Malaysian Palm Oil Council (MPOC) CEO Tan Sri Yusof Basiron reminisces about the early days of the oil palm industry and its growth in our country.
HIS parents were peasant farmers from Rembau, Negri Sembilan. Like many rural Malay folk in the 1950s, they worked on modest smallholdings producing rice and other food crops. The lush Malaysian landscape was then dotted with tin mines and rubber estates, the biggest dollar earners at the time.
Six decades on, Malaysian Palm Oil Council CEO Tan Sri Yusof Basiron has stayed true to his family trade. And today, the country’s landscape is dominated by a new commodity, palm oil.
Through his work on the crop, Yusof has made his mark.
Yusof’s parents wanted him to have a good education, and as a teen, he excelled at chemistry and mathematics. This got him into a prestigious military college; he later obtained a government scholarship for his undergraduate studies.
Yusof wasn’t particularly passionate about chemical engineering, his chosen field, and despite his successes, he insists he wasn’t particularly ambitious either. It was simply a case of going with the flow.
His first job at the Rubber Research Institute of Malaysia led to a post-graduate degree in rubber technology, after which he joined the newly established Palm Oil Research Institute (Porim), in 1979. And the rest, as they say, is history.
As Malaysia’s economy chugged its way through the 80s, transforming itself from being largely agricultural based into one driven by industrial growth, Yusof became part of the machinery that fashioned palm oil into a major player in the economy.
By 1980, synthetic rubber had eaten into the market share of Malaysia’s star crop, natural rubber, taking over 70% of the world’s total rubber consumption. And in 1985, a crash in world tin prices sealed that commodity’s status as a sunset industry. It was time to diversify. And Malaysia was placing its bets on palm oil.
Creating new markets
When Yusof first started with Porim, the oil palm industry was small.
“About two million tonnes of palm oil were produced a year,” recalls Yusof.
But the chemical engineer in him allowed Yusof to believe in the product and its greater potential.
“We knew that the world population was increasing. We knew that demand for edible oil was going to increase. And we knew that we could grow (more) palm oil.
“What we weren’t sure about was whether the world would actually consume palm oil if we ramped up production.”
It’s strange to think back on a time when palm oil only played a small role in the global economy. Today, it’s worth about US$44bil (RM146bil) a year. And palm oil products are used in, well, pretty much everything – from confectionery and cosmetics, to industrial products, biofuels and feedstock.
But back in the 70s, Yusof says it was mostly only used in soaps or margarine.
He added: “Even in Malaysia, the oil we used for cooking was coconut oil.”
Having a basic understanding of the chemical composition of palm oil however, the team at Porim knew they were onto something.
“Palm oil is a very stable frying oil, so we explored this. At the time, the task ahead was not only to develop the product, but create new markets for it by educating consumers about its advantages.
“So we did research to characterise palm oil, to turn it into an acceptable quality for food use, and to expand its potential applications.”
Porim’s findings were shared with instant noodle manufacturers in China and Japan.
“We told them palm oil would provide the best shelf life for products, and that it is cheaper to produce.”
Today, palm oil is a common ingredient in instant noodles, and China alone consumes about 42 billion packets per year.
Looking back at his younger years, Yusof feels that chemical engineering, a subject with broad-based applications, was a smart choice.
Now 65, he helms the MPOC, an organisation formed to protect and promote the interests of the palm oil sector.
The necessity for such an association became apparent as soon as the crop’s early successes led to a backlash from major competitors.
In 1986, palm oil took over a substantial share of the Pakistani market for vegetable oils, at the expense of the United States. That same year, exports of the oil into the US doubled, leading the American Soyabean Association to launch a series of anti-palm oil campaigns in 1987.
Despite its recent dip in prices, Malaysian palm oil has been a success story which Yusof is proud to have been a part of.
In 2011, Malaysian palm oil accounted for 17.6 million tonnes, or 24.1% of the global trade in oils and fats, but Yusof remembers when he first joined the newly established Porim. He was the only Malaysian in an institute headed and dominated by British scientists at the time. And the team had their work cut out for them but there was a pioneering spirit to lay firm the groundwork.
“We rented shophouses in Ampang Jaya and Dato Keramat in Selangor to set up temporary labs to get our research projects going, and then a few floors at Wisma Central in downtown Kuala Lumpur for office space,” he remembered.
Aside from developing and diversifying downstream applications through refined and fractionated oils and oleochemicals, one of the institute’s earliest breakthroughs was to revolutionise palm oil milling technology. Up until then, cooking the palm fruit bunches involved putting them in cages and into a high pressure cooker.
“It was a dirty, dangerous process, people got killed by the high-pressure steam,” Yusof explained.
What the institute did was to come up with a new, automated way of cooking the fruit bunches.
“Our idea was simple. Instead of using high pressure to cook the fruit, we decided to try a mechanised conveyor system, rollers and a cooking tunnel.
The new automated system was clean, tidy and so successful that it reduced manpower by 50-60% and created a new revenue stream for the country through the commercialisation and sales of the technology to millers all over the world.
Yusof is recollecting these stories while in his large, sparsely decorated office at MPOC’s headquarters just off the Damansara–Puchong Expressway in Petaling Jaya. There is a big desk piled with neat stacks of files at one end. At the other, next to the door sits a small display table decorated with Smart Balance spreads and cooking oils – a brand identified by its blend of healthy oils, developed by researchers at the Malaysian Palm Oil Board and marketed successfully in the United States.
Yusof’s three decades or so in the industry have taken him from the role of divisional director at Porim, to director general, a role he continued to occupy for a period after the institute’s transformation into its current incarnation: the Malaysian Palm Oil Board.
Today, Yusof blogs, tweets (about palm oil) and just recently, was conferred the honour of a Senior Fellow at the Academy of Sciences Malaysia (ASM), for which he served as president a few years back.
He can come across as pretty intense when it comes to his thoughts on global palm oil issues, especially when talking about NGOs and the anti-palm oil lobby. But for a man who has not only witnessed, but played a significant role in nurturing the crop from zero-base to one of the country’s most important exports, is that any wonder?
Yusof says palm oil is an industry in which one cannot afford to be complacent. He cites the price collapse of 2001 as an example, and shares how he was involved in crisis management then.
“That was a dark time. Farmers were getting around RM80 per tonne, compared to the RM400-RM500 they earn today.
“It was like there was no more value left in the fruit bunches,” he remembers.
They countered the situation with a new strategy: by burning palm oil in power plants and creating replanting schemes to cut out supply.
“Within a year, that helped prices to recover, and I record that as one of my contributions.”
An important part of the job he says, is trying to anticipate and be prepared for possible events of the future. This requires smart, innovative mindsets in science, economics and agriculture.
Yusof sees the importance of creating the infrastructure, not just to nurture, but to identify and work with fresh young talent.
During his tenure as president of ASM, he introduced a number of initiatives, such as the Top Research Scientist Malaysia project, the Mega Science project and he proposed the formation of the Mahathir Science Award Foundation.
The idea was to identify the movers and shakers, using these initiatives to lure them out of the woodwork and provide networking opportunities and platforms to work together.
He sees science as essential to driving the economy forward. Right now, the economy is caught within the middle income trap.
“There isn’t enough technology to base our economy on, to move forward. We’ve been importing these manufacturing processes rather than creating enough of our own.”
He added: “Compared with other countries, the quantum of research and investment in science R&D in Malaysia has been low, due to certain priorities of development and social engineering.”
On being granted the much-coveted Senior Fellowship at ASM, Yusof said he values the recognition. It’s a milestone, for sure. But somehow one gets the feeling that much more lies ahead.