For many years palm oil has been the victim of negative campaigning, especially in Europe and the United States. Kuala Lumpur and Jakarta have agreed to join forces to fight this but it remains to be seen what their actual plan is.
THE fight is real. At least for palm oil, that precious commodity export from Malaysia.
Palm oil has suffered endless negative campaigns and is constantly being demonised by the West. Malaysia and Indonesia, the world’s major exporters, have for years been at loggerheads with the European Union over curbs on imports of palm oil. Both countries have said that such moves are trade barriers and protectionist measures for the bloc’s domestic oilseed industries. The EU deforestation regulation is in addition to an EU renewable-energy directive, announced in 2018, that requires the phasing out of palm-based transportation fuels by 2030.
Malaysia and Indonesia agreed to up the ante in the fight against the discrimination when leaders of the two countries met recently. Following a meeting with visiting Prime Minister Datuk Seri Anwar Ibrahim in Bogor on Jan 9, President Joko “Jokowi” Widodo announced that the two countries would fight discrimination against palm oil together and strengthen cooperation through the Council of Palm Oil Producing Countries.
Whenever leaders of both countries meet, issues like migrant workers, borders and palm oil are usually on the table. But Jokowi has been consistently asking Malaysia to work together to fight palm oil discrimination.
In 2019, Jokowi and Tun Dr Mahathir Mohamad sent a scathing joint letter to the EU, conveying grave concerns over an EU plan that would effectively ban palm oil fuel in its member states over the next decade. The letter came with a threat of trade retaliation against the plan. Two years ago after a meeting with then prime minister Tan Sri Muhyiddin Yassin, Jokowi reiterated his call for both countries to work together.
“Indonesia will continue to combat the discrimination against palm oil and this fight will be more effective if it is done together. Indonesia hopes for the same commitment from Malaysia on this palm oil issue,” he said back then. Indonesia and Malaysia account for 85% of the world’s palm oil exports. The EU accounts for 9.4% of Malaysia’s palm oil market.
Malaysia has been fighting against palm oil campaigns for years. Deforestation allegations, the say no to palm oil campaign for destruction of the rainforest, home to the orang utan, are still very much alive. There are also anti-palm oil campaigns driven by US-soybean-lobbyists-linked claims of high cholesterol levels and saturated fats found in palm oil. It has been an exhausting fight.
Deputy Prime Minister Datuk Seri Fadillah Yusof, who is also Plantation and Commodities Minister, recently said Malaysia may stop exporting palm oil in response to deforestation regulations. Since he became minister, Fadillah has been raising palm oil concerns with the media and keeping abreast with the latest commodities issues. On Dec 23, his office issued a two-page statement lambasting the EU and its act to block market access by targeting commodities such palm oil, timber, cocoa and rubber.
“On Dec 6, the EU Council and Parliament reached a provisional deal on a proposal to minimise the risk of deforestation and forest degradation associated with products that are imported to or exported from the European Union.
“As a producing and trading country, Malaysia is deeply concerned by the developments of the EU-Deforestation-Free Products Regulation targeting commodities including palm oil, coca and rubber. This unilateral initiative is detrimental to free and fair trade and could result in adverse impacts on the global supply chain,” the statement said.
Fadillah said Malaysia feels that the regulation is a deliberate act to block market access, hurt small farmers and protect a domestic oilseeds market that is inefficient and cannot compete with the cost of palm oil. Malaysia has consistently said its palm oil is sustainable and one of the most certified vegetable oils in the world.
Fadillah will embark on a working trip to Indonesia soon to meet his counterpart and other stakeholders to fight the anti-palm oil lobby. He has said that Malaysia wants to form a joint mission with Indonesia to visit Europe and other palm oil importing countries to address environment concerns arising from vegetable oil plantation activities.
Malaysia is looking at formulating and implementing effective and aggressive action plans to increase awareness of the goodness of palm oil and dispel misinformation.
After Fadillah remarks on a possible ban on palm oil exports to the EU, Reuters reported some in the industry view the proposed ban as a knee-jerk reaction that will hurt the sector. Others are lauding Malaysia for putting its foot down.
If Malaysia does decide to make this move, is it a wise one? Because it would only encourage importer countries to look elsewhere. The anti-palm oil lobby is very powerful but Malaysia needs to be more aggressive and proactive in engaging experts to counter accusations and bad press. In fact, the offensive mode should have started years ago.
Some officials feel that there is a need to build a consistent and impactful narrative on the commodity and its byproducts.
“The agencies need to work together to address the gap throughout the supply chain. That clarity is lacking,” said an officer.
Another aspect that is worth considering is possibly managing it via the Malaysia-EU free trade agreement. The FTA was launched in October 2010 but negotiations reached an impasse in 2012. In 2021 both sides agreed to undertake a stocktaking exercise to assess each other’s positions.
Campaigns and engagements have been done and now missions are in the works. What is next for Malaysia’s palm oil?
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