M'sia needs to adopt a fact-based approach in the palm oil battle

  • Making Progress
  • Monday, 08 Jul 2019

Increased palm oil exports helped.

I AM not exaggerating when I say we have a palm oil problem.

I can say this, having spent close to two years as the political secretary to the former Plantation Industries and Commodities (MPIC) Minister.

I started my first innings at MPIC –now renamed the Primary Industries Ministry (MPI) – in late June 2016 after a Cabinet reshuffle.

Before I moved to MPIC, I thought I had a good understanding of palm oil and its inextricable link to our rural economy.

However, little did I know that my knowledge and understanding was cursory at best. It is a complex industry (to say the least) with an entire value chain that impacts close to three million Malaysians, or roughly around 10% of our population.

Palm oil is our third largest export earner but the highest net export earner because we export almost ten times the palm oil and palm oil-based products than we import.

I managed to catch up pretty fast with the help of friends and colleagues who took the time to school me.

I always believe and continue to that we must know our subject matter the best we can and surround ourselves with people smarter than us so we can learn from them.

MPIC, and now MPI, has some of the best civil servants I have ever worked with, and they are simply fantastic at what they do.

When Datuk Seri Mah Siew Keong took over the reins of MPI in late June 2016, we had a big battle on our hands.

Europe was threatening to ban palm oil from its biodiesel mix, and that would severely affect the palm oil industry as 60% of the palm oil exported to Europe is used for biodiesel.

In 2009, the European Union (EU) enacted the Renewable Energy Directive or RED 2009. The main reason for this was because the conventional wisdom at the time was that diesel is cleaner than petrol given the advances in engineering and biodiesel was the way forward for the automotive industry.

So, under RED 2009, the EU incentivised the use of biodiesel. The feedstock of biodiesel is edible oils such as canola, soybean, sunflower and, of course, palm oil. However, among all these edible oils, palm oil was the cheapest and the best suited for biodiesel because of its natural strengths.

This led to a steady increase in palm oil used for biofuels from 825,000 tonnes in 2008 to 3.9 million tonnes in 2017, amounting to more than half of all palm oil in Europe being used by diesel cars.

It also fuelled significant expansions of palm oil plantations in Indonesia and this led to more deforestation.

Also, pictures and videos of orangutans emaciated or on fire captured the imagination of the public, especially in Europe, and this led to calls for palm oil to be banned.

European kids who have never been to Borneo started to cry for our orangutans.

The EU, after the debacle of RED 2009, decided they wanted to a new renewable energy directive that excluded palm oil from the biodiesel mix as early as 2020. Whatever jargon the EU uses - and trust me, they are good at it – the EU wanted to effectively ban palm oil by severely restricting its market access.

If palm oil is excluded from the biofuel mix, will it die off?

The answer is probably not, but it would make life very difficult for Malaysia and Indonesia as this would amount to close to three million tonnes of palm oil (that is the amount the EU imports from Malaysia and Indonesia for biodiesel).

It will lead to a prolonged low-price cycle as there will be excess supply in the market. This hits our small farmers (650,000 in Malaysia and two million in Indonesia) hard as palm oil is the lifeblood of the rural economy of Malaysia and Indonesia.

We did the best we could in our two years, and Mah’s lobbying ensured that palm oil remained part of the EU's biodiesel mix at least until 2030 under the new renewable energy directive.

It was a big win for Malaysia. It also gave us the time to look for alternative markets and uses of palm oil.

Now coming to the video clip of couple young children from an international school in Kuala Lumpur dressed as orangutans hitting out at palm oil; why were some of us so miffed?

I wondered, how is it that there is an active anti-palm oil campaign on Malaysian soil despite this wondrous national treasure that has lifted millions out of poverty and helped transform Malaysia from an impoverished backwater to an Asian tiger.

The play at the international school is just another instance in a catalogue of attempts to over-simplify the debate surrounding palm oil in a way that demonises palm oil. Now, I take zero umbrage at the kids, but I am angry that teachers in international schools have run a systematic campaign to demonise palm oil.

I know for a fact that the Malaysian Palm Oil Council has been shut out by these schools whenever approached to discuss palm oil.

The government’s clumsy response to the international school episode aside; we need to have a debate on palm oil.

Many may not know but palm oil is the only edible oil that requires a sustainability certification but not all palm oil enjoys this certification.

Those subject to it have to ensure the entire value chain and production of palm oil is sustainably produced.

Those monitoring this process via the Roundtable of Sustainable Palm Oil (RSPO) are some of the most ardent environmentalists one will meet.

RSPO is so cumbersome that Malaysia developed a home-grown sustainability certification scheme called MSPO in short.

However, even then, it is hard for all small farmers to meet the stringent requirements of MSPO, but I believe they are trying.

However, MPI needs to buck up. Besides the "Love My Palm Oil" campaign, nothing much is being done to counter this negative narrative.

We need to take the fight for palm oil to Europe.

Overemphasis on the technical aspects and health properties of palm oil will not help. We do not need the minister in charge of palm oil telling us how youthful she looks after consuming a tablespoon of palm oil every day.

What we need is a story on how palm oil is being sustainably produced and the economic story behind palm oil – poverty alleviation.

Europeans do not like it when their conscience is pricked.

We also need to use comparative analysis to show that palm oil is being unfairly targeted.

For example, soybean planting in causing massive deforestation in South America but Green Peace is not doing anything about it.

Cattle farming (of which the EU is one of the largest cattle farming regions) causes the most greenhouse gas emissions, but no one says: “Let’s ban beef.”

Palm oil is four times more efficient than its closest competitor – soybean oil. So, palm oil only needs one-fourth of the land compared to soybean oil to produce a single tonne.

This terrible double standard makes me, and many others related to the palm oil sector, angry.

I remember preparing briefing notes for Mah whenever he met European ambassadors, and I would make sure all of this information was in it.

We need to fight the EU with facts and figures; not empty platitudes and pleas of nationalism – it will not work.

We are running out of time – I am sure this government does not want to be the government that loses the palm oil battle – so Malaysia needs to up the ante, but in doing so it needs a coherent and fact-based approach.

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