Tag: Policy News

The Malaysian Palm Oil Council (MPOC) welcomes the two resolutions on palm oil submitted to the Italian Parliament by Nuovo Centrodestra MP Dorina Bianchi, and by the Scelta Civica MPs Giovanni Monchiero, Pierpaolo Vargiu and Ilaria Capua, on 30th July 2015. It is pleasing to see facts and reason set out in relation to palm oil.

The Resolutions outline the health, environmental and economic benefits of palm oil; and offers an important criticism of the discriminatory negative campaign underway in Italy. The Italian Government should support such efforts, and condemn the misleading anti palm oil campaign being spearheaded by some members of the Partito Democratico and the Movimento 5 Stelle, as well as misinformed NGOs like Il Fatto Alimentare.

“Politicians have a great responsibility to defend scientific truth and adopt the best policies in protecting consumer health” said Dr Yusof Basiron, the CEO of MPOC.

“The MPOC calls on the Italian Government to support the efforts of MP Bianchi and to denounce the anti-palm oil campaign. Italy is good friend of Malaysia, and our two countries benefit from strong and growing trade links. It is a shame that some Italian MPs and NGOs are undermining this relationship.”

Malaysia is the world’s second-largest producer of palm oil and a major exporter of palm oil to Europe, including Italy. The respected economic analysts, Europe Economics, has found that palm oil imports contribute substantially to the Italian economy generating­ 500 million EUR in tax revenue; over 1 billion EUR in GDP; and 14,000 jobs.

In Malaysia, the palm oil industry has helped reduce the incidence of poverty from 50% in the 1960s, down to less than 5% today. It is one of the largest employers, directly employing more than 570,000 people, while another 290,000 are employed in downstream industries.

Contrary to NGO claims, Malaysia has one of the best forest protection regimes in the world, which has been recognised by the United Nations and the World Bank. It is proud to preserve 63% of its land under forest cover – ­ an unparalleled environmental achievement. In contrast, Italy has only 31% under forest cover.

The oil palm is the most land-efficient oilseed crop in the world, producing more oil but using less land. Malaysian palm oil is a sustainable, healthy and high-quality food product. It is recognised by scientists as the best substitute for food ingredients that contain dangerous trans fats. The US has banned trans fats and has ordered that these be phased out in food products by June 2018.

Malaysia’s economic development has for the most part been one of Southeast Asia’s development miracles. Over a period of 40-50 years, Malaysia has become an upper middle-income country, and is likely to be a fully industrialised country before the end of the decade.

How did this happen? It has been a slow and steady process that has involved the diversification of the economy away from subsistence agriculture and export agriculture into value-added processing, manufacturing and services.

But the basis of this – and what has set Malaysia apart from many other countries that were, and still are, reliant upon plantation-based agriculture – has been the growing involvement of smallholders.

They have been granted land with access to transportation links or which is close to urban areas. The farmers have been able to use their land as collateral, grow cash crops and pass wealth to the next generation.

There are parts of Malaysia — particularly in Sabah and Sarawak – where this development story is still unfolding. But the importance of this story remains lost on many, particularly in the West.

Read full story here

By Dr Yusof Basiron, CEO of MPOC

 

 

Palm oil has many benefits – environmental benefits, for its amazing yield, low land-use and productivity; social benefits, for employing small farmers, empowering rural communities, building infrastructure and reducing poverty across the developing world; and, of course, health benefits – for its content of Vitamins A and E, as well as a balanced composition of saturated and unsaturated fats.

Another primary health benefit of palm oil is that it is 100% free of trans fats – one of the most dangerous substances in food, according to the US Food and Drug Administration (FDA). On June 16, it announced its intention to ban the use of partially-hydrogenated vegetable oils – the source of industrial trans fats – in processed foods within three years.

Soft oils are partially hydrogenated in order to harden them to be used in food preparations. Palm oil’s unique balanced composition means it is naturally semi-solid and does not require hydrogenation.

Read full story here

By Dr Yusof Basiron, CEO of MPOC

Kuala Lumpur – The Malaysian Palm Oil Council responds to the false accusations against palm oil leveled by French Environment Minister, Segolene Royal. The CEO of MPOC, Dr Yusof Basiron, issued the following statement:

“Minister Royal is flat wrong, and is misleading the French and European public. The Malaysian Palm Oil industry needs public confirmation from the French Government that Minister Royal’s comments do not reflect official French Government policy towards palm oil. What’s more, Malaysia is the largest producer of certified sustainable palm oil, which is evidence in and of itself that Malaysia is not deforesting as Minister Royal, and her far-left Green friends claim.”

Malaysia is proud to preserve 62 per cent of land as forest cover – an unparalleled environmental commitment, recognized by the United Nations and the World Bank. France has a paltry 29 per cent forest cover, by comparison. In addition, 23 per cent of this forest is set aside for protection and conservation and 70 per cent of the total forest area is permanent forest, which means it can never be put into agriculture or human development. In all, Malaysia has 205,000 square kilometers of forest – an area that is more than twice the size of Portugal.

Malaysian Palm Oil, produced by over 200,000 small farmers, is a sustainable and high-quality food product. Palm oil is the most land-efficient oilseed in the world, producing more oil but using less land. France hosts the latest round of COP negotiations in Paris, later this year. It is essential that the French Government, and specifically, Minister Royal, educates herself about basic environmental facts on palm before the start of the COP.

Malaysia is the world’s second-largest producer of palm oil, and is a major exporter of palm oil to Europe. The Malaysian Palm Oil Council (MPOC) represents the interests of palm oil growers and small farmers, in Malaysia.

40 per cent of all palm oil plantations in Malaysia are owned or farmed by small farmers, who have benefited from oil palm cultivation as a route out of poverty in the rural communities. Palm oil has been a major factor in Malaysia reducing poverty from 50 per cent in the 1960s, down to less than 5 per cent today. Today, the palm oil industry is one of the nation’s largest employers, directly employing more than 570,000 people, with another 290,000 people employed downstream.

According to respected economic analysts Europe Economics, palm oil contributes substantially to the French economy. 4,600 jobs in France are linked to palm oil imports; palm oil contributes 170m EUR in tax revenues to France; and over 320m EUR in French GDP is attributed to palm oil.

EU Trade Commissioner Cecilia Malmström visited Kuala Lumpur last month as part of the ASEAN Summit.

Part of her mission, it seemed, was to revitalize the stalled trade talks for the Malaysia EU Free Trade Agreement (MEUFTA).

But the question that needs to be asked in response to her visit is this: how serious the EU is about trade – and trade in the region?

While the trade arm European Commission itself is no doubt keen on trade, the various political machines within the EU appear to be doing everything they can to undermine it.

Malmstrom highlighted the Singapore-EU FTA as an example, yet our understanding is that ratification has been hamstrung by the European Court of Justice.

The EU’s current big trade showpiece – a trade agreement with the US – is drifting and unlikely to be concluded within the decade.

Undermining the TTIP in particular is European politics, itself driven by various interests in manufacturing and agriculture.

Malaysia’s trade agreement hasn’t been immune to this, and nor has the EU’s proposed agreement with ASEAN.

While Malmstrom said during her visit that the EU is looking to build an ASEAN-wide agreement with what it already has in place, this is questionable given that its current agreements are hamstrung. And the likelihood of reaching agreement with a partner like Indonesia, for example, is slim at best.

The stalling of MEUFTA

Malaysia’s negotiations with the European Union on a free trade agreement (the MEUFTA) have been ongoing since 2010. They stalled during the election in 2012, but were given a new lease on life at the end of 2014, when the Prime Minister put forward a new mandate for the negotiations at an EU-ASEAN business forum.

Malaysia has already established trade agreements with Japan, Australia, India, Pakistan, New Zealand and Chile.

The EU was generally reluctant to push for trade liberalization until around 2007, when it commenced pursuit of an EU-ASEAN FTA. Presumably this was following China’s successful execution of a trade agreement with ASEAN that was ratified in 2008.

