on forced labour allegations. In the EU case, palm oil exports into the continent face numerous hurdles even with Asian palm oil exporters voluntarily abiding by the sustainable certification ruling under the Roundtable on Sustainable Palm Oil (RSPO) scheme.


In fact, putting in place mandatory sustainability requirements is not an issue for exporters, given that sustainable volumes will receive a market price premium. However, the EU’s failure or hesitance to recognise the national sustainability standards in Malaysia (the MSPO or Malaysian Sustainable Palm Oil standard) and Indonesia (the ISPO or Indonesian Sustainable Palm Oil standard) is a severe worry for both top two global palm oil producers. This is ironic, considering Europe only represents 6.4% of the global palm oil market. Yet, the cartel-like RSPO endeavours to apply pressure from consumers in affluent Western markets on Asian palm oil producers.

To re-cap, Indonesia was the first to initiate its national certification scheme (the ISPO) in 2011, with Malaysia following suit four years later (with the MSPO). Since then, both countries have been campaigning globally to win recognition of their standards and the right to define sustainable palm oil on their own terms. Uneven turf Unfair attacks and new allegations continue to discredit and pursue the industry's downfall amid existing legislation and certification standards to ensure labour rights are protected or the very fact that oil palm cultivation occupies only 0.31% of the global 5 billion hectares of agricultural land.


As highlighted by Gambian Centre for Sustainable Palm Oil Studies (CSPO) member Muhammed Magassy, it should come as no surprise if significant palm oil producers (like Malaysia and Indonesia) regard the EU’s anti-palm oil stance as “crop apartheid” given such behaviour re-animated the exploitative, colonial origins of the industry. While the EU biofuel ban is in place, it simultaneously evokes subtle protectionism by exempting European oilseed products such as rapeseed and sunflower, which require more land, water, and fertiliser than palm oil, from any economic penalty.


“We in Africa know this too well; the EU’s Common Agricultural Policy (CAP) provides domestic farmers €42 billion (RM196.2 bil) in annual subsidies, hence strengthening their ability to export at artificially low prices to the developing world,” argued Muhammed Magassy in “Green Trade War on Palm Oil” published by London-based The Parliament e-magazine. “This gives European producers an unfair advantage in markets such as Africa, bankrupting local farmers.”


Imagine such biasness is allowed to prevail even as palm oil also boasts numerous health benefits, which has led to the Malaysian Palm Oil Council (MPOC) unveiling the Malaysian Palm Oil Full of Goodness campaign to showcase the Malaysian Palm Oil industry’s sustainable initiatives and management. Dismantling barriers Denial of entry is already fuelling deep concerns among global industry players concerned that such a ruling may influence other major export destinations to follow suit. Of late, there has been a resurgence of anti-palm oil campaigns – even at the school level by associating the emergence of oil palm plantations with the disappearance of orang utans.


As mentioned earlier, such stigma surfaces even though there have been existing legislations to protect and prohibit the expansion of oil palm cultivation under existing conservation programmes. It just seems that no matter how many preventive measures are put in place, they are never enough. As much as Malaysia and neighbouring Indonesia, which are the world’s two largest palm oil producers, harbour no intention to make enemies, it is obviously high time for the palm oil industry to take a more proactive and aggressive stance to dispel baseless claims by powerful competitors who are out there to champion other types of edible vegetable oils.


It is time for all concerned certification bodies to come forward to defend palm oil, dispelling all the allegations. Slim chance or otherwise, Malaysia/Indonesia must proactively pursue their legal recourse filed with the World Trade Organization (WTO) against the EU’s restrictions on palm oil biodiesel. Truth must be told As highlighted by FGV Holdings Bhd’s group CEO Mohd Nazrul Izam Mansor at the Future-Proofed Palm Oil Summit (FPPO 2021) in November last year, the global agribusiness and food producer places a strong commitment to environmental, social
and governance (ESG) considerations in all its undertakings.


This is clearly embedded in the group’s sustainability policy where FGV has adopted the no deforestation, no planting on peat and no exploitation commitment. In its quest to conserve biodiversity and wildlife, the group has embarked on a new three-year initiative to protect and enhance high conservation value and high carbon stock areas within the vicinity of its plantations by planting fast growing indigenous or native tree species and wild fruit trees. “Wildlife protection and human-wildlife conflict management remain a high priority for FGV. One of our conservation projects involves the rescue, rehabilitation and release of injured or displaced Malayan Sun Bears,” he said in a special address at FPPO 2021.


“While this project is ongoing, we have expanded our Protection of Rare, Endangered and Threatened Species Programme to include pygmy elephants, gibbons and pangolins.” On the social component, FGV has been focusing on efforts in the past several years towards ensuring compliance to human rights and labour standards. These efforts have been intensified since early 2019 especially with our affiliation to the Fair Labour Association (FLA) which is a long-term programme to improve structures and systems for the enhancement of FGV’s labour practices.


