Palm | Kelapa Sawit

The Malaysian palm oil industry earned a healthy RM60 billion last year. This was an increase of RM 10 billion compared to 2009. Most plantation companies doubled their last quarterly profits compared to the previous year. The income generated by high prices as experienced by the palm oil industry led to rural townships around the country undergoing a mini economic boom. Clearly, the rural population benefited the most from the high prices of palm oil, rubber, cocoa and even pepper which form the major plantation commodities produced in Malaysia.
 

The economic contribution of palm oil and other plantation commodities provided the assurance of a remunerative source of income and unlimited employment opportunities throughout the year for the people of Malaysia. A day’s work of harvesting oil palm fruits or tapping rubber trees for latex can provide a person with an income of more than US $30. In a country where two meals per day would cost only US $4, such an income is rather remunerative. Nobody should be deprived of a better life or even resort to begging as long as he or she is willing to put in a few hours of work in a day in our oil palm or rubber plantations. Malaysia enjoys almost full employment which also means that labour shortages exist especially in the plantation sector.

In contrast, rural population of many developing countries often earns a mere US$2 per day, and employment is limited or seasonal. Food is often unaffordable and as previously mentioned in my blog , one billion people on this planet suffer from food insecurity where daily meals are not assured. This is where employment opportunities offered by the plantation industries in Malaysia also benefit labour from other countries. The income earned by the 300,000 foreign workers employed in the Malaysian oil palm industry, ensures that there is food on the table on a daily basis for 1 million of their family members living back home in Indonesia, Bangladesh, the Philippines and other neighbouring developing countries. In simple terms, the oil palm industry not only provides an income to Malaysians, but shares this benefit with an additional one million family members of workers who now do not need to go hungry to bed thus bringing cheer to so many poor people . How many industries can claim to do this?

The oil palm industry is also a major source of income for the government through the collection of corporate taxes. The benefits from such income will be more pervasive as the multiplier effects of government spending will impact education, health and infrastructural development. Essential food items are subjected to price control or subsidized in Malaysia, and this includes cooking oil for the public. The government taxes the palm oil industry in the form of a windfall tax and uses the money raised to make cooking oil affordable to the public. It is clear that palm oil provides solutions on many fronts: affordable food, lucrative income and overall stability to the country (bear in mind that high food prices and poverty have led to uprising in many developing countries recently).

Releasing the importance of the palm oil industry to the country’s economy, the Hon. Prime Minister of Malaysia recently spoke of the narrow view taken by the greenies and their followers who want to tarnish the image of palm oil by linking it to deforestation. No country in the position of Malaysia or Indonesia which benefits from the palm oil industry would tolerate the unsubstantiated allegations made by the greenies to denigrate palm oil. Viewed on a broader perspective, palm oil is a saviour to the current global shortages in oils and fats as a result of insufficient production of soyabean and rapeseed oils. For these oilseeds, lack of new land and unfavourable weather conditions have prevented any substantial expansion in planted areas or yield improvements. The future will see a widening gap between supply and demand of oils and fats. Consumers will face the prospects of escalating prices. Low income consumers from developing countries will be the most affected as they are the least able to afford expensive soyabean or rapeseed oils. Furthermore these oils are mostly burned in the EU for biodiesel, thereby further reducing the availability for world food requirements.

Palm oil plays a critical role in supplying affordable cooking oil to most developing countries which have to depend on imported supplies. The greenies have influenced the EU to discriminate against palm oil from being used as biofuel to protect the local rapeseed industry from competition by creating trade barriers through the implementation of the RED regulation. This leaves palm oil generally available for the food sector globally. As shortages are unavoidable, it does not matter what oil is used for which sector. What is important is that the growth in supply is matched with projected demand. Since oil palm is the most capable crop to meet the increasing demand, its production should be logically increased. Because of its high yield (10 times more than soyabean oil), it will require ten times less land to supply the world’s increasing needs.

