Between Oct 13 and Oct 21, 2017, a bi-partisan parliamentary committee comprising six MPs – led by Malaysian Palm Oil Board Chairman and Jasin MP Datuk Seri Ahmad Hamzah with Datuk Liang Teck Meng, Datuk Marcus Mojigoh, Datuk Seri Bung Mokhtar Radin, Datuk Zahidi Zainul Abidin and Dr Azman Ismail – spent nine days in Brussels, Belgium engaging with Members of European Parliament (MEPs) on Malaysia’s agriculture, forestry and environment policies.
The delegation had hoped that the engagements could persuade the European Parliament to reconsider its April 4 resolution to introduce a single certification scheme for palm oil entering the European Union (EU) market and phase out the use of palm biodiesel by 2020.
But alas, it was not to be.
If the EU eventually decides to accept what some MEPs are pushing for, then the livelihood of almost 650,000 smallholders, the core constituent of over two million people who work in the palm oil value chain, will be adversely affected.
Meanwhile, the EU Delegation to Malaysia, in a statement dated Oct 30, 2017, said that the European Parliament’s Environmental Committee anti-palm oil resolution on Oct 23, 2017, was non-binding and not part of a legislative initiative that needed to be ratified by EU member countries.
However, it is a fact that the resolution can potentially be adopted by the European Commission into formal and binding EU regulatory process and given the anti-palm oil predilections of the EU, we cannot discount this possibility at all.
This is an affront to the spirit of the on-going Malaysia-EU Free Trade Agreement negotiation and will hurt the bilateral trade that recorded RM149.1bil in 2016.
Palm oil is the lifeblood of smallholders
Today, close to 40% of the total 5.74 million hectares of oil palm planted area in Malaysia are managed by smallholders. On an average, a smallholder with a planted area of 3.9ha can earn a monthly net income of between RM2,000 and RM2,100.
The success of commercial oil palm planting, which reached its 100th-year milestone this year, provided the Government with an effective tool to eradicate poverty especially in the rural area and create employment opportunities in the agriculture sector.
This is reflected by the success story of Felda in pioneering land development for the landless farmers and encouraging the planting of oil palm. It is also in line with the United Nations Sustainable Development Goals (SDG).
The palm oil industry in Malaysia is very strictly regulated.
There are more than 60 laws and regulations enforced, ranging from land clearing and planting to transportation and production, to ensure its development is sustainable and in line with good agricultural practices.
In addition, the laws and regulations ensure that there is a healthy balance between development and the preservation of the environment and the wildlife habitats.
The success of the palm oil industry is not without challenges.
There is no denying that negative perceptions have gathered pace in recent years, touching on issues including deforestation, emission of greenhouse gases, planting on peatland, land rights and workers’ rights.
There is little doubt that the time has come for the industry to rethink and rebrand the palm oil originating from Malaysia.
Setting high standards
Implementation of a credible certification system using a national standard, that includes sustainability policies that are consistent with broader national sustainability goals, is an effective and responsible manner to brand Malaysian palm oil.
The Malaysian Sustainable Palm Oil (MSPO) Certification Scheme aims to certify oil palm plantations, independent and organised smallholdings and palm oil processing facilities based on seven principles, addressing (i) management commitment and responsibility; (ii) transparency; (iii) compliance with legal requirements; (iv) social responsibility, health, safety and employment conditions; (v) environment, natural resources, biodiversity and ecosystem services; (vi) best practices; and (vii) development of new plantings.
The MSPO Certification Scheme addresses good agricultural practices, which are essential for sustainable agriculture, producing a high-quality product and enhancing productivity through yield optimisation as a result.
MSPO has the potential to raise the average yield of the smallholders from the current national average of between 14 to 16 tonnes of fresh fruit bunches (FFB) per year to as high as 20 to 25 tonnes of FFB per year, which translates into higher income for the 650,000 farmers.
Another key feature of MSPO is enhanced traceability from the farms and mills to products, giving assurance of sustainability adherence through the value chain.
We are exploring ways to create a digital identity for palm oil so that every step of the production process is captured and can be assessed to ensure it meets the highest standards.
To ensure this actually happens, we have engaged reputable international organisations such as Bluenumbers from New York.
MSPO also promotes awareness on environmental and social aspects of sustainability, among others reducing accidents at the workplaces and reducing waste, resulting in reduced running costs and higher profits.
The Government is committed to ensuring the palm oil industry is fully certified under MSPO by December 2019.
A dedicated agency, the Malaysian Palm Oil Certification Council, is set up for the purpose in part, and it is backed by RM130mil in funding to certify all smallholders.
In addition, estates between the size of 40.46ha to 1,000ha and those above 1,001ha are given a 70% and 30% incentive respectively to partially offset the audit cost.
Processing facilities including mills, refineries, and crushers will similarly receive a 30% incentive of the audit cost.
Stronger reaction may be unavoidable
Even as the West moves the goalpost from health to deforestation in its unfair, unwarranted and sometimes illegal attacks against palm oil, Malaysia stands tall, as we have consistently upheld the principle of balancing development with conservation.
In my last article, I showcased our major conservation initiatives such as the Central Forest Spine, Heart of Borneo and Malaysian Palm Oil Wildlife Conservation Fund, and I committed to doing all that we can to deliver even more.
Be that as it may, the development in the EU is extremely frustrating.
It conveniently rebuffs the efforts we have taken in all aspects, including multiple and continuous engagements to find a win-win resolution, and attempts to straitjacket its supposed better standards onus.
As the actions of the anti-palm oil MEPs and their supporters continue to harm the palm oil industry, we may have little choice but to react in stronger terms.
Malaysia has demonstrated in the past that we have the courage and conviction to do what is necessary to safeguard the interest of our citizens. It will be no different this time.
I will also be meeting all the ambassadors of all the EU member states and my message will be simple: work with us and not against us.
- Datuk Seri Mah Siew Keong is Minister of Plantation Industries and Commodities. Commodities Today and Beyond is his op-ed to share his views, hope, and vision for commodities with everyday Malaysians.