Even then, it is worth noticing that FGV was slapped with a US CBP Withhold Release Order (WRO) on Sept 30 last year on allegations of forced labour. Nevertheless, FGV has appointed independent auditing firm Elevate Ltd expedite the auditing process which will eventually pave way to the lifting of the (WRO). FGV is not alone in such quandary as another Malaysian palm oil giant Sime Darby Plantation Bhd (Sime Plantation), too, is not spared from the WRO action. The world’s largest producer of Certified Sustainable Palm Oil (CSPO) is expected to deliver its impact report submission to the US CBP by end-April which will go towards the lifting of the WRO imposed on the company since December 2020.


Interestingly, Sime Plantation has recently revealed that it is transforming all its 33 Malaysian palm oil mills into certified food safety facilities by end-2023, after which the same standards will be rolled out across the group’s operations in Indonesia, Papua New Guinea and the Solomon Islands. On my part, I am seeking meetings with the US CBP and the EU by July this year to
set the record straight on forced labour allegations while once and for all, address the fallout from WROs issued by the US CPB to FGV Holdings and Sime Plantation in 2020.


On a similar note, Malaysia will be represented at the dispute proceeding on the EU’s alleged discrimination against the national palm oil industry from May 8 to 18 for us to provide our side of the story on the matter. I call on all Malaysians to work together with us to address the anti-palm oil propaganda by Western countries which is clearly aimed at bringing down our country's palm oil industry. I will ensure we put up an "aggressive" fight against these foreign pressures and provide them with all the relevant evidence. We will show them that Malaysia is not a
nation to be fooled around with.


Datuk Zuraida Kamaruddin is Malaysia’s Plantation Industries and
Commodities Minister.

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JATA LATES

MEDIA RELEASE
MALAYSIA INTERNATIONAL AGRICOMMODITY EXPO AND SUMMIT 2022
(MIACES) AS GLOBAL HUB OF AGRICOMMODITY INDUSTRY PLAYERS
______________________________________________________________________

1. YAB Dato' Sri Ismail Sabri bin Yaakob, Prime Minister today officiated the Malaysia International Agricommodity Expo and Summit 2022 (MIACES) which will start from 26TH to 28TH July 2022 at MITEC, Kuala Lumpur and involve participation from 39 countries and over 350 international companies.


2. MIACES is organized by the Ministry of Plantation Industries and Commodities (MPIC) with the support of agencies and councils under the Ministry. MIACES 2022 is a medium of strengthening the network of cooperation between agricommodity players to build a network of transactions as well as explore potential investments in the agricommodity sector. It also opens up the space and potential for industry players to penetrate the international market in a conducive business environment.


3. The expo and summit, which runs for three (3) days today, features the latest commodity products, services and plantation technology under one roof. Various other events were also organised such as conferences, roundtable discussions, business to business (B2B) meetings and prestigious awards nights in recognition of the industry players contribution.


4. MIACES 2022 helps bridge the gap between industry players, accelerating digitalization to build a sustainable ecosystem to improve quality. The expo and summit also enable industry players in each agricommodity network to transact and collaborate in the same hub.

5. Not only that, MIACES 2022 featured a 'Hosted Buyer' Programme that helps entrepreneurs expand their business model and open up opportunities to connect with leaders in the agricommodity sector. The B2B Virtual MIACES platform offers a one-on-one session with exporters, distributors, importers, investors, manufacturers, retailers, merchants, wholesalers and government bodies and agencies.


6. A total of 20 speakers will be involved in mentoring and coaching sessions for startups in the plantation and commodity industries, as well as recruitment, training and upskilling sessions for all. Special Farmers Day during the expo and summit also provides an opportunity for farmers to obtain information on the latest incentives, support and technologies in the industry.


7. All parties are invited to attend MIACES to support the country's agricommodity industry. For more information and pre-registration for activities, visit myagricommodity.com. Admission is free for all visitors.


MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES
26TH JULY 2022

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MEDIA STATEMENT
MPIC ENSURES SUSTAINABILITY OF MALAYSIA’S KEY
AGRICOMMODITY PRODUCTS THROUGH DAKN 2030


1. Contrary to expectation, the two-year COVID-19/MCO (Movement Control Order) period of 2020-2021 were ‘booming years ’for Malaysia’s Agricommodity products with an overall increase of 64% from the pre pandemic period of 2018-2019.


2. Despite the country facing numerous economic devastations from the raging COVID-19 pandemic, the export value of Malaysia’s Agricommodity products remained strong, rising significantly over the four-year period from RM127.9 billion in 2018 to RM128.5 billion (2019) to RM151.3 billion (2020) and RM209.6 billion (2021).


