100 YEARS OF MALAYSIAN PALM OIL FACTORS CONTRIBUTING
100 YEARS OF MALAYSIAN PALM OIL: FACTORS CONTRIBUTING TO ITS SUSTAINABILITY AND SUCCESS by Tan Sri Datuk Dr. Yusof Basiron and Dr. Yew Foong Kheong
Presentation 1. History of oil palm in Malaysia 2. Importance of palm oil to Malaysia 3. Importance of palm oil to world 4. Factors contributing to Malaysian Palm Oil’s success 5. Palm oil: The Ultimate Sustainable Oil 6. Managing issues to remain successful 7. The Future 8. Conclusions
1. The Journey from West Africa to Malaya Oil palms in the wild mangroves in Africa 2 4 1848: Oil palm brought to Botanic Gardens Buitenzorg (Bogor), Indonesia by Dutch East Indies Company 3 1 5 The 5 original steps used to extract palm oil 1870: Planted in Botanical Gardens, Singapore
History of Malaysian palm oil Source; MPIC 1917: First commercial planting in Tennamaram Estate, Selangor
Oil palm & rubber hectarage over the years • Oil palm expanding over the years, at expense of other crops such as rubber • Rubber area reached its peak in the 1980 s before its decline • More rubber land converted to oil palm when rubber prices fell • Today oil palm area still growing, increased by 251, 000 ha in 2014 -2015 • Rubber only grew by 11, 000 ha in same period
2. Importance of palm oil to Malaysia (Export earnings in Year 2014) Crop Export earnings *( RM) Oil palm 66. 1 billion Rubber 23. 6 billion (3 x) Timber 20. 4 billion Cocoa Pepper * from both upstream & downstream 4. 8 billion (14 x) 404. 6 million
Importance of palm oil to Malaysia (GDP contribution from agriculture in Year 2014) Crop GDP contribution * as percentage of total national GDP (%) Oil palm 5. 0 Rubber 1. 1 Timber 1. 3 Cocoa 0. 1 Pepper 0. 1 * from both upstream & downstream
Importance of palm oil in rural development & poverty eradication • Oil palm cultivation helps reduce migration from rural to urban areas • Alleviate poverty of rural areas • Instrumental in the development of secondary towns in rural areas • Provides places of worship, houses, schools, clinics, and other basic necessities in rural oil palm estates
THE EARLY FELDA TRANSFORMATION SETTLEMENTFELDA 9
FELDA TRANSFORMATION FELDA FEDERAL LAND DEVELOPMENT AUTHORITY (FELDA)
Oil palm industry is being used as an anchor to increase Malaysia’s GNI by 2020 • Palm Oil NKEA to raise Gross National Income to reach RM 178 billion by 2020 • Additional 41, 000 jobs (40% of which are high skilled jobs earning RM 6, 000 /month) • 8 EPPs for palm oil industry • First 5 EPPS to address upstream productivity & sustainability • Last 3 EPPs to address downstream value addition & sustainability
Addressing stagnating oil palm yields • Average FFB yield is stagnant • Average yield is 18. 70 tonnes per hectare (1975 -2015) • Last year yield was 18. 5 tonnes per hectare • National Key Economic Area for Oil Palm(NKEA) • EPP 1: Accelerating replanting and new planting • EPP 2: Improving Fresh Fruit Bunch Yield • While these are going on, simple method of conserving & trapping water can increase yield Source. TH Plantations
Results from experiments on irrigating oil palm Situation FFB Yield (t/ha/yr) Malaysian National Yield (1975 -2015) MPOB (DG’s plot) Felda (irrigated) 18. 70 32 46 Felda (lysimeter with maximum inputs of fertilizers & water) India (irrigated) India ( non-irrigated) 60 32 8
Oil palm yield increase via R&D
Serious local manpower shortage • EPP 3: Improve Worker’s Productivity • Motorized harvesting tool (Cantas) • Serious need to look at integrated approach to mechanization
3. Importance of Malaysian palm oil to world Parameter Malaysian palm oil’s contribution in world Total palm oil production in world 32 % Total global production of oils & fats 9. 6%
Oils and Fats Production (1990 – 2015) Rapeseed oil 10. 09% Others 46. 67% Sunflower oil 9. 73% Soybean oil 19. 90% Palm oil 13. 62% 1990 Production : 80. 89 million MT Source: Oil World 2015 Production : 204. 89 million MT
Oils & Fats: Net importers & exporters 2015
4. Factors contributing to success (a) Acumen of smart business entrepreneurs • Rubber was mainstay of Malaysian plantation industry once upon a time • Smart entrepreneurs switch to oil palm when they saw better prospect in oil palm • Switch from rubber & cocoa to oil palm • Entrepreneurs actually chopped down their rubber and cocoa tress to plant oil palm • Switch over also aided by low rubber & cocoa prices at one time and lack of labour • Oil palm plantation needs less workers than rubber • Oil palm shorter immature period
4. Factors contributing to success (b) Strong Malaysian Government support • Government came up with Agriculture Diversification Policy as far back as 1960 s • So as not to be too dependent on rubber crop alone • Plant oil palm & not just rubber • Before 1972: R&D on oil palm carried out by Department of Agriculture (DOA) • 1972: R&D transferred to Malaysian Agriculture Research & Development Institute (MARDI) • 1979: Palm Oil Research Institute of Malaysia (PORIM) • 2000: Malaysian Palm Oil Board (MPOB)
4 c: Importance of R & D • Agronomy • Pest & Disease control • Higher yielding clones • Find more uses for palm oil First example Ø Palm oil trunks were chipped & left in field to rot & supply organic matter & nutrients due to zero burning at one time Ø Today palm oil trunks are used to make high value furniture
4 d: PALM OIL AS BIOFUEL Second Example MALAYSIA: • Implemented B 5 policy on a country wide basis in 2011 • Implemented B 7 policy nationwide in 2014 • In process of implementing B 10 • Biofuel policy gives us an alternative use for palm oil • If ever we reach stage where we cannot sell palm oil for food, we use it as biofuel
