The Oil Palm

Malaysian palm oil model on African sustainable development agenda

The Malaysian palm oil model is set to generate considerable development benefits throughout Africa, as stakeholders welcome greater foreign investment in the agricultural sector. The Malaysian palm oil model is recognised as a promising mechanism to foster small farmer agricultural co-operatives that have the potential to drive development and improve food security.

The UN’s African Development Forum – attended by a range of stakeholders including governments, traditional rulers and civil society – recently adopted a Consensus Statement recognising the opportunities that foreign investment brings, particularly in strengthening the agricultural sector and promoting sustainable development.
The statement includes recommendations on how best to harness the potential of Africa’s “abundant agricultural lands… to address its food security concerns and serve as a basis for a model of structural transformation to boost employment, income and livelihoods”.
African countries noted that although increased foreign investment comes with some challenges, it “offers the continent an opportunity to address its yield gap and enhance agricultural technology, infrastructure, mechanization, market access and value-adding possibilities that can play an important role in boosting productivity and output”.
The Malaysian experience has shown that the key to a strong agricultural industry is investment in processing facilities and smallholder capacity through co-operative schemes. In the 1960s the Malaysian government created the Federal Land Development Authority (FELDA), which granted loans and plots to produce palm oil to over one hundred thousand landless families, as a means to alleviate poverty.
The Malaysian smallholder co-operative experiment is widely hailed as a success, providing smallholders with livelihood, driving rural development and generating economic growth on a national level. FELDA recently listed on the public stock exchange, in what was the second largest IPO (initial public offering) of all time.
This successful model is now being adapted to an African context in order to achieve similar development goals. Former Malaysian Prime Minister Tun Dr Mahathir Mohamad recently highlighted the potential for the Malaysian model to drive needed development in countries that have struggled with failing development indicators such as Sudan.
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Malaysian efforts to protect orang-utan habitat

A scientific study on orang-utan distribution throughout Borneo has indicated that Malaysian authorities are pursuing an effective orang-utan conservation strategy.

Using data collected over two decades from Sabah, Sarawak and Kalimantan, the study provides an overview of the distribution of potential orang-utan habitats throughout Borneo.
The research highlights the efforts of Malaysian authorit ies in establishing and managing orang-utan habitats under their jurisdiction.
According to Dr Marc Ancrenaz, head of the orang-utan conservation NGO – HUTAN – and co-author of the published paper, “more than 60 percent of the orang-utan population is now protected in Sabah [one of two Malaysian states on the Island of Borneo]. This is a huge improvement for orang-utan conservation in the State compared to the early 2000′s when only 30% of the orang-utans in Sabah were living in protected forests.”
The study commended Malaysian conservation efforts, noting that “protected areas in Malaysia appear better managed with lower rates of deforestation and forest degradation rates, and fewer incidences of hunting than in Indonesia.”
Despite significant efforts such as this, the research suggests that more work is needed beyond the Malaysian boarder, as it is likely that the majority of the Island’s orang-utans reside outside the established network of protected forests.
The study also indicated that significant orang-utan populations may live in Malaysian timber and palm oil concessions. Scientific research suggests that such concessions can harbour orang-utan populations when plantations are well managed. In a recent media interview, Dr Ancrenaz commended Malaysian authorities for their management of concessions and forest resources.
The study noted that production areas in Malaysian Borneo did not harbour potential orang-utan habitat, indicating that Malaysian efforts to zone lands for industrial functions were taking into account orang-utan habitats and functioning as an effective conservation tool.
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Vitamin E in palm oil linked to improved stroke recovery

New research shows that vitamin E from palm oil may save brain cells in the event of a stroke. The study, conducted by Professor Yuen Kah Hay of Universiti Sains Malaysia (USM) found that 200mg of palm tocotrienols taken twice daily can improve chances of recovery following a stroke.

Yuen began clinical trials after an American study showed that palm tocotrienols had the potential to protect brain cells.
According to the lead researcher Professor Yuen, “the evidence we have suggests that if people take it [palm tocotrienols] as a neuroprotective supplement, it can prevent brain cells from dying in the event of a stroke, and stimulate the reconstruction of blood vessels after.”
Tocotrienols are a key member of the vitamin E family. Palm fruit oil is the richest source of tocotrienols currently known.
The study involved 200 human volunteers with white matter lesions (WML) or oxygen-starved brain cells observed over two years.
Professor Yuen commented that “the promising evidence in this human clinical trial and with the abundance of palm oil in our country, it is likely that palm tocotrienols will become a national treasure to Malaysians.”
Forms of vitamin E such as tocotrienols may also help protect the brain from damage mediated by free radicals which have been linked to Alzheimer’s and dementia. According to Professor Patrizia Mecocci, professor of Gerontology and Geriatrics at the Department of Clinical and Experimental Medicine at the University of Perugia in Italy, vitamin E  can neutralise free radicles and may “be relevant in preventing or delaying the onset of Alzheimer’s in individuals with MCI [mild cognitive impairment].”
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EU: Malaysia “taking the right [sustainability] initiatives”

