The Oil Palm

The Oil Palm Quarterly Newsletter, Edition II

Turning Challenges Into Opportunities

The Malaysian palm oil industry continues to focus on advancing policies to support its businesses, consumers and the workers of Malaysia and its global partners. In May, the Governments of Malaysia and Indonesia agreed to establish the European Palm Oil Council (EPOC). EPOC will provide Malaysia and Indonesia a collective platform to address critical issues facing the world today such as access to food and clean energy, as well as address the ongoing campaign by certain groups in Europe against palm oil. Both governments also agreed to cooperate on a number of critical issues related to palm oil, including: addressing barriers to palm oil trade; countering the anti-palm oil campaigns; drawing attention to the inconsistency of the EU’s Directive on Renewable Energy with WTO rules and obligations; and to lobby against efforts by Australia to penalize and discriminate against palm oil.

Later this year, the American Palm Oil Council will host the 7th Annual Global Oils & Fats Forum in Washington, DC bringing together industry leaders, policymakers and experts in nutrition, biofuels and supply chain management to discuss the opportunities of palm oil in the U.S. market place.

Malaysian Leadership

Prime Minister Datuk Seri Najib Tun Razak launched the Global Science and Innovation Advisory Council (GSIAC), a partnership of scientists, academics and government officials that will advise on measures Malaysia can take to reach higher income status. Among these measures is the continued innovation within the palm oil industry and development of green technologies that will propel Malaysia to the forefront in sustainability and green technology. Just recently, the government and industry collaborated to introduce the Oil Palm Biomass Roadmap, a project that will utilize oil palm biomass for the production of chemicals, materials, products and fuels.

Finally, as highlighted in the inaugural Oil Palm Newsletter, The Federal Land Development Authority (FELDA), which accounted for more than 811,140 hectares of smallholder plantations as of 2009, became one of the first producers of biofuels to have plantations certified by the International Sustainability and Carbon Certification (ISCC) system in environmental conservation earlier this year, and in collaboration with Mission New Energy, became the first fully integrated ISCC-certified palm biodiesel supply and production chain. The contract will allow the company the supply more than USD$100 million of biodiesel from Malaysia’s smallholders to Europe’s biodiesel market.

Europe and the U.S.

Unfortunately, the campaign by European NGOs against palm oil continues. In Brussels, the European Parliament agreed to new regulations on labeling vegetable oil. The Malaysian industry engaged in the process by working to ensure palm oil was not singled out, countering claims by NGOs and a minority in the Parliament that labeling was necessary so consumers could be informed of the presence of palm oil due to concerns about deforestation.

Debate on the sustainability of biofuels continues in Europe following the approval of seven certification schemes. Indirect Land Use Change and whether EU legislation should be amended to include an ILUC factor is the prominent issue. Proponents of increasing sustainability criteria are looking to control the European biofuel market by preventing access for Malaysian palm oil. While the Commission is still considering ILUC, some MEPs are pushing for even further measures and proposing feedstock specific carbon default values.

Meanwhile, a report on Indirect Land Use Change, authored by economic consultancy Copenhagen Economics on behalf of the European Forum for Sustainable Development, analyzed research on ILUC and concluded that efforts to include ILUC criteria in biofuel regulations are misguided and lack credibility.

In other news out of Europe, the UK Ministry for Environment, Food and Rural Affairs (Defra) released a report compiled by ProForest that maps the UK’s consumption of palm oil. According to the report, “the stated policy objective is to increase the proportion of sustainable palm oil consumed in the UK.” This analysis lends support to NGO campaigns against the use of palm oil, while ignoring the critical role of smallholders and the industry’s combined environmental record.

MPOC CEO Tan Sri Datuk Dr Yusof Basiron, in a letter to the editor published by the Financial Times highlighted the importance of the industry to rural development and prosperity, demonstrated by the smallholders that make up a critical part of the industry, accounting for 39% of production.

And in the U.S. the role the palm oil industry has played in supporting women entrepreneurs was recognized by former U.S. Congresswoman and former Assistant Secretary General of the UN’s Food and Agriculture Organization, Eva Clayton, in an editorial about women in agriculture. In the editorial, Ms. Clayton recognizes the importance of the industry in alleviating poverty for women, a point of pride for the international palm oil industry, supporting gender equality both socially and economically.

Malaysian Delegation to Australia

The Malaysian Minister of Plantation Industries and Commodities, YB Tan Sri Bernard Giluk Dompok recently completed a multi-stakeholder mission to Australia to communicate Malaysia’s opposition to legislation under consideration that would mandate the labeling of palm oil in all consumer goods. The legislation is being pushed by anti-palm oil campaigning organizations and government supported zoos. The mission sought to encourage bilateral relations between the two countries and ensure that these efforts against the palm oil industry do not undermine an important bilateral relationship. Minister Dompok led a delegation of industry officials, including Dr Basiron, to Australia to meet with officials and Senator Xenophon, author of the draft bill, to discuss the country’s concerns with the legislation.

During his visit the Minister announced that the government was in the process of establishing a national certification system for palm oil. The system will serve a vital role in meeting the growing demand for certified vegetable oils, of which the palm oil industry is a global leader.

This followed the participation of a Malaysian delegation appearance before an Australian Senate Community Affairs Legislative Committee hearing on the Food Standards Amendment (Truth in Labelling – Palm Oil) Bill where they defended the industry and criticized the misrepresentations promoted by legislation supporters. Other officials have criticized the legislation, including Sarawakian Deputy Chief Minister Tan Sri Alfred Jabu and Sime Darby Chairman Tun Musa Hitam.

In light of these facts, and the impracticality of mandating specific vegetable oil labeling under existing trade laws and regulatory standards, the Committee released a report June 16 recommending voting against the Truth in Labelling (Palm Oil) Bill of 2010, supporting industry criticism of the effort. However, the legislation was passed in the Senate, and is currently awaiting consideration in the Lower House.