The greenies are threatening the world’s food security. On the one hand, they are encouraging the EU to convert inefficient rapeseed oil for biodiesel and on the other hand they are campaigning to limit the production of palm oil, fearing that it would compete with rapeseed as a raw material for the EU biodiesel industry. Inadvertently, their wish to restrict the growth of palm will accelerate the shortage of oils and fats in the world market. While current palm oil producers will benefit from escalating prices created by the greenies anti palm oil campaigns, other consumers, especially those in the developing countries, will be burdened by unaffordable cooking oil and escalating food prices. It would threaten jobs which would otherwise be created through the expansion in the oil palm sector as operations are labour intensive as compared to other oil seeds.

All these potential calamities are being created by the greenies out of their perverted and narrow views of deforestation. Without resorting to scientific evidence or even considering broad macro view of world requirements, they (the greenies) have opposed the expansion of oil palm cultivation fearing that rapeseed oil will be out-competed by palm oil for biofuel use in the EU. They use deforestation as an excuse for campaigning against palm oil without any scientific justification.

How can oil palm be blamed for deforestation in Indonesia when the country only uses 5% of its land area to plant oil palm which is one of its agricultural crops. In comparison, the UK has deforested up to 72 % of its land area for planting of agricultural crops. If the total land area under oil palm globally is compared to the total agricultural land of the world, the oil palm share is only 0.22%. Any scientist or non scientist would know that the utilization of 0.22% of the world agricultural area to plant oil palm, does not constitute massive deforestation. The fact is more than 60 and 80 % of the oil palm areas in Indonesia and Malaysia respectively were from non virgin forest areas. In addition, both countries have huge forest reserves which will cater to the need to conserve biodiversity.

How can such a small figure of land use be associated with habitat or biodiversity loss, or even be a cause of major contribution to GHG emission and global warming. I keep challenging the greenies and their fanatic followers to provide clear evidence or proof of any allegations they wish to throw at the palm oil industry. This includes allegations of indigenous people being robbed of their land. Let me correct the misinformation again. Indigenous people have been given ample land reserves by the British when they ruled the country. Their land is mostly cultivated with rubber or oil palm. Many are thankful that they have been given land to enable them to become prosperous smallholders. Obviously, we have laws in place that would address any attempt to rob people of their land.

Consumers in developing countries and also those in the developed countries must be alerted to the potential damage to the economy, food security and escalating food prices which will result from the anti palm oil campaigns orchestrated by the greenies. It is even immoral to support them in their campaign which will ultimately bring misery in the form of food shortages and high prices to the rest of the world. It is even more mind boggling to ask why the EU continues to blatantly fund the greenies to pursue their indefensible intentions to deny developing country consumers with an improved food security for the future.

The world population is estimated at 6.8 billion today. This is predicted to increase to 8 billion people in 2030 and 8.9 billion by 2050. There will be many more mouths to feed perpetually in the future thereby increasing the demand for food.



Over 1 billion, or 15% of the world still do not have enough food on a regular basis. At the turn of this century, United Nations expounded eight Millennium Development Goals. On top of the list is the goal to eradicate extreme poverty and hunger. The need to address this important issue was echoed, not too long ago, at the World Summit on Food Security that was held in Rome, Italy in November 2009. Very recently, in April 2010, World Bank launched the Global Agriculture and Food Security Program (GAFSP), which is a new multi-donor trust fund to improve food security and incomes in low-income countries through assistance to agriculture.




What is food security? According to FAO, food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.

The oil palm (Elaeis guineensis) is an important agricultural crop, which yields three important sources of food, namely palm oil, palm kernel oil and palm kernel cake. An average of 3.7 tonnes of palm oil, 0.4 tonnes of palm kernel oil and 0.6 tonnes of palm kernel cake is obtainable from one hectare of land. While the first two products can be used for human consumption, such as cooking oil, margarines, shortenings, bakery fats, vanaspati, ice creams and Vitamin E, etc., palm kernel cake is used as an animal feed.




The two major palm oil producers in the world are Indonesia and Malaysia, with outputs of 21.1 and 17.6 million tonnes respectively in 2009. Together, they constitute a magnanimous 85.3% of the world’s production.




Palm oil constitutes the major bulk of the world’s production of oils and fats. It contributed to 27.6% share when its production in 2009 was 45.5 million tonnes. Soyabean ranked second with a production of 35.9 million tonnes or 21.8%, animal fats third with 24.4 million tonnes produced or 14.8% while rapeseed was fourth with an output of 21.5 million tonnes or 13.1%.