High ranking EU official praised Malaysian environmental sustainability initiatives, for simultaneously achieving environmental and economic development goals. The new European Union (EU) Ambassador and Head of Delegation to Malaysia, Luc Vandebon, recently commented that “Malaysia is taking the right initiatives.”

Vandebon highlighted Malaysian provincial efforts in forest management, stakeholder involvement and conservation of tropical forests as a “great example, not only for Malaysia, but for the rest of the region”.
Vandebon further applauded Malaysians efforts in forest management, especially regarding developments towards a Voluntary Partnership Agreement (VPA) under the EU’s coming Forest Law Enforcement, Governance and Trade (FLEGT) programme, which focuses on forestry governance and management and the harvesting of tropical timber.
These sentiments were supported by data published by two elite US universities that recognised Malaysian efforts to improve environmental policy and implementation. The Environmental Performance Index, a global survey conducted through institutes affiliated to Yale and Columbia universities, ranked Malaysia amongst the top 25 nations. Malaysia outranked the US, Australia, and a number of European countries.
In the last two years, Malaysia jumped from 54th to 25th place to become the highest ranked nation amongst ASEAN (Association of South East Asian Nations). The study was conducted in collaboration with The World Economic Forum and The Joint Research Centre (JRC) of the European Commission.
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Agricultural investment needed to tackle poverty and hunger

The UN has highlighted the need for greater investment in agriculture in order to tackle poverty and hunger in developing nations.

This is precisely the approach taken by the Malaysian palm oil industry, which invests significantly in rural development, smallholder cultivation, and agricultural productivity throughout South-East Asia and Africa.

This was one of the key messages in the UN Food and Agriculture Organization’s (FAO) annual report – State of Food and Agriculture – which argues that investing in agriculture is amongst the most effective strategies for reducing poverty and promoting sustainability.

According to the FAO, on-farm investment by farmers is currently the most significant source of agricultural investment; far greater than the contribution from overseas development aid.

Farmers must therefore be a central component of any strategy that aims to increase investment in the agricultural sector. Jakob Skoet, an FAO economist who co-authored the report, said that governments can help smallholder farmers by ensuring access to land and tenure, building rural infrastructure, and supporting producer organisations, such as cooperatives.

The report highlighted the need to facilitate smallholders operating in the agricultural sector. This has been a key strategy of the Malaysian palm oil industry since the 1950s when the first Malaysian smallholder cooperative scheme was established under the Federal Land Development Authority (FELDA). The Malaysian palm oil smallholder model has since become the benchmark for successful smallholder cooperative schemes throughout the developing world.

The Malaysian palm oil model is a prime example of how investment and support for smallholders can alleviate poverty and drive economic development. Notably, around 40 per cent of all palm oil cultivation in Malaysia is by small farmers and families on small scale plantations.

The establishment of processing facilities that allows small farmers to access local and international markets has been central to the success of Malaysia palm oil industry. At the same time, industry investment has facilitated rural development and lifted hundreds of thousands of households out of poverty.

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French retailer ordered to halt anti-palm oil campaign

Last week the Commercial Court of Paris ruled against large French retailer – Système U – ordering the company to halt its anti-palm oil advertising campaign.

Palm oil growers celebrated the legal ruling as a victory against anti-palm oil campaigns which discriminate against vegetable oil producers from developing countries.

The complaint was lodged by African palm oil growers after the French retailer launched a public campaign attacking palm oil. Système U alleged that oil palm cultivation was responsible for significant environmental damage and deforestation, and that the consumption of palm oil has negative health effects.

These factual misrepresentations prompted the Côte d’Ivoire’s Association of Palm Oil Producers (Association Ivoirienne des Producteurs de Palmiers à Huile/AIPH) to bring an action against Système U in the Paris Tribunal de Commerce. The AIPH successfully argued that ‘the purpose of the campaign was solely commercial and that it lacked any basis in ecology or serious scientific analysis’.

The Tribunal de Commerce agreed with AIPH and ordered Système U to halt its anti-palm oil advertisements within 15 days. The court further ruled that failure to act would incur a penalty of €3000 per non-compliance.