4 e: Marketing palm oil & products • Revenue can only be earned if palm oil and products can be sold • Need to find markets • Malaysian Palm Oil Council or MPOC (previously known as Malaysian Palm Oil Promotion Council) was founded • MPOC works with industry members to find markets and new opportunities
Palm oil’s prominence is of concern to competitors Average Annual Growth (1990 – 2016 F) Palm Oil (7. 05%) Rapeseed Oil (5. 20%) Soybean Oil (4. 60%) Sunflower Oil (4. 40%) Palm oil overtook soybean oil as the most produced oil in 2004 • Allegations created to cause fear on use of palm oil • 1980 s: Issues of health as palm oil is saturated fats & bad for health • War was won when R&D showed this to be untrue • Attention turned to allegations that oil palm cultivation is not sustainable & damages the environment • Allegations without scientific basis • Amounting to “fear mongering”, ‘ green mongering” & ‘blackmailing” palm oil industry to compliance
5: Palm Oil- The Ultimate Sustainable Oil Sustainability certification should include other 99. 7% of agricultural commodities, especially beef, soyabean and grains and not just on palm oil in order to have meaningful mitigation of CO 2 emissions, biodiversity loss and deforestation. POI is wrongly targeted to achieve any significant results in CO 2 or deforestation reduction.
Palm oil trade is affected
6: Managing issues to be successful No palm oil labels: illegal but condoned by France ISSUES: • Started as Environment Issue ‘Oil palm cultivation causes deforestation & biodiversity loss’ • Slowly involving health and social issues
No Palm Oil Labels ü The No Palm Oil Labels will only be solved through intense political intervention; anti-palm interests don’t respond to niceties ü Requires a multi-faceted response
Palm Oil Tax in France • Started with Nutella Tax when French senator Yves Daudigny lobbied for 300% tax imposition on palm oil in 2011 • Palm oil forms 20% of ingredients in Nutella and dubbed ‘Nutella Tax’ • Proposal was gunned down in December 2012 by protests from Malaysian government & palm oil industry players
Resurfacing of Palm Oil Tax in France • Bill ‘Reconquering biodiversity, nature and landscape’ proposed by Archimbaud M. Gattolin & others + Groupe ecologiste (Greens) in 2015 • Senators from Green Party claimed that forest is lost to oil palm cultivation & loss of biodiversity • This additional tax set at 300 EU in 2017, 500 EU in 2018, 700 EU in 2019 and 900 EU in 2021
Palm Oil Tax in France • MPOC commissioned an economic analysis study to University of Aix- Marseilles Professor Pierre Garello • Found that claims favouring the tax are factually & materially wrong • Palm oil is already taxed more than other oil crops in France • Tax for palm oil is 21. 67%, sunflower oil 15. 79%, rapeseed 11. 69%, olive oil 4. 9% • Malaysia contested strongly against the Tax and in June 2016 the Tax was squashed
Council of Palm Oil Producing Countries (CPOPC) § CPOPC launched on 21 November 2015 during 27 th ASEAN Summit, Kuala Lumpur § Founding Members – Indonesia and Malaysia § To include other palm oil producing countries later § To work together to address issues by coming up with a unified stand for palm oil producing countries (Malaysia & Indonesia)
7. The Future Palm oil is food, fuel & fibre source Future of palm oil is driven by growth in demand for food, oleochemicals and biofuel due to population and economic growth The world population is projected to grow from 7. 3 billion in 2015 to 9. 6 billion by 2050, an increase of 32 percent. Food production must meet this rate of increase.
The Future Item/Year 2015 2080 (projected) Area relative to land mass in Malaysia World population 7. 2 billion 9. 1 billion Oil palm area in world 17. 3 M ha 21. 9 M ha 2/3 size of Malaysia Oil palm replaced by rapeseed 91. 7 M ha 116. 1 M ha 3. 5 times size of Malaysia Oil palm replaced by sunflower 109. 0 M ha 138. 0 M ha 4. 2 times size of Malaysia Oil palm replaced by soya 178. 2 M ha 225. 6 M ha 6. 8 times size of Malaysia • Future is bright for palm oil • Population growth will continue • More demand for food • Land available for agriculture is shrinking • 5 -10 times more land needed if other oil crops used • If total oil palm area in world replaced by soya, need nearly 7 times land area of Malaysia just to grow soya alone to feed the world!!
8. Conclusions Malaysian palm oil industry is 100 years old Has grown from strength to strength It is still growing Very important industry to Malaysia as economically it earns big revenue for country • Socially it has helped to alleviate poverty especially in rural areas • Its success has been due to • • - Smart business acumen of Malaysian entrepreneurs who saw potential of crop - Malaysian Government’s foresight & support for industry - Smart management of issues by industry & Government
Conclusions • Oil palm is a very sustainable crop • It can provide abundant & affordable source of food, fuel & fibre for the world population on least amount of land area • Future of palm oil is bright • Malaysian palm oil industry will continue to grow • For this to happen, Malaysian palm oil industry must continue to be vigilant & manage issues well • Industry must continue to work with relevant government & private organizations within & outside Malaysia
THANK YOU Visit my blog: http: //palmoiltoday. net Follow my Twitter: https: //twitter. com/Yusof. Basiron
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