There are hurdles to overcome during the pursuit to achieve food security in the future. A major obstacle is the diminishing availability of already scarce arable land. While population increases, the lack of arable land may not permit this to happen as it decreases from 0.75 hectares in 1922 to 0.23 hectares in 2005 and this will decrease further to 0.19 hectares per capita in 2030. An urgent need to use this scarce resource wisely can be realized if palm oil is chosen as the preferred oil over the other major vegetable oils. Due to oil palm’s high land productivity, whereby it can produce 4.1 tonnes versus 0.59, 0.42 and 0.36 tonnes of oil per hectare for rapeseed, sunflower and soyabean respectively, 7 times less land area is needed to obtain the same amount of vegetable oil if palm oil substitutes rapeseed completely.




Similarly, palm oil’s substitution for sunflower and soyabean saves 10 to 11 times more land from being cleared and planted with these two crops. The extra land saved, could then be used to plant other crops or for animal husbandry.




With land scarcity, palm oil’s contribution to ensure food security comes from successful research carried out in Malaysia, whereby clonal oil palm materials, capable of producing 25 to 50% more fresh fruit bunch yield are already planted in the fields. As such, higher land productivity than that obtained currently, can be expected from oil palm in the future, without resorting to felling more new land.

Vegetable oils such as palm, rapeseed, sunflower and soyabean can be used as biofuels. There is concern that there will be competition between these vegetable oils for use as food or fuel. Chatham House, United Kingdom has optimistically projected that 28% of vegetable oils or 57 million tonnes will be used for biofuels in 2015, with the balance of 72% to be used for food. In 2050, 39% of total vegetable oils will be used as fuel and the balance of 61% will be used for food. Such projected large amounts of vegetable oils dedicated for biofuel usage is unlikely to happen.

Progress has been made to convert biomass to biofuel leading to minimal quantities of vegetable oils being used as biofuels. In this respect, palm oil has a sustainability edge over soya, rapeseed and sunflower, as the oil palm, which is a perennial crop, produces large amounts of biomass all year round and these can be used for biofuel. Palm kernel is already used as a fuel source while palm briquettes can be made from empty fruit bunches. Methane from the palm oil effluent ponds is also trapped and used as biogas. Thus, besides ensuring food security, a new business of converting waste to wealth is created in the palm oil industry.




Palm oil can enhance food security by ensuring that the competition between food and fuel is minimal when its biomass are utilized for fuel and, therefore, any price hike will not be the result of such competing demands.

One of the drivers that often derail food security is the inability of the rural population, some of which live below the poverty level, to be able to afford sufficient food. The oil palm is a proven economic crop that has been used successfully to eradicate poverty due to its successful cultivation. The FELDA model in Malaysia bears testimony to such a success.

In conclusion, palm oil is the leader among the major vegetable oils that has the greatest potential to overcome food insecurity. It is capable of doing so in a very sustainable way since it requires the least land to produce the same amount of oil, thus freeing diminishing arable land for the cultivation of other crops or for animal husbandry. It is also proven that oil palm cultivation can help to eradicate rural poverty and hunger, which is one of the primary Millennium Development Goals.

Ensuring adequate supply of edible oils for the world market at affordable prices is very important to low income people of the developing world. Derailing future expansion of palm oil production through the Western Environmental NGO anti-palm oil campaigns will impact food security among the developing country population the most. It will also lead to massive deforestation as 10 times more land would be required to plant competing crops such as soyabean to meet future shortages compared to oil palm cultivation.

1. A few years ago when oils and fats were cheaper than petroleum, the EU and USA rushed to promote the use of biofuels for various reasons. One not-so-frankly-revealed reason was that oilseed farmers will benefit from the new market outlets and the increase in prices. The governments also benefited from this strategy because agricultural subsidies would be reduced if prices of soybean and rapeseed were high and price support subsidies would not be needed. In addition, it makes good political statements to say that biodiesel will help reduce global warming through reduced green house gas emissions, and also enable the countries to be less dependent on imported petroleum fuels.

2. Diverting a major portion of rapeseed and soy oil supply and stocks for biodiesel did result in increasing prices which benefited the EU and US farmers tremendously between 2004 and the middle of 2008. During this time, it became obvious that palm oil was a potentially good raw material to participate in the biodiesel industries in both the EU and USA as it is generally cheaper than soyabean or rapeseed oil. This resulted in increasing concern amongst the EU biodiesel lobbies who are integrated with the rapeseed industry over the potential competion from palm oil and they tried to prevent it from being imported for biodiesel production and use in the EU. This was also to ensure that biodiesel subsidies are not shared with competing imported oils.

3. Various trade barriers were set up by the goverments. For example, biodiesel standards were developed in the EU to disqualify palm oil biodiesel from being accepted. The cold flow plug point(CFPP) standard was introduced to ensure palm oil did not meet the required test and the anti palm oil lobby was relieved at the new arrangement. However, the Malaysian Palm Oil Board (MPOB) announced that palm oil biodiesel methyl esters can be processed with a new technology that would overcome the CFPP problem. Furthermore, if the blending of biodiesel is only at 5%, the CFPP value of palm oil biodiesel methyl esters becomes irrelevant as the 5 parts of palm biodiesel is totally dissolved by the 95 parts of petroleum diesel giving an acceptable blend. However, unknown to many, tallow produced in the EU and used for biodiesel would also fail the CFPP test and this would not go well with the local tallow lobbies.

4. EU farmers continue to question the reason for an imported commodity such as palm oil biodiesel to be accorded biofuel subsidy which is meant for local oilseed farmers. The outcries became louder as some power plants began to use palm oil as biofuel and enjoyed the subsidies and the cheaper prices. The rapeseed lobbies were worried that by allowing cheaper palm oil for use as biofuel in vehicles and power plants, it will eventually affect the demand for local oils, and create a substantial outflow of subsidies.(This narrow view ignores the fact that Malaysia imports large amount of EU and US goods and needs market access for its exports in order to remain a valued trading partner.)

5. A new import barrier for palm oil was subsequently introduced arising from the view of the former Dutch Environmental Minister who argued that if palm oil is encouraged for use as biofuel it would stimulate an increase in production leading to the opening of forest land. This apparently will affect the environment, animal habitats and biodiversity. He was able to introduce the fear factor of what could happen in the future if palm oil demand undergoes a rapid increase.

6. The environmental NGOs were quick to sieze on the opportunity to harp on the fear of potential deforestation, and started to report on orang utan habitat loss and global warming effects of oil palm cultivation on peat. The change in focus from deforestation due to logging to now oil palm plantation became a refreshing rallying point for NGOs perpetual campaigns. Afterall palm oil has more money to offer than the logging industry which has over the years witnessed a decline.

7. Once the issues of deforestation and palm oil fell into the hands of NGOs like FOE and Green Peace who use unscrupulus methods to attack their target victims, the whole issue of biodiesel development and protection of subsidies was totally forgotten. The farmers in the EU and USA who are worried by palm oil invasion for the new found application of their oils and fats as biodiesel are totally served by the NGOs who gladly run the anti-palm oil campaign while pocketing huge amount of funds. The collusion to get the NGOs to campaign against palm oil was cleverly disguised. It was reported for example, that the Dutch Lottery money of a staggering US$2 million was instrumental in financing Green Peace to carry out a blockade of a ship carrying palm oil from leaving an Indonesian port to sail to Europe in 2007.

8. It is clear that the fear factor used is based on the assumption that if demand for biofuel is increased, more oil palm cultivation will occur thus causing deforestation. Fortunately, Malaysia has consistently proven the assumption as baseless and wrong.

9. Let me debunk the various fallacies that are often cited to paint a bleak picture of the ever popular oil palm.

Fallacy 1 Oil palm plantations are claimed to be the cause of deforestation. Palm oil producing countries such as Malaysia have permanent forest reserves which take up to 55% of the country's total land area. Laws are in place to disallow these permanent forest areas to be converted to other uses including for agriculture or growing of oil palm. The remaining forest areas are meant for conversion into other uses, including agriculture. Some of these conversion forest areas are already alienated to individuals or organisations although the land may still not yet be converted and remain under forest cover. NGOs like Green Peace argue that these unconverted areas should be declared as forest through a moratorium on deforestation which essentially means a stop to a developing country like Malaysia from using its potential agricultural land to improve the life of its farmers. It is equivalent to asking the EU farmers to reforest back some 50 % of their agricultural land to help prevent global warming and preserve biodiversity. In all fairness, Greenpeace should agressively campaign for reforesting 50 % of agricultural land of the UK and EU and if successful, Malaysia should have no problem following the standard set by the EU in terms of land use ratio for agriculture.

There are also calls by NGOs for the Prince Chales Conservation fund to compensate developing countries for conserving more forests. Logically, these funds would be better used to reforest the over extended and over deforested agricultural areas in the UK. Most agricultural land can be easily reforested if so desired. The slogan "Plant Thy Own Forest" and "Stop Envying Thy Poor Neighbours Green Backyard" can be adopted. Otherwise Green Peace is cunningly introducing double standards where the EU can deforest and develop these areas into agricultural land, while the developing countries farmers are comdemmed to perpetual poverty by preventing them from exercising their sovereign rights to develop their agricultural land.

Fallacy 2 -It is often claimed that the expansion of oil palm cultivation will affect the habitats of the orang utans in Sabah and Sarawak. A recent study revealed that orang utan population is Sabah has not declined because the permanent forest area ( the favourite habitat of the orang utans that was surveyed five years ago) has not changed over the last five years. The study further revealed that the orang utan population in the non-permanent forest areas is increasing based on the survey of nesting sites. More surprisingly, orang utans living near oil palm plantations were observed to regularly visit the plantations to feed on loose oil palm fruitlets and benefit from an all year round availability of a healthy food source which is naturally rich in vitamin A and E, giving the orang utans a healthy shining coat. This suggests that development of the oil palm as a crop and conservation can successfully operate side by side.

Fallacy 3 The third fallacy is linking oil palm to deforestation and attributing this to global warming. The oil palm planted area of 4.3 million hectares in Malaysia represents a mere 0.09% of the world agriculture land. Assuming these areas were originally forests, Malaysia's share of deforestation for world food production is 0.09 %. I wait to see the NGO global warming scientists' prediction on the rise in global temperature caused by oil palm cultivation in Malaysia that resulted in 0.09 % of total deforestion via agricultural development. Even doubling the oil palm area may not add substantially to the world deforestation total. However, expanding oil palm may save deforestation by curtailing the rapid expansion of other inefficient land-use oil seed crops which need to be grown otherwise to overcome world shortages.

Cultivated Area of Oil Seeds in the World | Click here to view the full resolution

Fallacy 4Potraying palm oil as inferior to soyabean or rapeseed oil in global warming debate. Oil palm in Malaysia and Indonesia is an agricultural crop which is grown mainly for the export market. We are the only two major net exporter countries (Argentina is a distant third) for vegetable oils and fats. The rest of the world are mostly net importers. It implies that if palm oil supply is reduced in the future, ten times more forest areas will need to be converted to agriculture to meet the shortages by growing soyabean or other annual oilseed crops compared to the area needed to grow oil palm to produce the targeted quantity of oil.

Mileage per hectare per year - Based on a new VW Polo | Click here to view the full resolution

Recently, it was revealed that new varieties of oil palm are capable of increasing the yield by 3 times more and if further research to stabilise this yield potential is undertaken through international collaboration, palm oil can be a sound candidate to help solve not only future food shortages but also the biofuel need of the world. In simple terms, it has been calculated that a hectare of oil palm will potentially produce oil sufficient to fuel a VW Polo car 400,000 km of travel per year including the use of the methane fuel generated by the oil palm mill effluent, while a hectare of soya bean can fuel only 8,000 km of travel by the same car as a comparison. The irony is that the EU and USA are gladly promoting the most inefficient bio fuel derived from soyabean and rapeseed sources ,which can only mean massive deforestation possibly in Agentina, Brazil or where ever soyabean and rapeseed can be grown. The opportunity for oil palm to serve as an efficient fuel source and to save more forests from being converted into soyabean and rapeseed farms is sadly overlooked and we can only blame this on the manupulative science which is used by NGOs to raise emotions and blur the truth from reaching the attention of decision and policy makers in the EU and USA.