The Malaysian Palm Oil Council has played a key role in promoting the palm oil industry in Malaysia.
FROM cookies and ice-cream to instant noodles, about half of all packaged products sold in the supermarkets contain palm oil.
In fact, it is the most widely consumed vegetable oil in the world as palm oil constitutes up to 80% of our daily fat consumption.
It is not without nutritional benefits; palm oil is a natural source of carotenoids and vitamin E, and provides our body with fatty acids and other important fat-soluble micronutrients as well as calories needed for our daily activities.
Malaysia is one of the key producers of palm oil in the world. Currently, it accounts for 29.4% of the world’s palm oil production and 36.7% of world exports. (Source: Oil World, March 2017.)
Last year, the palm oil industry contributed RM38.5bil (3.84%) to the country’s total Gross Domestic Product (GDP, at constant 2010 prices).
The country’s palm oil reaches over 150 countries and in 2016, the European Union imported 29.4% of its palm oil from Malaysia.
The total land area in Malaysia utilised to grow oil palm is 5.74 million hectares, with 3.06 million hectares in Sabah and Sarawak, and 2.68 million hectares in Peninsular Malaysia. In terms of production, the country produced 17.3 million tonnes of palm oil and 1.96 million tonnes of palm kernel oil last year. (Source: Malaysian Palm Oil Board [MPOB], 2017.)
According to MPOB, as of April 2017, the number of people directly employed in the palm oil industry stood at 440,262 (exclusive of 280,977 independent smallholders). In terms of livelihood, the Council of Palm Oil Producing Countries estimates that the industry supports about four million people.
The Malaysian Palm Oil Council (MPOC) is a crucial engine that drives the Malaysian palm oil industry.
Its history dates back to 1990 and the council’s role is to “promote the market expansion of Malaysian palm oil and its products by enhancing the image of palm oil and creating better acceptance of palm oil through awareness of various technological and economic advantages and environmental sustainability.”
In a recent interview, MPOC chairman Datuk Lee Yeow Chor shared his views on the challenges facing the palm oil industry and the way forward:
With this year marking 100 years of the Malaysian palm oil industry, what are three milestones that we have achieved?
The Malaysian palm oil industry is one of the most important segments of GDP and it is also one of the top foreign exchange earners for the country. So that’s the first milestone. Secondly, it has been a very effective tool for lifting up the rural economy and, in association with that, eradicating poverty. Thirdly, the palm oil industry has put Malaysia on the world map in terms of it being the leading producer of vegetable oil.
What are your views of the ongoing anti-palm oil lobby from abroad?
From the MPOC’s point of view, we do not mind fact-based and balanced discussions. However, we often see that the way that the NGOs stir up campaigns is through manipulation of data and they propagate very extreme measures like having a moratorium or banning the use of palm oil altogether. That, we feel, is not the right approach and we would like to engage with them and discuss practical solutions based on science and facts.
If we look at the global point of view, world population is increasing. Today, palm oil is the largest produced vegetable oil in the world. So palm oil will have to be featured and cannot be taken out of the vegetable oil market altogether, (contrary to) what some NGOs are advocating. It’s a fact that it has to be here to fulfil the world’s need for vegetable oil.
So, what is the best way going forward to satisfy the increasing appetite for vegetable oil? For MPOC, we advocate that palm oil should be one of the main solutions simply because palm oil is the most efficient oil crop in the world right now, by a magnitude of six to eight times that of other oilseed crops in terms of the land usage per hectare.
What are some of the current measures taken by MPOC to promote market expansion of Malaysian palm oil and its products?
For market expansion, the main tool we use is through techno-economic seminars which we hold in various countries. When we want to open up new markets, we typically hold these seminars there to educate users about the technological advantages of palm oil. We also talk about the economic benefits of palm oil, mainly price competitiveness and also market price trends of palm oil. These give processors, users and traders in the country a very good picture about palm oil. In these seminars, we also bring together all the important components of cross-border palm oil trade. We put together the players, starting with the traders, processors, shippers and even bankers, and this enables the market to be opened up in the particular country, especially new countries.
For existing markets, we also have to defend our share, and sometimes we have to counter attempts to impose non-tariff barriers against palm oil. So we have to advocate by approaching legislators and government decision-makers to make sure they don’t impose discriminatory non-tariff barriers on the import of palm oil into their countries. In addition, we also hold seminars with scientists who will talk about the nutritional benefits of palm oil to dispel any negative false news about its nutritional attributes.
What are the three key challenges faced by the palm oil industry today?
On the plantation side, the perennial problem is a lack of workers, and we need a lot of workers. Over the years, this problem has gone from bad to worse. We need workers from other countries, but due to the development of plantations in these foreign countries, workers are reluctant to come over to Malaysia to work. So this is the most important challenge facing the oil palm plantation sector. Of course, we have to expand our source countries but it is still a challenge due to various restrictions.
Due to increasing concerns for the environment and sustainability, the second challenge is to tackle consumer perception about palm oil in terms of health and environmental issues. We have to deal with anti-palm oil campaigns and misconstrued campaigns based on false facts because consumer perceptions will influence retailers and food companies who buy palm oil.
The third challenge is related to governments and legislators in other countries. Due to these misconceived allegations against palm oil, they attempt to impose discriminatory non-tariff barriers such as up to 400% higher tax on palm oil versus other oils. Some of them are also proposing a quota in favour of their domestic seed producers.
What is MPOC’s role in addressing these challenges?
For shortage of workers, the most direct solution is to reduce the use of workers. We have to look into more ways to automate some of the processes. Looking at the past 20 years, we have managed to reduce the use of workers by around 15% in plantations.
But going forward, of course, there is still scope for reduction of labour, but that scope will probably be less because some of the processes are difficult to be replaced by machines. For example, harvesting is still a skilled job and has to rely on labour.
Tackling consumer perception is something we have to spend a lot of time on. First, we have to have very good research of our own to build up our knowledge on the health aspects of palm oil, and the planting of palm oil and to what extent it affects the environment, deforestation or peat lands. We have to build our own solid data to counter some of the quick research done by NGOs. We find much of the data quoted by NGOs is based on quite shallow, desktop-style research, which doesn’t really give the full picture. Based on our ground research, we have to learn how to be good communicators by using various media, especially social media, to spread the correct message about palm oil.
The third challenge is non-tariff barriers imposed by foreign governments and legislators.
MPOC and the relevant government officials have to do a lot of lobbying with the foreign government officials and legislators so they understand the true situation of palm oil, and refrain from imposing discriminatory measures against it.
The Malaysian palm oil industry has done well to be propelled to where it is today as one of the foremost producers of vegetable oils in the world.
Going forward, we should sustain our present position as far as plantation production is concerned. We should also develop more value-added uses for palm oil so that it becomes a more diversified industrial product, and not just a commodity product. That way, we can really increase the amount of revenue we can gain from each tonne of palm oil we produce in Malaysia.