The decision has been hailed as a victory for palm oil growers. Respected African economist, Thompson Ayodele, claimed the ruling as “a victory of truth – that palm oil contributes to the fight against poverty and to create jobs in Africa and elsewhere in the developing world. Système U should be ashamed of conducting such a campaign misleading and disgraceful against palm oil”.

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New livelihood opportunities for Malaysian farmers

A new generation of palm oil small farmers are being given an opportunity to own homes and improve their livelihoods, according to Malaysian media reports.

FELDA, the Malaysian Federal Land Development Authority which administers a national smallholder palm oil scheme, is reportedly offering new opportunities for participants under the ‘Sentuhan Kasih’ FELDA programme.

The FELDA programme offers settlers the opportunity to improve their livelihoods by participating in the production of a high value added commodity.

The FELDA scheme is widely regarded as a successful model for agricultural driven development in rural areas. By assisting smallholder settlers participate in the agricultural sector, the scheme has assisted hundreds of thousands of low income farmers increase their livelihoods. The scheme has further contributed to national development by providing needed infrastructure and new economic opportunities and markets in rural areas.

According to media reports, the Sentuhan Kasih project recently opened for registration, and is scheduled to commence in February. It was launched by Malaysian Prime Minister Datuk Seri Najib Razak in November 2012.

The first phase of the project involves building and allocating 100 houses to provide settlers with comfortable homes to improve quality of life. Each household will reportedly be allocated two 10 hectare plots – one for household use and one for farming. Houses and plots are reportedly available in the Malaysian states of Johor, Pahang; and Terengganu.
FELDA project director, Abdul Malek Jalil, commented that the authority is “doing our best to help FELDA settlers have a better quality of life… we hope the new generation will make good use of the opportunities given to them.”

The new project has been welcomed throughout Malaysia, where the benefits of palm oil in improving low income smallholder are widely recognised.

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Exporting Innovative Palm Oil By-Products to China

POIC Sabah Sdn Bhd chief executive officer Datuk Dr Pang Teck Wai traveled to China this week to educate participants in a commodities sourcing seminar on the traditional and alternative benefits of palm oil in the world’s largest market for imported palm oil. The event, organized in conjunction with the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) and the Malaysia-China Chamber of Commerce provided the Malaysian company with an opportunity to promote recent developments in commercialization of palm oil by-products.

“Empty fruit bunches can be processed into long fibre for mattress stuffing, fuel briquettes and fertilizers in cake or pellet form, paper pulp and paper products, composite fibre boards and other products,” Bernama reported Datuk Wai as saying in the seminar.

China imported more than 3.4 million tonnes of palm oil in 2010, more than 1 million more tonnes than Pakistan, Malaysia’s next largest market. And with more than six million tonnes of empty fruit bunches left over after processing annually in Malaysia, downstream products represent a significant opportunity for all participants in the palm oil industry, from smallholder producers and oil mills looking to increase the value of the oil palm.

Meanwhile, efforts to find alternative uses for palm oil by-products demonstrate the innovation being employed by the sector, and that companies have yet to fully realize the full potential of the oil palm. Earlier this year, Bernama reported that the Malaysian Palm Oil Board holds the highest commercialisation rate “of 30.1 per cent, or 143 technologies, with an estimated RM2.05 billion in market value of the products.”

Innovation has always been a driving force behind the Malaysian palm oil industry, and continuing this innovation, as called for in the National Key Economic Areas (NKEA), is a key priority for Malaysia.

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US Government environment agency visit Malaysia

The US Government’s Environmental Protection Agency (EPA) recently concluded a visit to Malaysia as part of their assessment of greenhouse gas (ghg) savings from palm oil based biofuels. The final assessment will inform the decision of whether palm oil derived biofuels meet sustainability requirements under the US renewable fuel standard.
The field visit to Malaysia comes after complaints that the EPA’s initial assessment could not be scientifically substantiated.

Biodiesel produced from Malaysian palm oil is both a sustainable and cost effective renewable energy source. Malaysian palm oil plantations represent a net CO2 sink. Biofuels produced from Malaysian palm oil constitute a sustainable energy source with significant ghg emissions savings.

The Malaysian industry has grown substantially over the last 20 years. Much of this expansion has occurred on land zoned for agriculture, degraded lands, or previous rubber and cocoa plantations.

As a result, ghg emissions from forests cleared for palm oil plantations is relatively small. Especially compared to Malaysia’s vast forest resources: around 60 per cent of Malaysia is still covered by permanent forests, and almost 20 per cent is covered by plantation tree crops. In total, approximately 80 per cent of the country is under tree cover.