Not long after, the EU shelved its ASEAN plans, mostly due to the intractability of human rights and labor rights requirements in its FTAs, combined with countries such as Myanmar that would struggle to meet the benchmarks.

It then went after two agreements, one with Singapore and one with Malaysia. Singapore was straightforward: it is already an open, services-based economy with no agriculture and relatively little manufacturing.

Malaysia, on the other hand, has a vibrant manufacturing and industrials sector and one agricultural product that competes head to head with European farmers: palm oil.

There was a general agreement that the MEUFTA talks would be restarted during Malmstrom’s visit, but palm oil is one issue that needs addressing.

Palm oil, labels and MEUFTA 

So where does palm oil sit for Malmstrom?

During her visit she stated that the various European campaigns against palm oil were being driven by consumer concerns, yet her grasp of the situation is questionable at best.

The use of labels by some European retailers in France and Belgium that are aimed at reducing palm oil consumption have serious implications for the trade relationship more broadly.

The key actors here are non-palm oil vegetable oil producers, environmental campaigners and certain retailers placing labels on some foodstuffs in France and Belgium bearing the message ‘No Palm Oil’ or ‘Palm Oil Free’.

A report commissioned by MPOC by the prestigious international law firm, Hogan Lovells, concluded these labels contravene EU laws, particularly the new EU Food Information to Consumers Regulation (1169/2011). This came into force in December 2014, and applies to all EU Member States, including France and Belgium.

Under these and other EU rules, food labelling claims for nutrition or health must have scientific justification. These rules provide coverage for these claims to be implied as well as direct. For example, the claim ‘No Preservatives’ implies preservatives have a negative health impact.

Currently, the proponents of the labels are attempting to justify ‘No Palm Oil’ labels on health grounds. There is, however, no scientific basis for this case.

There has been a lack of implementation and enforcement of the regulations, particularly in Belgium. Belgian Government Ministries and the regulatory authorities responsible have not enforced the law, and have not pursued those companies that are using and promoting the anti-palm oil labels.

This lack of implementation can also be seen in France. In 2012, it took a lawsuit by a group of exporters from the Ivory Coast suing French supermarket chain Systeme U to get some political and public attention. The farmers won the lawsuit after arguing that the campaign — which claimed palm oil had a negative effect on the environment — lacked credible ecological data and scientific analysis. The anti-palm oil advertising was withdrawn on the orders of the court.

In other words, we have a situation where EU member states aren’t enforcing their own laws.

The question then is whether a trade negotiation can be conducted in good faith.

Renewable energy

Similarly Malmstrom stated during her visit that “sustainable sources of energy” were part of the EU Renewable Energy Directive (RED).

But the trade problems around the RED have been disturbing for anyone attempting to export to the EU.

This has been a particularly contentious policy for exporters of renewable feedstocks for fuels to the EU. The policy effectively subsidised renewable energy producers by mandating that a percentage of the EU’s energy supply had to come from renewable sources.

The possibility that renewable fuels might be imported — and competitively — wasn’t necessarily a scenario envisioned by EU policymakers. But the competitiveness of soy- and palm-based fuels effectively meant that the subsidy would go to non-European producers.

This resulted in Europe introducing arbitrary environmental criteria to prevent access to this subsidised market by imports. In other words, trade discrimination.

Argentina brought a complaint against the EU over the policy which is highly likely to breach WTO rules. Malaysia and Indonesia have both expressed concerns in the WTO.

Where do we go?

So does this mean MEUFTA remains at a standstill?

Probably not, but there does appear to be an impasse.

The EU is trying to get larger trade deals under its belt. Its priority is a trade agreement with the US. It is still seeking an ASEAN FTA — hence the need for cooperation agreements with ASEAN member states.

This is a very European approach: slow, unwieldy, bureaucratic. Contrast this with the dynamism of the US-backed Trans Pacific Partnership Agreement, which has gone from almost nothing to being near completion within four years.