3. To sustain the potential and growth of Malaysia’s Agricommodity industry, the National Agricommodity Policy 2021-2030 (DAKN 2030) was launched in March 2022 to further drive the
development of the country’s Agricommodity sector in a more sustainable, competitive and market-oriented manner. This is in tandem with new norms and increased leverage on digital technology in the post-COVID-19 era.


4. In essence, DAKN 2030 contains five core thrusts:

(i) sustainability;

(ii) productivity;

(iii) value-added creation;

(iv)market development; and

(v) inclusivity.


5. Below are six Agricommodity products that will benefit directly from the implementation of DAKN 2030:

(i) Palm oil: Efforts will be undertaken to increase exports and reduce stocks through export duty exemptions for crude palm kernel oil (CPKO) and processed palm kernel oil (RBDPKO) for
companies that meet the application criteria. As a result, the price of crude palm oil (CPO) has stabilised again while showing an increasing trend from June 2020 until now. In tandem with this is implementation of the Malaysian Sustainable Palm Oil (MSPO) certification to brand sustainable and quality Malaysian palm oil as well as strengthening strategic cooperation with Indonesia through the Council of Palm Oil Producing Countries (CPOPC).


(ii) Rubber: Plans are afoot to extend the use of rubber in Malaysia to road construction and the production of new and value-added products based on rubber such as seismic bearings, rubber gloves and others. At the same time Malaysia will co-operate with the world's main rubber producing countries namely Thailand and Indonesia under the framework of the International Tripartite Rubber Council (ITRC) to strengthen and stabilise international rubber market prices;


(iii) Timber: Malaysia will expand its participation in domestic and international timber, furniture and construction exhibitions to create demand for Malaysian timber products and to increase
networking and business opportunities in relevant countries; and At the same time, the country plans to increase cooperation between relevant agencies such as the Malaysian External Trade
Development Corporation (MATRADE) and the Malaysian Communications and Multimedia Commission (MCMC) to encourage the timber industry to expand access to the digital market through digital exhibition participation as well as to encourage marketing through digital platforms such as AliBaba and MineBizs, among others.


(iv) Cocoa: DAKN 2030 seeks to implement the Domestic Market Support Service Programme (KSPD) by helping cocoa farmers market their beans with reasonable purchase price offers, thus
reducing the activities of middlemen who offer uncompetitive prices. Additionally, efforts will be directed at carrying out virtual promotional activities where the industry has attended several
virtual exhibition programmes through webinar, zoom stage presentation, live chat and online business matching platforms.


(v) Pepper: A potential effort is to directly sell pepper and its related products to special or niche markets to increase the competitiveness of the Malaysian pepper industry; This entails the
introduction of value-added pepper products such as sterile pepper (Mikrokleen) and pepper powder for markets that are more concerned with food safety and quality as well as farm-level
specialty products such as creamy white pepper (LPK). So far, the Malaysian Pepper Board (MPB) has successfully penetrated the value-added pepper product market and the special pepper
market in Japan, Sweden, South Korea, China, Taiwan, Hong Kong, Spain and Polynesia, to name a few markets.


(vi) Kenaf: The initial plan is to introduce cluster farms of 20 to 50 hectares to replace small-scale farms that are less economical and cultivated by existing kenaf growers. Additionally, the focus is also to develop a Research Centre for Research, Innovation Technology And Incubation Of Small Enterprises (RINTIS) to produce entrepreneurs in premium fibre processing activities apart from increasing the research and development (R&D) efforts of kenaf at upstream, intermediate and downstream levels.


6. MPIC is committed to sustain the country's agricommodity sectors in order to ensure continuous impactful economic recovery and improvement post COVID-19, despite facing the inflation
challenge predicted to be in 2023. DAKN 2030 is the guideline for the ministry in maximizing the potential of the circular economy through agricommodity biomass. This is to strengthen the position of the agricommodity sectors in economic recovery post COVID19.


YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
26th SEPTEMBER 2022

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MEDIA STATEMENT
MALAYSIA PREPARED TO ASSIST THE UK AND EUROPE IN THE SEED
OIL SUPPLY CRISIS BY SUPPLYING MALAYSIAN FULL OF GOODNESS
COOKING OIL


1. The Ministry of Plantation Industries and Commodities (MPIC) is prepared to assist the United Kingdom and Europe over their impending edible seed oil supply crisis. The British press recently indicated that the UK would run into a cooking oil crisis in weeks as the seed oil supply was choked due to the RussiaUkraine war. We are deeply concerned over the state in UK and Europe following the current situation between Russia and Ukraine. And therefore, should the UK and other European nations need our assistance, we are ready to assist with supplying edible palm oil or cooking oil for their domestic and manufacturing needs.


