Success attracts brickbats - Business News | The Star Online


Success attracts brickbats

Palm oil as an affordable vegetable oil is targeted by NGOs with an agenda.

YOU don’t get to be 100 years old and not have problems along the way. What are the biggest challenges facing the palm oil industry at the moment?

Bek-Nielsen: The world is changing faster than ever, and in tune with a higher level of development we see demands changing. If we look at the last 15 years, there has been a growing change in the mindset of consumers in general, particularly in the West where demands relating to the well-being of the environment has increased.

In the old days, whether it was in the United States, Brazil or parts of Europe, they just looked at forests as something to be converted. But now, when developing countries are starting to do this, it clashes with these changing demands from the consumer base who now insists on stricter standards.

So we have two choices: We can either listen, or we can refuse to listen.

However, if we refuse to adapt to the changing circumstances and continue with “business as usual”, then we will inevitably close the door on opportunities.

It is therefore time for us to take heed of these changes and see how we can still proceed with development, but do this responsibly, thus limiting the impact on the environment.

If we do that, then we will be in a position to fulfil what Winston Churchill once said, namely “difficulties mastered are opportunities won.”

Yusof: From my perspective, the palm oil industry is already very successful. The challenges that we are facing reflect our success. If you look at the statistics, we are the highest-growth commodity oil, as compared with the other oils that have been seeing a shrinking market share.

To counter our success, they resort to anti-palm oil campaigns. They come up with emotional “scientific studies” to back their anti-palm oil policy agenda that is pushed to lawmakers. They have designed this as a method to overcome their lack of competitiveness in their own commodities and to protect their own farmers.

European countries are perpetrating the perception that palm oil is linked to deforestation and is destroying the habitat of the orang utan – which is not true. These allegations are not backed by statistics or facts. They are pandering to the NGOs’ “no deforestation” agenda to stop expansion in oil palm cultivation. It is no longer just an NGO issue today, for these campaigns are now becoming potential legislation.

Any developing country would need to clear land to develop its resources. For Malaysia, this may not be necessary but what about other developing countries? They have a lot of forests, all non-productive, but they cannot develop these forests to plant oil palm as the NGOs are also demanding that High Carbon Stock (HCS) be included as a trade standard to qualify for market access. Resolutions have been tabled at the European Parliament to ban entry of palm oil from HCS value land .

All these standards are merely tools through which the European environmentalists and protectionist movements are trying to control the capability of developing countries to further develop and compete in their market.

So where do we go from here? If they adopt a no-deforestation policy, the future of the palm oil industry is restricted only to the current planted area.

Lee Yeow Chor: The Malaysian Palm Oil Council (MPOC) was set up by the Government to promote palm oil, but now its responsibilities have expanded to include fighting anti-palm oil sentiments and campaigns. Yes, the campaigns have elevated from just NGOs aiming to influence consumers, to now influencing the legislators as well as food companies.

There are a few fronts that we can go on to address this issue. Firstly, we must form alliances. We are no longer alone in this – we have fellow producers throughout the globe. Apart from Indonesia, we have other palm oil producing countries in Africa, South America and Thailand.

We have to form alliances, especially among developing countries, to speak out against this unfair treatment which is hampering our development goals.

The problem is that the developed countries started converting their forests much earlier, and now that they have cleared most of their forests they are saying that we are causing the problem and impacting the environment.

Secondly, to be successful palm oil players today, we don’t just need to be good planters; we must also be good communicators. We have to be very vigilant and savvy in using communication tools to rebut the unfair allegations. Of course, we must be savvy in the use of digital media, and not just the traditional media. MPOC recognises this and has been putting a lot of effort in improving communication on this front.

Growing strong: The oil palm (Elaeis guineensis jacq.) which originates from West Africa was introduced to Malaya  by the British in the late 19th century as ornament plants. The first commercial oil palm cultivation took place in Tennamaran Estate, Selangor, in 1917. Today, Malaysia is the second largest palm oil producer in the world after Indonesia.
Growing strong: The oil palm (Elaeis guineensis jacq.) which originates from West Africa was introduced to Malaya by the British in the late 19th century as ornament plants. The first commercial oil palm cultivation took place in Tennamaran Estate, Selangor, in 1917. Today, Malaysia is the second largest palm oil producer in the world after Indonesia.

Lee Oi Hian: We have to focus on the competitiveness of the industry.

The industry has been slacking a little bit. Yes, we are doing relatively well but we haven’t improved as much as the other competing genetically-modified crops.