But on the MEUFTA question and the broader trade relationship, Malaysia needs assurances from the EU that the trade relationship is important, and that the EU considers Malaysia an equal trading partner, particularly as it is chairing ASEAN this year.

ASEAN’s population is more than 600 million.

Some observers of the palm oil trade had hoped that MEUFTA would provide a magic bullet solution that would address many of the policy problems facing palm oil.

But if Malaysia has to wait for the EU and its negotiations with ASEAN member states to be concluded, these policies will require a piecemeal approach.

Malaysia can, for example, consider launching its own dispute resolution case in relation to the EU-RED, just as Argentina has done.

Malaysia’s negotiations with the EU over the FLEGT timber programme are ongoing; a working committee could be established to look at the possibility of introducing a VPA on other commodities. Similarly, the EU has launched consultations into broader FLEGT arrangements — and Malaysia should participate in this.

Labelling, however, presents a more immediate challenge in that while it is not a policy, its continued protection by governments of Belgium and France represents a state-sponsored endorsement of the actions by these private companies. Alongside affected exporters, the government needs to use diplomatic channels within those jurisdictions accordingly. Similarly, the EU needs to ensure that they attempt to enforce the law and not be seen as subject to politicisation.

Should Malaysia raise these issues in future negotiations and demand answers?

Absolutely.

Malaysia — and the rest of ASEAN — needs to remind the EU that: first, trade is a two-way relationship; second, that its imperial influence has long faded; third, its protectionist tendencies will not cut it in a globalised, post-colonial world.

Food industry news site Food Navigator picked up our recent policy blog in response to a report by Western NGO FERN, which recently made a series of claims about Malaysian Palm Oil.

The big statement made in their most recent report – and that we set about debunking was this:

“the available evidence suggests that most forest clearance for soy and cattle elsewhere in Latin America is also illegal, as it is for much of the palm oil from Malaysia.”

In short, the report claims that most clearance for much of the palm oil from Malaysia is illegal, based on available evidence.

That is a very serious allegation to make.

So our response was to track this evidence to its original source – a previous report by the same author for Forest Trends.

The Forest Trends report makes the following claim: in 2000-2012 deforestation for commercial agriculture which was illegal is 43 per cent.

To arrive at this, the study “assumes the problem is 50% of the measured average of Indonesia, Cambodia, and PNG; high-end analysis assumes it is equal to the average for these three countries.”

In other words, FERN’s claim is that Malaysia’s level of enforcement and compliance is half that of three other countries with completely different systems of government, federal and state regulations, systems of governance. The original report said “No suitable quantitative data exist on which to base estimates” of so-called illegal clearing, but FERN has just thrown the allegations at Malaysia anyway.

What’s the justification for the 50%? There isn’t one.

In fact, the study uses the same 50% figure when making estimates about Vietnam, Myanmar and Laos.

When making estimates about Paraguay and Peru, it simply used the 50% number on Latin American countries where it had data – Brazil and Bolivia.

When making estimates about African countries – where it had no data at all – it used 50% across a range of countries from Asia and Latin America.

Regardless of the accuracy of the measures in other countries, using them as proxies for illegality in forestry, agriculture or any other sector anywhere else in the world is a methodology that is poor at best, and completely erroneous, at worst.  It has all the scientific rigour of saying, “I reckon it’s about half.”

Even worse, it reeks of an attitude towards developing countries that has no compulsion to understand the significant differences between nations: “They all look pretty much the same.” This is the worst kind of attitude that a Western NGO could take, towards developing nations.

The response by FERN has been to say the following:

“Ideally the global estimate would have been produced by simply adding up the relative contribution of each country with tropical forest, but this was not possible because of lack of sufficient data on which to make a national-level assessment.”

But the real question is this: if you don’t have the data, how can you make the claim?

If there is no data, how is it possible to truthfully state that forest clearance for “much of the palm oil” from Malaysia is illegal?

Further, this doesn’t just apply to FERN and Forest Trends.

This applies to the UK Government – in the form of its Department for International Development (DfID) – which sponsored and provided funding for this report.

