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Last Updated: 04 October 2022

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

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Last Updated: 21 June 2022

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MEDIA STATEMENT
PALM KERNEL WASTE AS ANIMAL FEED TO CONTROL PRICES
AND STABILISE CHICKEN SUPPLY IN THE COUNTRY

1. THE Ministry of Plantation Industries and Commodities (MPIC) will step up efforts to promote the use of palm kernel waste as animal feed to ensure Malaysia has sustainable supply of chickens in the long run.

2. As we know, one of the reasons why chicken prices sometimes soar is due to the high price of chicken feed. It has been reported that chicken feed had gone up from RM500 per tonne to RM1,900 per tonne in some cases.

3. As a result, chickens were being fed less, causing the livestock to grow slower than normal, and in the process restricting the supply of the birds. Malaysia imports most of its chicken feed, mostly made of grain like corn and soybean. These items are facing worldwide shortage due to the war in Ukraine and uncertain weather patterns.

4. However, Malaysia's oil palm plantations produce huge supplies of palm kernel waste. Past researches have shown that feeding fermented palm kernel cake (PKC) and high dietary fat to broilers, can be a good substitute for the imported feed which almost all commercial chicken farms use today.

5. The MPIC will also hold discussions with other stakeholders to review our export policy on PKC in favour of local broilers. Right now, a lot of our PKC is exported for the European cattle industry.

6. The Ministry will also work with relevant agencies, government-linked companies (GLCs) and State Governments to urgently look into how it can quickly ensure the availability of palm kernel waste as animal feed for the Malaysian poultry industry.

7. Additionally, the MPIC will also be working closely with research institutes such as public universities to look into ways to enhance the quality of PKC to make it the preferred choice for chicken breeders. This includes ways of reducing the fibre content in the PKC.

8. MPIC is committed to playing its part to help reduce Malaysia’s dependence on imported livestock feed, in the spirit of Keluarga Malaysia. At the end of the day, it's about putting the interests of the people first and The Ministry is determined to ensure the commodity sectors consistently contribute to the country’s economic development.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
31 MAY 2022

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Last Updated: 26 May 2022

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MEDIA STATEMENT
OPPORTUNE TIME FOR PALM OIL TO REGAIN ITS MARKET SHARE IN EU
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1. THE Ministry of Plantation Industries and Commodities (MPIC) will take advantage of the political tension in Europe and the shortage of global edible oil to promote Malaysian palm oil, paving the way for the commodity to regain its market share, especially in the European Union (EU). Russia’s invasion of Ukraine on Feb 24 this year has significantly affected the global vegetable oil supplies as the uncertainty over Black Sea exports have resulted in higher vegetable/edible oil prices.

2. This could further tighten the global oilseed and vegoil supplies, thus prolonging the upcycle in vegoil prices. The Eastern European tension has led to shortages of sunflower oil and rapeseed oil with both countries account for 80% of global exports. MPIC believes that the Black Sea tension will benefit Malaysian palm oil exports as many European countries with high dependency on sunflower oil, have now shifted their demand to palm oil.

3. In fact, Ukraine and Russia are entering the critical month for sunflower planting which should start in April, hence the prolonged war could hamper the coming planting season. Ukraine’s and Russia’s sunflower oil exports account for 10% of global vegoil exports. Market analysts are presently anticipating an increase in palm oil demand from EU region in the near-term given lower quantity of soybean exports from Brazil, Paraguay, Russia and Ukraine as well as reduced sunflower from Russia, Kazakhstan and Ukraine.

4. Coupled with the latest move by neighbouring Indonesia who is the world’s largest palm oil exporter to widen the scope of its export ban on raw materials for cooking oil to include crude and refined palm oil, global vegetable oil prices are likely to remain high in 1H 2022. This is why I believe now is a time opportunity for palm oil to regain its confidence from European buyers given the publicity the commodity received in the past.

5. In this respect, I have instructed relevant agencies under MPIC, such as the Malaysian Palm Oil Council (MPOC) and the Malaysian Palm Oil Board (MPOB) to undertake aggressive efforts and campaigns not just for our commodity to fill global market gaps in the interim. These agencies, in collaboration with MPIC, will have to ensure that Malaysian palm oil remain a top choice in global markets in the long run, particularly those where the consumers have been exposed to vicious propaganda in the past.

6. Under my leadership, MPIC will not want to waste a good crisis. It is time we step up efforts to counter adverse propaganda to undermine palm oil’s credibility and for us to showcase the numerous health benefits the golden oil has to offer. These are all in line with MPOC’s Malaysian Palm Oil Full of Goodness campaign.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
06 MAY 2022

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Last Updated: 22 June 2022

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PRESS STATEMENT
BE EXTRA SENSITIVE OF US CBP’S FORCED LABOUR RULE TO
CIRCUMVENT WRO PITFALL
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1. LAST Thursday (June 2), the US Customs and Border Protection (CBP) clarified to the Malaysian media how it derived evidence of forced labour allegations and how it pursued its investigations that led to products from six Malaysian firms still being prevented from entering the US market after being slapped with Withhold Release Orders (WROs).

2. As much as we cannot totally agree with its reliance on remote or third-party evidence in its investigation process, we have to accept that at the end of the day, the enforcement agency is vested with the prerogative to act based on what it deems as proprietary information.

3. The Ministry of Plantation Industries and Commodities (MPIC) has no intention of disputing CBP's prerogative, but feel the claims are unfair and also biased.

4. The ban on Malaysian palm oil and palm oil products (or rubber gloves for the matter) is based only on allegations of forced labour claims made by NGOs and other groups.

5. Nevertheless, CBP in detailing the route and subsequent actions taken against some companies, has reiterated that its investigations were done through reasonable information, analysis, investigations and assumptions.

6. In this regard, Malaysian palm oil and palm oil-related products may have to bear the brunt of being in direct competition with soybean oil of which the US is the world’s leading producer and the second-leading exporter.

7. Now that the modus operandi of the CBP and how their verdict is passed has been made clear, the onus is on industry players – especially those in the labour-intensive rubber gloves and plantation sectors – to pay heed to CBP’s sensitivities and work around a remedial action plan to avoid being slapped again by a WRO for accusations of forced labour.

8. In this regard, MPIC wishes to commend the Malaysian Rubber Gloves Manufacturers Association (MARGMA) for its recent engagement with CBP to further develop a clear respect and understanding of the roles played by both parties in the governance of labour issues.

9. It is learnt that MARGMA has been spearheading such efforts since 2018 when it advocated a zero-debt policy and also initiated remedial actions to be undertaken by each member to dislodge itself from the stigma of forced labour by leveraging the International Labour Organization’s (ILO) 11 indicators as the guiding principle.

10.Above all else, MARGMA has also formed an ESG Unit (environmental, social, and governance unit) and task force to actively educate and sensitise members and its employees on the 11 ILO indicators of forced labour. This vigorous exercise is done via partnership with the ILO), and the US, UK and European Union (EU) embassies/high commissions in Malaysia.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
8 JUNE 2022