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Thursday October 6, 2011

Malaysian Palm Oil Association won’t quit Roundtable on Sustainable Palm Oil

PETALING JAYA: The Malaysian Palm Oil Association (MPOA) will not quit the Roundtable on Sustainable Palm Oil (RSPO) grouping but it is advising its members to stop seeking new RSPO certification for the production of certified sustainable palm oil (CSPO).

“We want to see the current RSPO certified palm oil production of 5.1 million tonnes be fully taken up by Western buyers,” said MPOA vice-chairman Boon Weng Siew.

Of the total RSPO-certified palm production, MPOA claimed that only 40% was taken up while the CSPO premium had plunged to only 30 US cents compared with US$50 per tonne in 2008.

“On average, a local oil palm grower will need to fork out about RM10 for the production of one tonne RSPO-certified palm oil. Now, given such poor premium, planters cannot even cover their production cost,” explained Boon.

Furthermore, MPOA and the Indonesian Palm Oil Association (GAPKI) members were disappointed with the poor off-take and low premium of CSPO despite having gone through cumbersome and costly certification processes.

“Why do we need to keep on building the pyramid (producing CSPO) when the off-take is so poor?”

United Plantations Bhd is the first Malaysian plantation group to export RSPO-certified palm oil to Europe.

Its executive director Datuk Carl Bek-Nielsen said: “We producers have been exposed to a very unfortunate degree of hypocrisy by end-users including the multinational companies (MNCs). This goes totally against the spirit of the RSPO.”

He said Malaysian producers had delivered and bent backwards to comply with the stringent RSPO sustainability criteria which were not imposed on other competing vegetable oil producers.

“In return, we have been given endless broken promises by the MNCs who have not fulfilled nor supported the RSPO spirit,” added Bek-Nielsen.

He said the world palm oil producers must unite and stressed that “We should not certify any new production units unless demand matches the supply of CSPO. It is time for the end-users to live up to their rethorics.”

An industry member of MPOA said the association might seek for a three-year moratorium to stop Malaysian planters from pursuing their on-going RSPO certification at the RSPO 9th Annual Meeting Roundtable in Sabah next month.

“We will strongly push for this agenda,” he said. This is in view of the pledges given by Western food and consumer goods to use only CSPO in their operations by 2015.

Of the 4.5 million ha planted with oil palm in Malaysia, three million ha belong to the estate group and 1.5 million ha, the smallholders. The MPOA members' hectarage represent about 70% of the three million ha under the estate group. MPOA Class 1 members with hectarage exceeding 40,000ha and direct members of RSPO include the top plantation giants like United Plantations Bhd, Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd and Felda Group.

Other MPOA members under Class 2 (over 5,000ha to 40,000ha), Class 3 (500ha to 5,000ha) and Class 4 (40ha to 500ha) are mostly non-RSPO members with no CSPO production.

Last Friday, GAPKI has taken a bold move to quit from the RSPO saying that it wanted to commit to the Indonesian Sustainable Palm Oil (ISPO) scheme a sustainability platform made mandatory to all plantation companies in the republic.

RSPO advisor M.R. Chandran commended GAPKI's instrumental role towards promoting sustainable palm oil.

“However, since RSPO is a voluntary member based organisation, members are entitled to decide their status within the RSPO based on their respective priorities and commitments,” he said.

“While GAPKI, as an association representing Indonesian palm oil producers, has decided to relinquish its presence, I feel confident that the current Indonesian member plantation companies will continue to support RSPO and will continue their commitment to comply with best practices towards CSPO,” he added.

GAPKI has over 500 member companies, of which only 10% are RSPO members.

He said Indonesia has recorded a phenomenal year-on-year growth of CSPO from 200,000 tonnes in 2009 to 2.082 million tonnes as of last month.

On the ISPO scheme, Chandran said the success of the new standard has yet to be seen but “any national standards will be complementary to the RSPO.”

Asked whether Malaysian planters would follow in the footsteps of GAPKI, he said: “I don't think so due to the huge commitment made by leading local grower companies.”

Malaysia via the Government initiative is also planning its own sustainability scheme for palm oil called the Malaysian Sustainable Palm Oil (MSPO). MSPO is speculated to be launch at the MPOB's International Palm Oil Conference 2011 by middle of next month.

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