FERN has stated that “the UK Government had no say in the production of this report in any way, shape or form.” Perhaps not, but they were the ones that paid for it, and without that it would never have happened.

And to add an insult to Malaysia, FERN has stated that “Malaysia … hardly features in the report anyway.” This is a little like saying that a newspaper that devoted a full page to defaming someone doesn’t matter, because the rest of the newspaper was devoted to other subjects.

In fact, FERN has insulted Malaysia, the Malaysian Palm Oil community and both the independent and organised smallholders.

The FERN report gets to the heart of many of the Western debates about the environment and development in developing countries, and to the heart of the future of the global palm oil industry.

For many years, the campaign against deforestation in developing countries focused on the forestry sector. Timber and paper products became the enemy; campaigns against illegal logging that went after the timber product trade resulted in policies being implemented in Western countries. Then, almost overnight, there was the realisation that deforestation for the most part –

around 80 per cent – is caused by agriculture.  And around half of agricultural deforestation in Africa and Asia is from local and subsistence agriculture – in other words, poor people trying to grow food for their families.

At the same time, deforestation was repeatedly blamed for being a major contributor – around 25% according to some NGO estimates – to greenhouse emissions. This estimate has been almost halved.

There is a tendency of Western Environmental NGOs to construct an idealised pre-modern view of the developing world, where progress should for some reason not take place.

It’s literally a fantastic narrative, and facts simply make this narrative untenable.

In these circumstances, it would seem that twisting or cherry picking the data to fit the narrative makes more sense – particularly if you want to get headlines.

Background

The European NGO FERN recently released a report stating that a significant majority of the EU’s commodity imports are the result of ‘illegal deforestation’.

The report was funded in part by the US-based Ford Foundation and the UK’s Department for International Development (i.e. – the British Government).

It was authored by a forest campaigner who has worked closely with organisations such as Greenpeace and WWF through his private consultancy.

The report falls under DFID’s Forest Governance Markets and Climate programme.

Key Claims

The report makes the contention that a substantial proportion of commodity imports to the European Union are the result of illegal forest clearing. The report concentrates specifically on palm oil, beef, soy and leather.

In relation to Malaysia and Malaysian Palm Oil, the report makes a number of claims.

Claim 1: “Malaysia has the world’s worst deforestation rate.”

The source that is used for this claim is the environmental advocacy site Mongabay, which published the story in 2013. Yet in 2014, the same source claimed that Indonesia has the worst deforestation rate. Mongabay is not exactly the New York Times; what they publish should be taken with a grain of salt.

The academic sources cited state that Malaysia has the worst deforestation rate, but in terms of absolute area, forest lost in countries such as Brazil, Indonesia, Canada, Russia, the US and Australia are significantly higher. Indonesia’s actual forest loss annually is at least four times as large. Even by the sources’ own aggregate measures, countries such as Portugal and South Africa have more significant rates of loss, despite coming from a lower base. The inconsistency of the secondary source (Mongabay) simply reinforces the questionability of making such a blanket statement.

This claim is a classic example of cherry-picking data to suit a pre-existing agenda. The overall percentage of forest cover remaining in Malaysia is actually well over 50% – higher than almost every European country – and the Malaysian Government has been praised by among others the United Nations, for an ambitious and bold commitment to retain a minimum 50% of land area as forest. The insinuation in this report that Malaysia is happily and mercilessly deforesting is manifestly false.

Claim 2: Claims of corruption and graft in Sarawak, followed by the statement that “there are more than 200 land rights cases pending in the Sarawak courts, the majority of them relating to plantation development. The few such cases which have been concluded have found in favour of the local communities which brought them.”

However, it should be noted that the only comprehensive survey of NCR cases between 1995 and 2010 – undertaken by a conservation NGO – notes that of the 147 cases relating to forest clearance, around 40 per cent are related to palm oil. Not included in the survey are a large number of non-forest disputes relating to infrastructure developments such as airports.

That the courts have often found in favour of the plaintiffs effectively vindicates the independence of Malaysia’s legal system, and illustrates that – far from being a major problem – the system is working. Every country worldwide will experience land disputes: the key is that they are properly considered and administered.