Productivity is key, in terms of yields as well as labour. In this sense, we are on a journey but there’s a long way to go. We have been cruising, without sufficient innovative attempts to really reap the potential yields that our scientists tell us that our planting materials are capable of doing.

I believe that it is our attitude and lack of urgency that is hindering us from achieving much more.

Also, one of the biggest challenges facing the industry at the moment is the critical shortage of foreign workers.

Zakaria: When I took up my position in FGV on April 1 this year, the major challenge that I saw for the company was the old trees. Many of our trees are over 20 years old and are no longer productive. The company and the settlers are facing the same problem.

For the company, we can conduct replanting on 15,000 to 16,000 hectares per year, and this costs us over RM300mil.

However, for the settlers they are facing a problem because replanting requires a lot of money – it will cost them at least RM15,000 per acre. So that is the challenge for them.

Another big challenge I faced when I took over this role was when I wanted to improve the yields of the plantations. There was a lack of experts in this area. I found that there was a shortage of people who are really good at this, so I had to bring in the retired experts to help me.

I suppose this is because many young people do not find the plantation industry attractive anymore. Probably in terms of the location and salary, and the fact that you do not have the same facilities you can find in a town area. These are some of the challenges I faced.

One of the biggest challenges facing the industry at the moment is the critical shortage of foreign workers. Can this problem be resolved in the near future?

Wong: From the Sarawak perspective, the shortage of workers at the operational level has become the greatest challenge for the industry today.

Sarawak only produces an average 16 tonnes of fresh fruit bunch per hectare, while more established companies like United Plantations have an average yield of almost 26 tonnes per hectare.

For Sarawak to fully realise its yield potential, it is important that the shortage of workers be addressed urgently. I also noticed that the local smallholders are also facing the same shortage of workers.

Bek-Nielsen: No responsible country will accept a massive influx of guest (foreign) workers and the Malaysian government, no doubt, wants to act responsibly in this issue. It is a balancing act.

Our industry has a relatively small percentage of guest workers when compared to the total number of guest workers seeking employment in Malaysia. I don’t think it is even 15% of the total number of them legally employed in Malaysia. However, the palm oil industry contributes 8% to the country’s GDP and therefore it punches well above its weight.

In addition, the earnings on plantations are good and the companies provide them with free housing, free water, medical and electricity. Which other industry in Malaysia does that?

Malaysia is developing very fast. Urbanisation is like a huge magnet, pulling a sea of people into the bigger towns. While this is happening now in Malaysia, the same movement has taken place in Western Europe and the US decades ago where a large proportion of agriculture in these developed countries, especially fruit orchards and vegetable production entities, are heavily dependent on Eastern European or Latino workers. Without these hard-working individuals, their agricultural production would collapse, similar to what the palm oil industry would be exposed to if we could not legally recruit guest workers from Bangladesh, Indonesia and other parts of the world. This is the reality and we need to appreciate these facts.

It is not that our industry doesn’t want to innovate or move forward. We all want to try to minimise our dependency on workers, but this takes time and is easier said than done.

Indeed, we need to be more aggressive in our pursuit to minimise our dependency on labour but to think we can come to levels comparable to temperate crops is just not realistic.

However, we must aspire and make concerted efforts to raise the present productivity through increasing the level of mechanisation and innovation. Targets should be set and with that I am sure that we will live up to the saying that “necessity is the mother of all inventions”.

Lee Oi Hian: Regarding social problems associated with workers, this is minimal in our industry as we are rural-based and the majority of workers are provided with housing in estates with medical services and other facilities. They go to town only once in a while.

Twenty years ago, to get a passport it was an arduous process that took such a long time. Look at it now, it is so well done. The authorities can develop a similarly efficient process of bringing foreign workers into the plantation industry. The current process is so long.

For our industry, when you cannot bring in workers on time, you cannot pass the baton – it is like relay. When we don’t have workers, you lose the crop. Every tonne of crop that we lose, the Government also loses an equal significant part of their share.

The Government has to develop a system for the plantation industry alone, where they can monitor the number and whereabouts of the worker that we bring in. They need to ensure that we don’t have illegals working in our plantations. There may be some illegal workers among the contractors and smallholders but if we do not improve the system, it will not be resolved.

Bek-Nielsen: I agree, and we would like to appeal for a simplified process without undermining the legality, so that we can expedite the movement in the recruitment and also repatriation of workers.

We must remember that what this industry produces is unlike a concrete block or rubber tyre. This is a perishable fruit and you have a certain expiry date on it. If you fail to bring it down, it is going to rot.

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