2. Malaysian palm oil sustainability fully adheres to the Malaysian Palm Oil Certification Council (MPOCC), which is based on the Malaysian Sustainable Palm Oil (MSPO) standards, and consistent with the international Roundtable on Sustainable Palm Oil (RSPO) requirements. We see this as a humanitarian need as Russia and Ukraine jointly supply 70 percent of sunflower cooking oil to the world.


3. Despite the anti-palm oil propaganda by some Western nations, and while we do not condone this misleading protectionist and distorted propaganda, we still want to offer our assistance in this trying time. Malaysia is a caring, friendly nation, and because of that, we are more than willing to provide Malaysian palm oil full of goodness to these affected countries.

4. This country has long battled against Western anti-palm oil propaganda, and it is time for us to put this to rest. We are ready to offer immediate assistance as we do not want to see any country suffer from a cooking oil supply crisis when Malaysia is one of the biggest palm oil producers in the world.


YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES (MPIC)
29 MARCH 2022

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MEDIA STATEMENT
CPO PRICE WEAKNESS IS TEMPORARY; MPIC TO FOCUS ON LONG-TERM EDIBLE
OIL VIABILITY
________________________________________________________________________

1. It has to be accepted that the softening of the Malaysian palm oil futures in recent times is pretty much expected in view of the weak global stock market, arising from inflation-induced interest rate hikes which have now triggered recessionary concerns.


2. Although CPO prices have come off their peak levels that exceeded RM8,000/metric tonne in March 2022 when the Russia-Ukraine conflict sparked a shortfall in sunflower oil, Kenanga Research has forecast “a still decent” average CPO prices of RM4,500/MT for 2022 and RM4,000/ MT in 2023.


3. Production costs may be pushed up by rising fertiliser, labour and transportation costs but all-in-all, costs should stay within the RM2,000 to RM2,500 per MT range, translating to still rather healthy upstream margins for the plantation sector.


4. As it is, both palm oil (circa 35% market share) and soybean oil (circa 25% share) remain the main edible oils in the world market although palm oil production has peaked while the US soybean harvest has just started for 2022.


5. Therefore, planters – both large corporations and smallholders – must have faith in the golden crop given demand for edible oil has been growing steadily for decades supported by rising population, affluence – and to some extent – more urban lifestyle.


6. On average, consumption grew 3% year-on-year (y-o-y) during the recent decade while the 30-year average standing is even higher at 3.6% a year, according to the Kenanga Research report dated 28 September 2022 which reiterated its “overweight” outlook on the sector. Long-term prospect in tact


7. It is inevitable, however, that the negative impact of COVID-19 on economic activities, most notably the hospitality, travel and tourism sectors have weighted down palm oil demands to around 1% y-o-y since 2020.


8. However, the market report expects a reversion back to 3% growth as the global economy is gradually opening up again.


9. While concerns have been raised about demand staying subdued or even worsening due to an ensuing global economic slowdown amid hot inflation, rising interest rates and recession fears, such likelihood is only temporary as China which is a major palm oil consumer can be expected to gradually relax its zero-COVID-19 policy that has in a way hindered palm oil consumption and demand.


10.Most of all, the fundamental demand drivers are food and fuels, essential day-to-day consumables and above all else, Indonesia – the largest user of palm oil and palm biodiesel – has resumed road testing the B40 biodiesel since late July after a five- month delay. Indonesia currently runs a B30 blend with plans to adopt the B40 mix sometime this or next year.


11.Encouragingly, Malaysia’s plantation sector has also progressed with many larger concerns having already embraced the environmental, social and governance (ESG) principles as part of their day-to-day operations.


12.A testament to the success is that about 16 million MT of palm oil is now Malaysian Sustainable Palm Oil (MSPO)-certified as well as meeting some of the highest ESG standards for agriculture produce worldwide.


13.As observed by Kenanga Research, the better managed plantation groups are not resting on their laurels but pushing towards even higher palm oil yields of 6 MT per hectare which is about 10 times more efficient than other oil crops.


14.In the upcoming Budget 2023 which will be tabled on Oct 7, the Ministry of Plantation Industries and Commodities (MPIC) is pushing for a fundamental shift in strategy by focusing on intensive, yield and investment-driven growth in line with the increasing emphasis on sustainability by major producing nations and consuming markets.


15.Additionally, MPIC has also embarked on “The Global Movement to Champion the Goodness of Palm Oil” campaign to further complement efforts to boost awareness of the quality of the Malaysian palm oil as well as to counter the various misinformation and false allegations levelled at our golden oil.


YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
3rd OCTOBER 2022