Claim 3: The paper makes blanket claims about the amount of palm oil imported from Malaysia that it considers to be a result of ‘illegal deforestation’, based on value (EUR550 million) and area (130,000 ha).

Much of this work is based on earlier work undertaken by the same author for by another NGO, Forest Trends,

Yet this work is also plagued with problems. The Forest Trends report claims that 43 per cent of palm oil plantations have been established illegally. To arrive at this claim, the author takes a ‘measured average’ of illegality of plantation establishment in Cambodia, PNG and Borneo and halves it. This is despite all three countries having completely different land tenure and legal systems. In other words, there is no genuine attempt to distinguish – let alone measure – possible levels of legal or regulatory breaches.

Further, the author states that: “No suitable quantitative data exist on which to base estimates, though plentiful qualitative data demonstrate that problem is widespread, especially in Sarawak.” Yet even then, the source cited – another Forest Trends report – states, “studies by WWF and the World Bank in 2001 found that Malaysia’s legislative framework and political scenario provides adequate support for effective forest law enforcement, with the level of illegal logging (from selective felling and forest conversion) being “small (in the order of 1% or less) compared to the legal wood products trade.”

It should also be noted that the Forest Trends report on which the FERN report is based states that the ‘majority’ of NCR claims are around palm oil, citing the same NGO report cited above by the Oil Palm. This is simply not the case.

Analysis of Funding — and Why the British Government is Engaged in a Smear Campaign against Malaysia

The report was likely funded under DFID’s Forest Markets Governance and Climate programme. This programme has been responsible for much of the anti-agriculture rhetoric coming from Europe.

The programme can be read as a protectionist method for stymieing commodity imports from major developing countries such as Malaysia, Indonesia and Brazil as a means of conserving forests and protecting European industries. Yes, protectionism because Europe is simply uncompetitive in the 21^st Century. The programme’s administrative documents state:

“The programme will actively support poor people, who are deprived of their livelihoods by poor forest governance, to make their case. It will also support investigation into best practice where rules benefit poor people. It will provide context-specific evidence on how changes in forest governance that tackle illegal logging and illegal clearance affect different groups.”

Yet there is little evidence to date that there has been support for the rural poor under the programme, particularly in Malaysia.

The documents further state:

“There may be costs associated with reducing agricultural commodity production on illegally cleared land in terms of employment for poor people and smallholder incomes. In this case the programme will help countries legalise land conversion or develop economic activities on already degraded or cleared land.”

So, on the one hand the programme says it will support poorer smallholders, but also acknowledges that the programme might completely ruin their livelihoods. But also states that it might attempts to relocate communities to suit the objectives of the programme – something that World Bank’s aid guidelines actively discourage.

This is an egregious act by the British Government against Malaysian interests, and is openly stymieing Malaysia’s efforts to increase wealth for its people.

There’s a further problem. The DFID programme concentrates on a handful of countries – mainly Liberia, Ghana and Indonesia. Malaysia is not one of them. So, while some in London think it is fine for DFID to pay for reports that actively discourage purchases of imports from a country like Malaysia and harm livelihoods, there’s no mitigation of this through support programmes.

In the end, the purpose of the document appears to be to lobby for something resembling a FLEGT arrangement for commodities, with voluntary partnership agreements (VPAs) with countries. While the objectives of VPAs might be good and in theory they might work, the fact is that there is not a single VPA on timber that is currently working and has moved beyond the pilot stage.

Even worse, small and medium enterprises in Indonesia have taken up the case with their forestry minister as they have had trouble accessing European export markets – because of the newly implemented export licensing regulations that will be a precursor to a working VPA. This is despite more than 10 years and literally hundreds of millions of euros being thrown at the programme.

So, the intentions might be good – but the implementation is, frankly, perverse. Rather than actually trying to improve forest governance where it’s needed, it is actively discouraging the purchase of commodities from developing countries – such as palm oil – across the board.

This isn’t development assistance; it’s Green Colonialism.