At the same time, Malaysia is a developing country pursuing higher living standards. The palm oil industry contributes significantly to achieving this goal, particularly by driving rural development amongst small scale farmers. There are around 700 000 palm oil smallholders in Malaysia.

The market for biodiesels is important driver behind the success of the Malaysian palm oil sector. Malaysian biodiesel output is expected to double in 2013. However these market forecasts, and their associated economic benefits to national development, could be threatened if key export markets do not accurately recognise Malaysian palm oil derived biofuels as a sustainable source of renewable energy.

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Malaysian Palm Oil Council Rebukes Proposed French Palm Oil Tax

A statement from the Malaysian Palm Oil Council Chief Executive Officer Tan Sri Dr Yusof Basiron on the proposed ‘Nutella Tax’ offered by French Senator Yves Daudigny:

“Malaysia is deeply concerned with French Senator Yves Daudigny’s proposed 300 per cent tax increase on palm oil. The proposal is based on inaccurate claims that palm oil is bad for health and nutrition, and that Malaysia does not respect the environment. Palm oil is a healthy, natural and important product which 240,000 small farmers in Malaysia are proud to produce.

“Contrary to Senator Daudigny’s comments, every nutritional and food expert concludes that palm oil is in fact free of dangerous trans fats, free of GMOs and contains valuable vitamins.  A study from Fonds Francais Alimentation et Santé finds that replacing palm oil is a bad option for French consumers, potentially leading to a rise in the level of trans fat consumption.

“It is important that allegations or claims made about palm oil as high in saturated fat are assessed in relation to the total fats consumption of the French population. The majority of saturated fats consumed in France comes from animal sources – from meat, milk, cheese and butter – not from palm oil.  The Senator’s proposal to deny palm oil its rightful place in food manufacturing will not only be an economic and functional opportunity loss to industry, but also for the French people if they involuntarily consume worse alternatives such as hydrogenated (high trans fat) sunflower or rapeseed oil. The French consume about 101kgs of meat per person per year with an average of 15kgs of saturated fat content. Milk consumption per person is 92.2 liters containing 4kgs of milk fats which belong to the saturated fats category. Cheese has 30% animal fat content and the French are well known to consume 24kgs of cheese per capita, which provides 8kgs of saturated animal fats. Butter consumption is 7.3kgs per capita which is 100% saturated animal fats. If we were to add this up, the total animal saturated fats from milk, meat, cheese, and butter per person per year is 34.4kgs. In comparison palm oil consumption per capita in France is only 2kgs.

“Malaysian palm oil has a proven track record on efficient land use and conservation. Malaysia has over 50 per cent of its land committed to forest cover, and has designated just over 24 per cent of total land area for agricultural purposes. In contrast, forest area in France covers just 28 percent of total land area – but agricultural land covers over 50 per cent of total land area. Palm oil yields 4.13 tonnes of vegetable oil per hectare, or 10, 7 and 5 times the yields of soybean, sunflower and rapeseed, respectively, and occupies less than 5 per cent of land under oilseed cultivation.

“The action taken by French Senator Daudigny, to propose onerous new burdens on palm oil producers, is irresponsible, badly-informed and ignores the primary source of saturated fats in the French diet. Not only will the legislative proposal hurt local business communities in France, which have opted to use palm oil for its superior economic and functional attributes, but the attack comes after the start of talks by Malaysian palm oil representatives with French leaders, industry and civil society to work together to correct misperceptions about palm oil. Over 240,000 small farmers across Malaysia depend on palm oil for their livelihood. In addition to this, many thousands of other jobs in Malaysia depend upon related industries. Senator Daudigny’s actions jeopardize the livelihood of these farmers.

“We call upon the French government to reject the proposal by Senator Daudigny. Senator Daudigny’s proposed tax is part of an aggressive and unprovoked attack against palm oil. Instead, Senator Daudigny should focus his efforts on all saturated fats.

“This campaign has already been the focus of a complaint by small farmers in Africa and Malaysia. These actions will significantly undermine the competitiveness of the French food industry – domestically and globally.

Malaysian Palm Oil Council (MPOC)

The Malaysian Palm Oil Council (MPOC) aims to promote the market expansion of Malaysian palm oil and its products by enhancing the image of palm oil and creating better acceptance of palm oil. The MPOC helps to improve the understanding of the strengths and benefits of palm oil in terms of nutrition, socioeconomic development and sustainability, as well as its ubiquitous and necessary presence in our daily lives.

For further information, please contact the following:
Dr Yusof Basiron:
Belvinder Sron: