The Oil Palm The Oil Palm

ICYMI: A Message to President Hollande: Support Palm Oil

In an opinion editorial featured in The Star, Belgian agronomist Pierre Bois d’Enghien writes about this week’s visit of French President Francois Hollande to Malaysia – and why the President should guarantee that Palm Oil will not be taxed in France.

The Star: A Message to President Hollande: Support Palm Oil

By Pierre Bois d’Enghien

‘Francois Hollande’s visit to Malaysia is important for French business: according to French media reports, there are hopes of defence contracts being signed. Alongside such French priorities, the President should be asked to recognize the Malaysian priority of Palm Oil.

‘First, he should support G2G initiatives. President Hollande should announce that the French Government will provide technical and financial support to helping develop and strengthen MSPO, the Malaysian Government’s standard.

‘Second, President Hollande should commit that France will not tax palm oil. In 2013, former Prime Minister and now Foreign Affairs Minister Jean-Marc Ayrault promised that France would not tax palm oil, and that promise needs to be re-stated by President Hollande.

‘Third, President Hollande should recognise the achievements Malaysia has made in terms of environmental management and sustainable commodities. These would be the actions of a true friend; it remains to be seen if France will agree.’

Read the full opinion editorial here: A Message to President Hollande: Support Palm Oil

The Oil Palm The Oil Palm

Statement from Minister of Plantation Industries and Commodities Datuk Seri Mah Siew Keong following European Parliament Report on Palm Oil and Deforestation

The Minister of Plantation Industries and Commodities, YB Datuk Seri Mah Siew Keong expressed concern on the recent voting of the Committee on the Environment, Public Health and Food Safety of the European Parliament (ENVI Committee) on Motion 2016/2222(INI) which includes opinions of the  Committee on Agriculture and Rural Development (AGRI), the Committee on International Trade (INTA), and the Committee on Development (DEVE) for a European Parliament Resolution on Palm Oil and Deforestation of Rainforests.

The Resolution links the palm oil industry to deforestation and the disappearance of the ecosystems. Among the main elements of the Resolution includes the need for a single certification that will guarantee only sustainably produced palm oil enters the European Union (EU) market and the requirement for food labelling indicating palm oil is sustainably produced through packaging or information accessible through technological features. Such Resolution is perceived as trade impediment and may have a significant negative effect on Malaysia’s exports. Furthermore, the requirement for mandatory labelling requirement targeted specifically for imported palm oil products could be considered as a significant departure from WTO commitments.

The palm oil industry in Malaysia is one of the well-regulated industries in the world and being one of the major producer and exporter of palm oil products globally, Malaysia would like to strongly reiterate that the palm oil industry subscribes to sustainable practices. In this regard, Malaysia has implemented the Malaysian Sustainable Palm Oil Certification Scheme (MSPO) beginning 2015 to promote the production of sustainable palm oil. MSPO is based on compliance to domestic laws and regulations, including the development and management of oil palm cultivation that subscribes to best environment and agricultural practices. As of January 2017, a total of 221,548.14 hectares have been certified under the MSPO scheme. To emphasize on Malaysia’s seriousness towards ensuring that palm oil is produced sustainably, the MSPO certification scheme has been made mandatory by December 2019 and it will be a move towards a truly reliable and internationally acceptable certification system. For Malaysian palm oil, our vision is through a MSPO certification as well as products identified through a Malaysian MSPO logo that would be the hallmark of quality and sustainability assurance to our global customers.

Malaysia strongly opposes the Resolution by the EU Parliament as it will have a negative repercussion on the palm oil imports into the EU and a devastating impact on the economy of producer nations. Currently, the EU is the largest market for Malaysian palm oil and palm-based products where in 2016, EU’s imports were valued at around RM10 billion. It is important to note that the palm oil industry is an essential component of the agriculture sector in Malaysia and has been instrumental in addressing rural poverty and providing employment opportunities. This industry is important to the livelihood of small farmers where, there are currently more than 600,000 smallholders in Malaysia, which is close to 40% of the total planted area. The palm oil industry has contributed to RM67.6 billion in 2016 in terms of export earnings and accounted for 55.4% and 8.6% of total commodity exports and total merchandise exports respectively.

In addition, Malaysia has also put in place various regulations related to conservation of its forest and biodiversity. Malaysia currently has 55.3% of land area under forest cover. This is in line with the commitment at the Rio Summit 1992 to retain at least 50% of the land area under forest cover. Palm oil cultivation currently accounts for 5.74 million hectares which occupies around 17.4% of the land area.

It is also important to note that this Resolution arises out of the Commission finding of 2013 where EU states that they are the biggest importer of deforested products with soyabean and soya cake from Brazil and Argentina amounting to 50%. Palm oil is in third place. Therefore the move by EU to single out palm oil and not the other crops that account for more than 50% of European imports that have been shown to contribute significantly towards deforestation through cattle grazing (animal husbandry) and soya cultivation is unjustifiable.

The Ministry of Plantation Industries and Commodities will continue to engage the relevant stakeholders in the European Union apart from initiatives that have been undertaken to engage the Members of European Parliaments through familiarisation visits to the oil palm plantation to educate on the sustainable practices of Malaysian palm oil industry. Malaysia will also collaborate with Indonesia under the ambit of Council of Palm Oil Producing Countries (CPOPC) to jointly represent our case highlighting the environmental and sustainable development of the oil palm industry and its contribution to the economy and poverty eradication as well as nutritional attributes of palm oil.



