First-class Palm Oil
Encompassing both plantations and smallholdings, the dynamic Malaysian oil palm sector drives downstream industries, infrastructure development, socio-economic growth and poverty alleviation schemes. The industry was the fourth-largest contributor to the economy in 2014, accounting for RM66.12 billion (EUR 15.7 billion) of export earnings.
In a wide-ranging interview, the Minister shares his views on how the industry is addressing fresh challenges in markets worldwide. These include anti-palm oil campaigns in Europe; the US ban on trans fats; and certification standards for sustainable palm oil.
Cecilia Malmstrom, the Trade Commissioner for the European Union (EU), has declared that use of the ‘No Palm Oil’ label is a private initiative, and that it does not come under the jurisdiction of the European Commission. What do you make of the comment?
In a review commissioned by the Malaysian Palm Oil Council, experts in law firm Hogan Lovells found that use of the ‘No Palm Oil’ label is a clear breach of EU law. Commissioner for Health and Food Safety Vytenis Andriukaitis has come to recognise that the label is obsolete, as have many politicians in France and Belgium.
This is in light of the Food Information to Consumers Regulation, which mandates the labelling of the origin of specific vegetable oil content. So, the time has come for the EU to denounce the use of the ‘No Palm Oil’ label and call for its removal from food packaging.
This would also support Europe’s own interests. Palm oil is of tremendous economic importance to the EU. European businesses understand this, and it is crucial that others also realise it.
Today, palm oil is used in about 50% of all products found on supermarket shelves. Palm oil imports contribute an estimated 5.8 billion EUR to the EU economy annually. According to the respected UK-based research consultancy Europe Economics, 67,000 jobs in the EU are linked to this sector.
How is Malaysia dealing with the anti-palm oil campaign in Italy?
In Italy, competing oilseed industries and farming groups, together with NGOs and political parties, have made baseless claims that consumption of palm oil is ‘harmful to health’ and that oil palm cultivation ‘leads to deforestation’. These groups are well-funded and have been very vocal in the Italian media.
However, the Malaysian palm oil industry has moved to counter the campaign with a fact-based approach to educate end-users and enable them to arrive at an informed decision. In this, the industry has science on its side.
At the same time, Malaysia maintains close ties with Italy in the interests of diplomacy and mutual prosperity. Trade between the two nations is now valued at more than RM2 billion (EUR 0.5 billion) annually.
Italy is an important market for palm oil which is used in the food and energy sectors; the palm oil import sector also supports about 14,000 jobs in the country. It is therefore important for Malaysians and Italians to work together to defeat this unjustified campaign.
Given such challenges, will Europe continue to be a major market for Malaysian palm oil?
We are committed to trade with Europe. It is still a major market for Malaysian palm oil. In 2014, Malaysia exported 4.25 million tonnes of palm oil and derived products to the EU.
The EU is also a leader of global opinion and a trendsetter for both regulation and consumer behaviour. Therefore, it is important for Malaysia to continue engaging with European countries and the EU to reinforce the many beneficial attributes of palm oil. We now see a growing number of scientists and experts in Europe sharing our view that palm oil is a first-class product. This is a positive sign.
How is Malaysia responding to these challenges in terms of branding?
We will launch a major branding initiative soon to explain the benefits of palm oil to consumers in Europe. This is also intended to position Malaysian palm oil as a premier brand that offers the assurance of high quality and sustainable production.
The initiative will highlight the fact that palm oil is healthy, balanced oil that is free of trans fats and genetically-modified organisms. In terms of protecting the environment, cultivation of oil palm requires the least amount of land to produce the highest-yielding oilseed crop. In this context, participation in the sector allows rural communities to rise out of poverty in developing countries and contribute towards socio-economic development.
The Food and Drug Administration (FDA) has announced that trans fats will be banned from food in the US within three years. Can we expect a similar decision in Europe?
The US ban on trans fats is an historic decision. It is being imposed due to the now-accepted fact that trans fats are extremely harmful to human health, a finding which has found unanimity within the scientific community. As we know, the FDA’s initial steps were to restrict intake of trans fats, and to require the labelling of trans fat content in food products.
Years of issue-based campaigning and research to highlight the dangers of trans fats have paid off for the Malaysian palm oil industry. It can now leverage on the FDA ban to promote the technical and health qualities of palm oil.
As it is naturally semi-solid, palm oil does not require hydrogenation – the industrial process in food manufacturing that creates trans fats. Palm oil can therefore deliver precisely the same functions as partially-hydrogenated oils, but without trans fats.
In Europe, the debate has begun on whether or not to ban trans fats. As Europeans are very health conscious, we expect the debate to be a robust one. Malaysia should participate in this to encourage and extend the use of palm oil.
NGOs and the media have been critical of deforestation, which they have linked to oil palm cultivation. How do you view the ‘No Deforestation’ campaign?
Deforestation is a challenge anywhere in the world when it is unplanned and unmanaged. In Malaysia, this is not the case. We have laws and regulations on land use and preservation of permanent forests for a reason: to balance economic development with environmental and conservation management.
If conservation shuts out economic growth, people will illegally deforest because they have no other means of earning an income. If economic development does not consider environmental management, the land and soil will become degraded and nothing will grow. So, it is a matter of balancing priorities.
It is easy for campaigners and companies to demand ‘zero deforestation’ supply chains. But this does not address complex problems of implementation, including the need for alternative means of economic growth. The ‘No Deforestation’ campaign denies developing countries their sovereign right to utilise land for agriculture and food production.
Malaysia has pledged to keep at least 50% of its land area under forest cover, a commitment that has been lauded by the United Nations and World Bank. As at 2012, approximately 21.01 million ha or 63% of Malaysia remains forested. The historical expansion of oil palm cultivation has mainly been through the use of idle land or conversion of land use from other economic crops like rubber.
Fact-box: Biodiversity in tropical rainforests
|Malaysia’s location in the humid tropics has endowed its landscape with various types of flora and fauna. The landscape known as tropical rainforest, a biome that evolved millions of years ago, acts as a mega-store for biological diversity. This ranges from smaller microscopic organisms and bacteria, to larger organisms such as mammals, fishes and birds.Records show that this mega-store is the habitat of approximately 17,631 species of flora including 377 algae, 1,387 briofit, 1,600 ferns and its families, 61 gymnosperms, 4,180 monocotyledons and 10,026 dicotyledons.There are 9,563 species of fauna that include 480 mammals, 742 birds, 242 amphibians, 567 reptiles, 590 freshwater fish, 1,967 butterflies and 1,073 leaves beetles.This richness and diversified biology have attracted the attention of the global community. As a result, Malaysia is recognised as one of 12 nations with ‘mega-biological diversity’.|
In relation to the previous question, what is the future of certification for Malaysian palm oil?
Malaysian plantation groups have obtained certification under the standard established by the Roundtable for Sustainable Palm Oil (RSPO), and now produce 42% of the global supply of certified sustainable palm oil.
But compliance with the RSPO process has proven too costly and cumbersome for smallholders in Malaysia. So, to assure buyers that palm oil is responsibly produced, Malaysia has embarked on its own certification scheme – the Malaysian Sustainable Palm Oil (MSPO) standard, which will provide more than 200,000 smallholders the opportunity to have their product certified as sustainable.
The MSPO is the future of certification. The reason is simple: it combines environmental protection with the goal of improving the socio-economic outlook of smallholders. This is what sets the MSPO apart from other certification systems – in planning and implementing it, the socio-economic outcome is not an afterthought, but seen as an integral part of sustainable production.
I was glad to read that The Forest Trust (TFT) now agrees with Malaysia’s long-standing philosophy to go ‘beyond certification’ and look at how oil palm cultivation is bringing about socio-economic advancement for smallholders and workers. But I was disheartened to note when reading a new book by TFT Founder Scott Poynton that the word ‘deforestation’ appears more than 30 times and the word ‘poverty’ no more than three times.
There is still clearly a difference between the objectives of developed and developing countries when it comes to what certification is supposed to achieve. For this reason, we will be looking to harmonise our standard with like-minded producers like Indonesia. This will be done under the auspices of ASEAN, which Malaysia currently chairs, and we will aim for a regional standard.
The US has criticised some aspects of the Malaysian plantation industry and its labour practices. What is your response?
We treat all allegations about labour seriously, but these are largely misplaced insofar as the palm oil industry is concerned. Following the report by the US Government, we carried out a review of oil palm plantations in six states. It showed several cases where it was alleged that the passports of migrant workers were being withheld by employers; and that some children accompany parents to work because of inadequate access to childcare services.
We have been working closely with the US Government and International Labour Organisation to monitor and rectify these problems, and the most recent report by the US Government recognises our progress. This has led to Malaysia being upgraded to the Tier 2 list, comprising countries ‘making significant effort to bring themselves into compliance’ with anti-human trafficking efforts.