Minister of Plantation Industries and Commodities

The Oil Palm The Oil Palm

The European Parliament’s Deeply-Flawed Campaign Against Palm Oil

The European Parliament’s Committee on Environment, Public Health and Food Safety is set to vote on a deeply-flawed draft report that contains a number of falsehoods about Palm Oil.

Let’s set the record straight.

Myth #1: The draft report claims that “Cultivation of palm oil over the last 20 years has been the cause of 20% of all deforestation.”

Fact: This is completely false and has disproved by the EU’s own research. In 2013 the EU commissioned research[1] looking into the causes of deforestation globally. The report calculates that over a 20-year period, about 132 million hectares (Mha) of deforestation can be attributed to the agriculture and forestry sector. Of this, 58Mha – a little less than half — was cleared for livestock grazing. The others are “soybeans (13 Mha), maize (8 Mha), oil palm (6 Mha), wood products (5 Mha), rice (4 Mha), and sugar cane (3 Mha).” So, out of a total 239Mha of deforestation, 2.5 per cent can be attributed to Palm Oil, less than soybean, beef, maize and infrastructure development[2].


Myth #2: Companies producing Palm Oil are guilty of “Deforestation”.

Fact: This is a ‘straw man’ argument. Forest Transition is a well-recognised path to development, whereby poor countries develop their resources to maximize food production and human development. Europe engaged in massive unsustainable clearing of forests for its development. In Malaysia, 56.4% of land has been kept as forest area, while setting aside 20% of land for agricultural development.  This is a track record of development and forest protection that no EU country can match.  Again, no EU country can match this record.  Belgium has 23% forest area, France has 31%, Italy has 32%, and the Rapporteur’s home country, Czech Republic, has 36%. This is a far cry from the claims made by the Committee.  Perhaps the Committee should look no further than within the borders of Europe before criticising others.


Myth #3: In Paragraph E, the draft report states that “precious tropical ecosystems, which cover a mere 7% of the Earth’s surface, are under increasing pressure from deforestation and the establishment of palm oil plantations.”

Fact: This is a misrepresentation of absurd proportions. Tropical land represents 31 per cent of ice-free total land surface area – approximately 20 million km2[3]. The total global oil palm cultivated area is approximately is 180,000 km2 – less than 1 per cent of tropical land area, and around 0.1 per cent of total global land area[4]. This compares with cultivated area for soybean (1,170,000km2), rapeseed (357,000 km2) and maize (1,830,000 km2).  In the past ten years, oil palm area has expanded by around 57,000 km2. Soybean has expanded by 251,000 km2; rapeseed has expanded by 80,000 km2. Paddy rice has expanded by around 82,000 km2. The largest long-term factor in deforestation in tropical forests is demographics. The largest pressure on tropical ecosystems has been in Latin American forests, notably Brazil, where the commodity pressures have been from beef and soybean, not Palm Oil.


Myth #4: The expansion of Oil Palm plantations in other developing countries is a bad thing and undermines sustainable development.

Fact: European policy has a dark history in undermining developing countries’ prosperity and development.  This report seeks to perpetuate that dark history. Further, the report is oblivious to the plight of farmers in developing countries. Oil Palm cultivation supports millions of livelihoods across Sub-Saharan Africa and South East Asia and has done so for decades.  In Africa, small farmers produce around 90 per cent of Palm Oil[5]. In Malaysia, 39 per cent of oil palm is from small farmers. Further development and cultivation of oil palm will increase food security, improve rural incomes, and benefit the economies of developing countries in Africa and Asia. These benefits for the global poor appear not to matter to the authors of the European Parliament report.


Myth #5: Palm Oil is the sole reason for declining populations of endangered animals such as the orang-utan. The report states in Paragraph I “the loss of natural habitats in the form of rainforests is endangering the survival of a large number of species”.

Fact: Research clearly shows that Palm Oil is not to blame for species decline. The NGO Traffic highlights that the major threat to tiger populations is poaching[6], not Palm Oil. A Traffic study notes that a hunter can earn around 1.5 times the annual income of a typical rural worker from the capture of a single tiger[7]. Similarly, the reasons for orang-utan deaths are only now being understood, despite campaigners simply blaming ‘Palm Oil’. In a recent study of village populations in Kalimantan, it was noted that more than half the orangutan killings were for meat consumption[8] by the local communities. In Malaysia, recent strategies to preserve orang-utan populations – based on these realities – have succeeded in stabilising animal numbers.  The reality is that Palm Oil doesn’t kill animals or make them extinct. Human population and development does. The past 500 years have seen a range of species extinctions across Europe. The Pyrenean ibex, native to France, went extinct in 2000. The Caspian tiger went extinct as recently as 1975.


Myth #6: Using certification schemes and NGO-developed conservation measures such as Greenpeace’s High Carbon Stock approach will support sustainable development. The report in Paragraph 4 “Calls for companies that cultivate palm oil to use the High Carbon Stock (HCS) approach when developing their plantations.”

Fact: The idea that democratic sovereign countries such as Malaysia should have environmental management standards written in Brussels belongs to a different era. Organisations such as Greenpeace have pushed an agenda to restrict Palm Oil production and procurement that has had a negative impact on small farmers. As a result of Greenpeace’s ‘Zero Deforestation’ policies Unilever admits publicly that it has cut around 80 per cent of its small farmers from its supply chain[9]. Thousands of small farmers will be negatively impacted. Greenpeace, and the European Parliament, are prioritising environmental ideology over the social and economic welfare of people in Africa and Asia.


Myth #7: Palm oil biodiesel is somehow worse than alternative sources of biofuel. The report in Paragraph 16 calls for palm oil biodiesel to banned “by 2020 at the latest”.

Fact: European legislators are more interested in protecting domestic industries in Europe than solving environmental problems or making efficient fuels. Palm oil is by far the most efficient oilseed in the world. Biodiesel from Palm Oil is therefore responsible for using far less land, and far fewer fertilizers and other inputs, compared to any other oilseed crop. The use of Palm Oil for biofuels and biomass has been shown by scientists to be highly beneficial[10] for the EU’s renewable strategy. Advanced biomass is also a major advantage: Palm Oil’s use of POME, used FFB and fronds, have significant benefits as advanced biomass feedstocks[11] that can be beneficial for the EU’s pivot towards advanced biofuels and biomass. The EU’s inefficient, underproductive and overpriced domestic biofuels – primarily rapeseed – are using such scare stories to impose restrictions on Palm Oil exports to Europe. This is an attempt to use myths to prop up failing European industries – in contravention of the facts.

[1] European Commission (2013). The impact of EU consumption on deforestation: Comprehensive analysis of the impact of EU consumption on deforestation. Technical Report 2013-63

[2] European Commission (2013). The impact of EU consumption on deforestation: Comprehensive analysis of the impact of EU consumption on deforestation. Technical Report 2013-63

[3] Yale School of Forestry. ‘Tropical Zone’

[4] FAO (2016). FAOSTAT database collections.  Food and Agriculture Organization of the United Nations. Rome.

[5] N. E. Tiku  and F. A. Bullem (2015). Oil palm marketing, Nigeria-lessons to learn from Malaysia experience, opportunities and foreign direct investment in Cross River State. Journal of Development and Agricultural Economics. Vol. 7(7), pp. 243-252, July, 2015.

[6] Chris R. Shepherd and Nolan Magnus (2004). Nowhere To Hide: The Trade In Sumatran Tiger. Traffic Southeast Asia

[7] Chris R. Shepherd and Nolan Magnus (2004). Nowhere To Hide: The Trade In Sumatran Tiger. Traffic Southeast Asia

[8] Erik Meijaard et al (2011). Quantifying Killing of Orangutans and Human-Orangutan Conflict in Kalimantan, Indonesia. PLOS ONE 7(3)

[9] Fred Pearce (2013). Push for traceable supply chains threatens smallholder farmers. n

[10] JENA Economic Research (2010): Recalculating Default Values for Palm Oil

[11] IOP Science (2013):  Use of Oil Palm Waste as a renewable energy source and its impact on reduction of air pollution in context of Malaysia:

The Oil Palm The Oil Palm

The Apology that Oil Palm Growers Need to Hear

NGOs and campaign groups rarely admit that they are wrong. They almost never admit that an industry that they have been campaigning against is right.

But that is effectively what the Union of Concerned Scientists (UCS) – a US-based campaign group – has done in relation to palm oil.

UCS has pointed out that palm oil is not the environmental bogeyman that NGOs have made it out to be. Why? Because it is not a major contributor to global deforestation.

What has tipped UCS over is a report by Climate Focus, written for signatories to the New York Declaration on Forests. It pointed out that commodities such as beef, soybean and maize have a significantly higher deforestation footprint than palm oil. In the case of beef, it’s around 10 times bigger.

Much of this is based on work previously undertaken by the European Commission, which looked at the deforestation footprints of various commodities.

The MPOC has been writing on this topic and pointing out the European Commission data since it was released.

But the mea culpa from UCS has much larger implications for environmental campaigning.

As UCS states: “a recent study indicates that that global corporations that have committed to ending the deforestation they cause, have got their priorities backwards. And it suggests that the NGO community—and that definitely includes me—may have had our priorities wrong too.”

The Climate Focus study points out that palm oil companies have made significantly bigger commitments to zero deforestation than any other commodity group, despite being a much lower contributor to deforestation.

A question for organisations like UCS and the broader NGO and campaigning community is whether this means they will cease their absurd campaign against palm oil and whether they will actually apologise for some of the claims they have made.

A bigger question, though, is the funding associated with NGO campaigns.

The Climate and Land Use Alliance, a coalition of US-based foundations, has funded a wealth of activity aimed at palm oil. A look at their Global Grants list indicates that they have spent more than USD 13 million campaigning on palm oil across 38 funded projects – including USD 3 million for Greenpeace.

Compare this with their spending in the same list on soybean: five projects, totalling USD 2.5 million. And compare this with spending on beef and cattle: USD 759,000. These beef projects weren’t even exclusively beef projects; they looked at different commodities.

A lot of this funding is still ongoing. Greenpeace is in the middle of a USD1 million grant directed at palm oil. So is Rainforest Action Network. Friends of the Earth is in the middle of a USD400,000 grant.

It’s no wonder the campaigning against palm oil and the subsequent commitments have been skewed: there was simply more money thrown at it.

There are also other factors. Where palm oil can be substituted for competing oils, beef cannot be substituted for anything. The largest beef producers in the world are the US and the EU. A campaign against beef is simply not politically tenable in those countries.

In the EU, palm oil can be substituted with competing European oils such as sunflower and rapeseed. Generating an environmental case against palm oil – which is really only grown in two countries that are not major trading partners – is a no-brainer for those industries.

But this isn’t the first time that environmentalists have declared war on a particular industry and got the underlying facts wrong.

During the 1990s and most of the 2000s, campaigners concentrated heavily on the timber industry. There was an assumption that timber demand was leading to global forest loss. This resulted in campaigns against paper products and an entire industry of consultants working on illegal logging policy. But it wasn’t timber demand that was the problem: it was the need to grow food.

There is little downside for NGOs if they are wrong.  Greenpeace claimed for a long time that tropical deforestation was responsible for around 25 per cent of global emissions. The estimate is now much closer to 10 per cent. Greenpeace would no doubt justify this by saying it brought attention to the issue.

But in the case of palm oil, erroneous information has harmed the commodity’s reputation, and impacted the lives of the 3 million small farmers who grow it.

They are the people that need the apology.

The Oil Palm The Oil Palm

Making Palm Oil ‘Socially Unacceptable’

The campaign against palm oil is ever-evolving. In the 1980s and 1990s, the US soybean lobby campaigned on health grounds. Since 2000, the campaign shifted to environmental concerns, largely supported by the rapeseed and sunflower industries in Europe and led by radical Green NGOs.

In recent years this has taken on a new and more comprehensive approach. Its clear objective is to make palm oil ‘socially unacceptable’. This new approach has been aggressive: even Prince Harry has been drawn into the debate, arguing recently that palm oil should be as socially unacceptable as cigarettes.

Harry’s misinformed comments reveal the tactics of the anti-palm oil campaign. It is the same tactic that radical campaigners have used to good effect to shut down and restrict other products that they object to. Palm oil is now in their sights, and they have a clear playbook.

The first part of the campaign is well underway. That is the push to make palm oil consumption more visible – to give them an easy-to-see target. This has already happened in food in many countries. There was considerable pressure to have palm oil specifically labelled in Europe, which has been implemented in law. Lobbying by NGOs is now focused on bringing that transparency to bear in the United States and Australia and New Zealand.

Once palm oil can be easily seen and identified by consumers through labelling, the second, more insidious, part of the campaign takes off. This is to push for products to be free of palm oil: the results of this can be seen in the proliferation of No Palm Oil labels by companies across Europe.

These labels, though, are clearly illegal. There are rules governing the use of negative claims in food labelling in the EU and Australia. There needs to be a justifiable case as to why something can be labelled ‘free’ of a particular product. In most cases this is for health reasons, e.g. dairy or soy. Dairy and soy are both sources of allergens. Hydrogenated soybean oil is a major source of trans fats. This does not apply to palm oil, which is not an allergen.

The real goal is to poison the minds of consumers against palm oil: when enough products indicate and advertise that they do not contain a specific product, consumers begin to see that product as ‘socially unacceptable’ to consume.

This campaign has even been openly admitted by some campaigners – in an article late last year; the author posited a hypothetical situation where consumers would eat crackers containing palm oil in secret.

The arguments used by the anti-palm oil campaigners remain weak. First, there is the health case. As stated above, this case is tenuous and has been tried over a 30 year period. New evidence has closed this case comprehensively from a scientific perspective. The NGOs, however, do not care for science.

Second, there is the environmental case. Environmental justification for avoiding palm oil has taken on many guises. It has gone through the wildlife conservation case, the climate change case, the peat case and more recently the fire and haze case. In all these cases, claims by campaigners have been rebutted with evidence. Once again, what they lack in evidence, the campaigners make up with persistence. If a message is repeated enough, people will simply accept it.

Third – and this is the newest part of the campaign – is the attempt to make a social case against palm oil. Most recently, attacks have been made on palm oil for links to child labour, human rights abuses and property rights infringements.

This last part of the campaign is particularly dangerous, and has been focused on audiences in the United States. It must be urgently dealt with if palm oil is to avoid this narrative becoming as ingrained as the environmental narrative is in Europe.

In most of these cases, there are no distinctions made between the sources of the palm oil whether companies or countries. The target is the commodity itself.

And as is often the case in Western markets, people don’t necessarily need legitimate reasons to think something is unacceptable. If they are convinced by consistent NGO and media claims that a product is socially or morally unacceptable, they will ignore scientific evidence and legal rulings. The campaigners now plan to inflict the same socially unacceptable fate onto palm oil.

Tobacco, of course, is the ultimate socially unacceptable product. Prince Harry’s comments were not an accident: the comparison with tobacco is the dream of palm oil’s opponents. This is how they would like palm oil to be treated: taxed, restricted, ostracised.

The weak arguments against palm oil haven’t changed. But neither has the determination of opponents. What has changed is that there is now a concerted plan using all methods available to send palm oil down the same, well-travelled path to social banishment that has been suffered by other products, such as tobacco. The palm oil industry must act fast to avoid this fate.

The Oil Palm

Sustainable Palm Oil the Norm? A Loaded Term

The Center for International Forest Research recently asked the question: “What will it take to make sustainable palm oil the norm?”

This is a question that NGOs often ask, and it’s often unqualified.

When NGOs ask, it’s a loaded question. It’s directed at Western companies and Western policymakers. It goes hand in hand with a series of assumptions about oil palm growing and palm oil production.  First is that oil palm growers are a large, homogenous group. Second is that oil palm growers are, for the most part, part of large corporations. Third is that everyone everywhere considers environmental sustainability to be the number-one priority. Fourth is that Western developed markets are the only markets that matter. Fifth is that ‘sustainable’ means all aspects of sustainability – including poverty reduction – are covered.

Anyone who has a basic understanding of palm oil production and palm oil markets knows that none of these assumptions are true.

But there’s such a misunderstanding in the debate over palm oil that Western NGOs have been able to push it in the opposite direction. Consider how NGOs are pushing for tighter, more expensive standards that are completely out of reach for small farmers, and exclude small farmers from supply chains. The most egregious example of this is the ‘zero deforestation’ traceability model. This was the model that resulted in Unilever having to cut 80 per cent of its smallholder suppliers from its supply network.

What this underlines is that most of the NGO arguments around sustainability are simply a string of Western moral arguments about the environment. They have little to do with balancing the perspective or producing strong social and economic outcomes on the ground. Fortunately the CIFOR research bears these fallacies out  – but don’t expect NGOs and campaign groups to be leaping on the findings.

Take this from the report’s executive summary when looking at the uptake of RSPO and ‘zero deforestation’ commitments by major companies:

“… oil palm growers are a diverse group, operating in a range of contexts; this means that current high profile signs of change by large multinational companies may not be representative of the entire sector.”

Or on the importance of sustainability among smallholder growers:

“In regions such as Sumatra with long-established oil palm sectors, the number of independent smallholder farmers is growing rapidly. These smallholders have access to an escalating number of independent mills, which offer competitive pricing opportunities. These mills rely heavily on fresh fruit bunches purchased on the open market and often do not have corporate purchasing policies or checks in place for legality and sustainability concerns.”

And on the importance of Western markets:

“…growers are catering to rapidly growing import markets in China and India, which place much less focus on environmental and social principles, compared to western markets.”

The research also bears out the reluctance by oil palm growers in Indonesia to taking on sustainability commitments and certification standards.

The basic and overarching problem is simple: cost. This is now a generally accepted point in the debate: certification is expensive, and small farmers can’t afford it without assistance from aid agencies or other groups.

Failing that, more NGOs have called for greater RSPO certification. The problem there is that the uptake of RSPO at the demand end is approximately 50 per cent. Why is uptake so low? First, there is almost zero consumer demand (well, maybe in some parts of Europe…). Second, because the demand is not there, there is no premium that can be offered to producers – so there is zero incentive for small farmers to sign up to certification initiatives such as RSPO.

What few people have suggested is that there should be attempts to make certification cheaper. It could be argued that some Western companies are already attempting this via support for small farmer initiatives. But this misses the point; these schemes only serve Western markets.

A Better Way Forward?

There is a better way: national standards.

Malaysian Sustainable Palm Oil (MSPO) is the best example of this. It implements government sustainability policy consistent with broader national sustainability goals.  It is cost-effective because it has to be. These are standards that articulate the balance between social, economic and environmental concerns. One of the key differences between RSPO and conventional international standards is that RSPO is a private body not subjected to legislative checks and balances. RSPO as a body effectively decides who is and isn’t accredited to audit a standard, as well as developing the standard.  That’s not how national standards are formed or work in practice.

Under national and international standards, standards development and accreditation are distinct and separate processes. This is why, for example, a tyre maker can make tyres according to an official standard without having to be a member of a tyre producing body. So, producers don’t have to pay membership fees; they just pay audit fees. It also means that auditors can be competitive without cutting corners, as they need to maintain their credibility via a separate accreditation process.

But one of the reasons NGOs remain wedded to RSPO is that it is weighted towards Western interests.

The CIFOR report states:

“The majority of motions submitted by the growers target the governance of RSPO, generally requesting better representation of their needs. Private sustainability standards, with their origins or leadership in Europe or America, may be perceived as a new manifestation of Western control, as reported by four of our key informants.”

One of the problems with the Western environmental movement is that it has taken on a moral position that is generally fixed. CIFOR’s report on sustainability demonstrates that if it is genuinely interested in improving environmental outcomes, it needs to dispense with the notion that tougher, more expensive standards are always better.  It needs to accept that solutions developed on the ground – such as MSPO – will provide an improvement. And any improvement is better than no improvement.

The Oil Palm

Malaysian Palm Oil Council: Response to Statements by Australian Parliamentarian Jason Wood

Kuala Lumpur – CEO of the Malaysian Palm Oil Council (MPOC) Tan Sri Datuk Dr. Yusof Basiron today responded to statements made by Australian Parliamentarian Jason Wood, that criticised Malaysia and Malaysian palm oil. Dr Yusof Basiron has issued the following statement:

“A member for the Australian Government – Jason Wood – unfairly criticised Malaysia and Malaysian Palm Oil today in the Australian media and in Australian parliament. He did this in order to push his own government towards the labelling of vegetable oils.

“The question is why? The Malaysian Palm Oil industry has never been opposed to the introduction of transparent labelling of all vegetable oils when it has been introduced. The Australian and New Zealand governments are currently considering regulations that will bring Australia into line with similar requirements in the US and the European Union.

“However, Mr Wood has used this as an excuse to criticise Malaysia and Malaysian Palm Oil, setting back relations between our two countries.

“There are more than 300,000 small farmers in Malaysia that cultivate palm oil. It has brought more than 1 million people out of poverty.

“According to the UN, Malaysia’s forest area loss is significantly lower than Australia’s. Both the Malaysian Government and industry have devoted considerable resources to the protection of animals and the environment. Malaysia has supported and introduced national certification systems for sustainable palm oil production.

“Mr Wood and his colleagues have seen fit to single out Malaysia and Malaysian Palm Oil. But the regulatory changes are about all vegetable oils – not just palm oil.”

“If Mr Wood is serious about protecting animals and wildlife in Malaysia and gaining the support of his Malaysian counterparts, he should consider engaging with us instead of criticising us.”

“Last week a report for the New York Declaration on Forests stated that deforestation caused by beef is nine times worse than that caused by palm oil. Mr Wood should take this into consideration the next time he is looking for foreign countries to criticise.”

The Oil Palm

The Oil Palm: EU Admits Palm Oil Policies Not Based on Facts but Emotion

Those following the Palm Oil debate in Europe know that the EU’s Renewable Energy Directive (RED) has been, for years, a tool for protectionist European oilseeds to attempt to restrict market access for Palm Oil. Previous versions of the RED have included obvious and at times incredible attempts to discriminate against Palm Oil: all have been dismissed as anti-scientific, unworkable and in contradiction with the facts.

That the RED is anti-scientific is widely known but now this has been confirmed from the most unlikely of sources – the EU Commission itself.

The EU Commission’s Director of Renewable Energy, Marie Donnelly, was recently quoted as saying that EU policy on renewable energy should be determined by citizens’ emotions, “even if these concerns are emotive rather than factual-based or scientific”.

It is important to take a moment to consider the implications of this statement. The EU has accepted that its flagship emissions-reduction, renewable energy policy is not based on facts or science. This is a damning indictment of the weakness and the discrimination of the EU’s policymaking.

The admission – which is confirming what was known to be true in any case – is all the more concerning because in some important ways the RED Directive has worked well. An important area of achievement has been in the transport and energy generation sectors, where imported Palm Oil biodiesel has been used as a renewable energy source to great effect.

The use of Palm Oil biodiesel in Europe has risen, for several reasons. First, Palm Oil is incredibly cost-effective. It has a superior yield compared to its competitor oilseeds, such as rapeseed. Rapeseed produces around 0.79 tonnes of oil per hectare; Palm Oil produces 4 tonnes per hectare. The incredible efficiency and productivity of Palm Oil leads to cost benefits for businesses and consumers in Europe – not to mention environmental benefits, as far less land needs to be used to produce oil.

Second, Malaysian Palm Oil biodiesel meets strict sustainability standards both at home and abroad. Malaysia has a world-leading Palm Oil sector, with strict Government and industry regulation. The recent introduction of the Malaysian Sustainable Palm Oil (MSPO) standard, aimed to cover all Malaysian Palm Oil, is the guarantee of quality and sustainability.

In order to qualify for biofuel imports under the Renewable Energy Directive, Malaysian Palm Oil must meet further sustainability criteria, in the form of certification schemes that are recognized by the EU Commission. Malaysian producers have no problems in meeting these demanding and strict criteria, such as the German Government’s ISCC certification.

The proof that Malaysian Palm Oil is both beneficial, and sustainable, is incontrovertible. Why, then, would EU leaders try so hard to fix the RED process against Palm Oil? A simple answer: protectionism. Ms Donnelly was correct in admitting that the RED is not based on science – however, her assertion that it is ‘emotive’ factors that are driving EU policy is misleading. What is driving EU policy is the fact that Palm Oil is taking market share from less efficient, less competitive crops such as European-grown rapeseed.

Protecting uncompetitive domestic rapeseed is why the EU previously attempted to introduce Indirect Land-Use Change (ILUC) criteria that would have harmed Palm Oil. It is also why some MEPs tried to remove Palm Oil from ‘approved’ biomass lists, without evidence (other crops’ position on the list was never questioned). Finally, it is the reason that new anti-scientific campaigns against Palm Oil have already kicked off ahead of the latest EU revision of the RED in 2017.

The campaign is about discrimination, pure and simple. A WTO case is already underway on an unrelated issue of EU discrimination against Palm Oil imports; the EU Commission sounds like it is inviting further such cases if it intends to ignore facts and science in favour of discrimination against imports in RED.

The admission from the Commission that protectionism and anti-science views will be promoted and accepted as part of EU policy is a warning. The next 12 months of biofuel negotiations will be difficult – and the market share of Malaysian Palm Oil is clearly under threat. Claims from the EU that this is based on ‘emotion’ or ‘public opinion’ should be ignored: this is discrimination for protectionist reasons, and should be treated as such.

Pierre Bois D’Enghien

Will Major Purchasers Support Small Farmers?

There is a real test brewing for the world’s major purchasers at November’s RSPO Roundtable and General Assembly.

It is this: do these companies support the livelihoods of small farmers?

This test is about the problems that new planting procedure (NPP) under the RSPO have created for small farmers.

The problems are so acute that there are not just one, but two resolutions calling for the NPP to be reviewed and/or revoked for small farmers.

The NPP requires that all new plantings undertake a HCV assessment, develop an implementation plan, get verification and publish all plans.  When the NPP was finalised there was supposed to be a guidance document published for small farmers. This hasn’t happened.

As a consequence, small farmers have been saddled with procedures that are so burdensome and expensive that it effectively deters them from undertaking new plantings, even if their existing plantings have been audited and certified.

This is a major deterrent for small farmer producers for a system that already has enough trouble attracting and certifying small farmers.

Of the 3 million-plus small farmers producing palm oil around the world, only around 1,400 independent small farmers have been certified. Granted, there are other small farmers who have been certified under group certification models within larger operations but in many cases these costs are covered as part of the group model.

One of the major controversies around palm oil certification – and the consequent barriers to entry for some supply chains — has been its impact on small farmers.

This is a problem that RSPO has struggled with since its inception, and it is well recognised among sustainable development professionals, policy experts and businesses that certification can exclude small farmers from certain markets.

Both resolutions ultimately call for the same thing: a suspension of the NPP for small farmers.

One has been launched by NGO Solidaridad with the backing of some major palm oil companies; the second is from a coalition of smaller Indonesian producers.

The Solidaridad resolution goes into more detail, pointing out that NPP requires a pre-audit by assessors. This is a problem.

Many countries do not have in-country assessors, meaning that small farmers on, say, 50ha, would have to engage overseas assessors to get close to passing the NPP test.

There are some bigger questions that should be asked.

Will the world’s major goods companies support something like this? Will Nestle, Ferrero and others support it?

These companies have been making noise about sustainable development and assisting small farmers in developing countries for decades. This is an opportunity for them to put their money where their mouths are.

They were more than happy to cave to campaign demands that all palm oil production be ‘deforestation free’. But they have at the same time said they will support small farmers.

There’s a clear choice for these companies here in terms of supporting sustainable development. And this doesn’t mean condoning large-scale deforestation. Sustainability is a compromise after all.

But consider also whether the world’s major goods companies would put these types of conditions on small farmers and suppliers from Western countries. If a small woodlot in the US was cleared for corn or soybean farming in the US, would companies like Nestle be putting a test on these small farmers? Would Ferrero be putting these tests on Italian farmers? Would there be a barrier to stop them selling into the supply chain? This is unlikely.

This is also a test for the more radical NGOs that say they support sustainable development. Are they actually going to support small farmers?

There hasn’t been much publicity around this, and nor is there likely to be. But Western companies should consider their response very carefully. The world’s small farmers and the companies, NGOs and governments that support them will be watching them very carefully.

The Oil Palm

Priorities for Malaysian Palm Oil

Malaysian Plantation Industries and Commodities Minister, the Hon. Datuk Seri Mah Siew Keong is a veteran of politics. He hails from Perak, one of the top three palm oil-producing states in Peninsular Malaysia and an area with a long history of commodity development. He grew up in his constituency, Teluk Intan, seeing at first-hand the positive impact of palm oil on the livelihood of smallholders. He was appointed to his current portfolio in June. In an interview, he speaks on a range of issues that involve Malaysia’s palm oil industry.

Could you tell our international readers about your political career?

I first entered Parliament in 1999. From 2004-2006, I held the post of Deputy Trade Minister, after which I was the Minister for Agriculture and Agro-based Industry for two years. I left Parliament in 2009. Between 2010 and 2013, I was Chairman of the Malaysian External Trade Development Corporation.

In 2014, I returned to Parliament and was appointed Minister in the Prime Minister’s Department, before becoming the Minister for Plantation Industries and Commodities. So I have experience across the portfolios of both trade and agriculture.

What are your priorities for development of the palm oil industry?

Malaysia will mark its centennial of oil palm planting next year. I want to see to it that the industry expands and becomes more competitive globally, while keeping the empowerment of smallholders at its heart.

To do this, we must first counter unjustified negative and discriminatory perceptions of palm oil in European countries. Efforts must be sustained to engage with these countries, and to reinforce the many beneficial attributes of palm oil. We have to defeat anti-palm oil campaigns to ensure continued market access and to maintain our market share.

Secondly, we will have to move toward new downstream activities for further addition of value. With home-grown natural resources at hand, it will be more cost-competitive to add value to downstream products. Higher demand for palm oil will ultimately deliver more revenue to the country and income to smallholders.

I am confident that these approaches, coupled with relevant incentives, will go a long way towards empowering smallholders and contributing to the economic growth of the country.

How important is the palm oil industry to the Malaysian economy?

The industry’s significance cannot be overstated. It contributes around 8% of the national GDP and more than one-third of agricultural GDP. Palm oil exports are worth RM63.2 billion – or 8.1% of all exports.

Over one-third of the oil palm acreage is planted by more than 300,000 farmers and their families. In total, more than 1 million people are dependent upon smallholder farming. This is an enormous contribution to the well-being and success of these families, their communities, and the nation as a whole.

Over the years, the industry has helped bring down the poverty rate from 50% after Independence to less than 5% today. Some 40% of Malaysia’s oil palm acreage now belongs to small farmers. This is proof that palm oil is truly a commodity that distributes wealth throughout the population, while bringing about social and economic benefits especially in rural areas.

The benefits for Malaysia are clear. Are there advantages from the palm oil trade for importing countries?

There are positive economic impacts for countries choosing to import palm oil. In China, for example, palm oil imports are associated with over 900,000 jobs and up to 59 billion Yuan in GDP benefits. In the European Union, downstream palm oil industries contribute up to 117,000 jobs and up to US$2.9 billion in tax revenue.

These figures, calculated by the London-based consultancy Europe Economics, show how important palm oil is as a global commodity. It is a competitive, low-cost vegetable oil that can be used in food and manufacturing, as evident in the major markets of China and India. This is a win-win situation for both producer countries such as Malaysia and for importing countries.

What are your views on the current debate on the environment, in relation to palm oil production?

Let me first state that Malaysia is a world leader in environmental protection: our commitment to preserve 50% of the country’s land area under forest has been recognised by the United Nations. We have also adopted Good Agricultural Practices, such as the zero-burning policy in clearing stands of old oil palm trees.

Moving forward, the Malaysian palm oil industry is giving greater attention to research in order to increase productivity and the oil extraction rate, rather than rely on expanding the planted acreage. Environmental protection and economic growth are not mutually exclusive: Malaysia has demonstrated this with the oil palm sector.

The global market is large enough for all edible oils to compete in, but the question we need to ask is: are we able to fulfill growing demand as the world population increases? This demand is easily met by the oil palm, as it is the highest yielding oil crop. It produces 4.2 tonnes of oil per hectare in contrast to 0.42 tonnes and 0.36 tonnes per hectare from sunflower and soybean respectively.

Furthermore, the oil palm is a perennial crop. It therefore provides a sustainable and steady supply of palm oil. As the world population increases, the superior productivity of the oil palm is the solution to issues like the scarcity of land and food insecurity. In addition, palm oil has a unique composition of texture, efficiency and nutrition, which has made it popular with companies and consumers across the globe.

Are there opportunities to expand recognition of the Malaysian Sustainable Palm Oil (MSPO) standard and similar national schemes?

Yes, certainly. The MSPO standard was launched last year. It is based on Malaysia’s Good Agricultural Practices for oil palm, as well as domestic laws and regulations, and our international obligations. The Indonesian Sustainable Palm Oil standard was developed by our counterparts in Indonesia. There is potential for recognition of these standards through the ASEAN mechanism.

On a recent visit to Europe, I discussed the MSPO with Members of Parliament and Ministers in different countries. The benefits of the MSPO are of great interest to many of our partners in Europe. It will require a concerted international effort to achieve recognition, but the palm oil industry will gain from this.

Regional cooperation appears to be moving forward with the establishment of the Council of Palm Oil Producing Countries (CPOPC). Where is this headed?

We are working closely with Indonesia on the major areas of operations. This is an important step forward for industry cooperation, since Indonesia and Malaysia are the two largest palm oil producers. We are confident that the CPOPC will be an effective organisation that will communicate the benefits of palm oil globally. For example, a coordinated approach to trade policy can help producer countries to fight discrimination against palm oil.

You have spoken in favour of the Trans-Pacific Partnership Agreement (TPPA). What are the potential opportunities for palm oil from this and other trade agreements?

The TPPA – once it enters into force – will be beneficial to both Malaysia and this region, and not just for palm oil. Other opportunities will emerge from the Malaysia-EU free trade agreement, on which negotiations are resuming. We can work toward increasing opportunities for palm oil, whether through lower tariffs, pulling back non-tariff barriers or obtaining recognition of the MSPO.

Is there still a danger of France implementing a new tax on palm oil?

Yes. One tax proposal was defeated in July, thanks to strong opposition from producer countries and others. But on a visit to France recently, it was clear to me that the danger of a new tax exists. It is important that Malaysia takes a firm stance on this matter: any tax increase, in any form, is unacceptable.

France has formed a commission to review the sustainability of palm oil. Malaysia will oppose any attempt to set arbitrary sustainability criteria. We must stand ready to respond should countries impose discriminatory taxes or criteria against palm oil, as it is our key export.

In which regions do you see improved prospects for marketing palm oil?

China and India are still incredibly large export markets. The vegetable oil market in both countries remains fiercely competitive, particularly in China where there is often substitution with other oils. I do, however, think we have the opportunity to generate stronger investment and export ties with both countries when it comes to palm oil.

Africa is the other region of interest. Its countries are becoming increasingly urbanised and vegetable oil demand is rising. There are encouraging prospects for exports, as well as investment in palm oil. We have the experience and know-how to make these opportunities work.