Summary

 

KL, Jakarta to appoint palm oil ‘envoy’

Malaysia and Indonesia plan to appoint an ‘Ambassador of Palm Oil’ to promote the benefits of consuming palm oil products in the international market.

Datuk Seri Mah Siew Keong, the Malaysian Minister of Plantation Industries and Commodities, said misrepresentations spread by the anti-palm oil lobby have led to non-tariff barriers in major importing countries.

“These include the ‘No palm oil’ label [on food products] and proposals to impose a high import tax on palm oil products. This is a form of discrimination to us,” he said.

Mah said this after co-chairing the Ministerial Meeting of the Council of Palm Oil Producing Countries (CPOPC) with Indonesia’s Coordinating Minister of Maritime and Resources, Luhut Binsar Panjaitan, in Putrajaya on Aug 30.

Luhut Binsar said the ambassador must be a person who is influential and that some names are in hand, but that these will have to be discussed with Datuk Seri Mah.

He said the two countries have also agreed to cooperate in promoting the use of biodiesel in other countries, especially China.

“China is looking to overcome environmental problems and we are trying to convince [its] government that B5 or B10 biodiesel can bring [about a] good impact,” he said, referencing the blends of 5-10% palm methyl ester and 90-95% regular diesel.

Datuk Seri Mah also said both countries have agreed to contribute US$5 million each initially to operate the CPOPC secretariat.

The secretariat, he said, will organise ministerial missions to major importing countries, including those in the European Union, to address current concerns about palm oil.

Palm Oil Refiners Association of Malaysia chief executive Mohammad Jaaffar Ahmad has been appointed deputy executive director of the CPOPC.

“He will represent Malaysia […]. We will appoint the other two representatives in a couple of weeks. They will be tasked with taking care of smallholders’ interests and global palm oil stock management,” Datuk Seri Mah said.

Earlier this month, the Indonesian government had appointed Benny Wachyudi as the CPOPC executive director. The secretariat structure is such that four directors will report to the executive director and his deputy – two from Indonesia and two from Malaysia.

Indonesia has appointed Fadhil Hasan the CPOPC director in charge of standards and sustainably issues. His duties are mainly to harmonise the certification criteria of the Indonesian Sustainable Palm Oil and Malaysian Sustainable Palm Oil standards.

Eight other palm oil producers – Thailand, Nigeria, Colombia, Papua New Guinea, Ivory Coast, Honduras, Guatemala and Brazil – have expressed interest in joining the CPOPC to date.

Sources: Compiled from reports by Bernama, Aug 31, 2016, & New Straits Times, Aug 30, 2016

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Global oil palm acreage could double without damaging forests 

The area covered by oil palm plantations worldwide could double without damaging protected areas or sensitive forests, according to recent research.

Researchers from the Austria-based International Institute for Applied Systems Analysis (IIASA) studied satellite maps from Southeast Asia, Africa and Latin America to determine where the crop used to make vegetable oils and other consumer products could be expanded sustainably.

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The findings follow criticism by campaign groups who say the expansion of oil palm plantations has destroyed rainforests and displaced native people from ancestral lands.

More than 18 million ha are covered by oil palm plantations, up from 6 million ha in 1990, IIASA said.

Expansion of the crop, which accounts for about 30% of all vegetable oil used worldwide, has been concentrated in biodiversity-rich Malaysia and Indonesia.

The industry could grow sustainably if the right policies are put in place, the researchers said.

“Currently, ‘no-deforestation’ pledges are being formulated and eventually implemented on different scales – from palm oil traders to provincial governments,” IIASA researcher Johannes Pirker told the Thomson Reuters Foundation.

“As a co-benefit of these initiatives, improved land-use planning and tenure clarification, smallholder inclusion and improved production practices might come about, which will ultimately also benefit the land rights of traditional communities.”

Satellite data shows an area of up about 19 million ha on which the industry could grow without damaging forests that are particularly valuable for biodiversity or storing carbon as means of combating climate change, IIASA said.

Globally, an estimated three million small farmers work in the oil palm business and this could rise above seven million if the industry is expanded sustainably, it added.

Source: Reuters, July 27, 2016

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Red palm oil reduces Vitamin A deficiency in China project

Malaysia has provided an assurance that it will continue to offer high-standard edible oil to meet health needs.

Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said Malaysia has invested in financial and human capital to better understand the effects of palm oil on human health.

This was proven by findings from the ‘red palm oil programme’ mounted by the Palm Oil Research and Technical Service Institute of MPOB in Gansu, China. Under this, 2,000 school children were given biscuits made with red palm shortening to fight Vitamin A deficiency.

“The results […] show that deficiency fell from 21.6% to 6%. This clearly indicates that palm oil plays a big role in China’s oils and fats market […],” Datuk Seri Mah told reporters in Tianjin.

He noted that Vitamin A deficiency is a significant public health issue in developing countries and is a major cause of blindness as well as overall mortality.

Red palm oil has been studied as a supplement and as part of food fortification to boost Vitamin A levels, he said.

Over the past 30 years, Malaysia has partnered leading biomedical and nutritional research institutions around the globe, including China, to carry out clinical studies related to palm oil, he said.

“Today there is a wealth of scientific evidence that supports the fact that palm oil is a wholesome and nutritious edible oil,” Datuk Seri Mah said.
Source: Bernama, Aug 12, 2016

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‘Carbon neutral’ urban centres for Malaysia

Malaysia hopes to have a city or township with zero carbon emissions in all states by 2026.

To date, Malacca City and Iskandar Malaysia in Johor have been earmarked to become the country’s first ‘green technology’ cities by 2020, said Natural Resources and Environment Minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar.

Malaysia had promised to reduce its overall greenhouse gas emission intensity by 45% by 2030, during the United Nations Climate Change Conference (UNCCC) in Copenhagen in 2009.

Prime Minister Datuk Seri Najib Abdul Razak had reiterated the stand at last December’s Paris conference.

Datuk Seri Wan Junaidi said the federal government is scouting for potential cities or new townships where it can implement a Low-Carbon Cities Framework (LCCF) – currently being developed in Malacca and Johor – in a bid to drive down CO2 emissions.

The LCCF is a town planner for local governments and developers to calculate the CO2 emission baseline of cities and how to reduce this in four key areas: transportation, environmental quality, buildings and energy, and waste and water management.

Malaysia’s report to the UNCCC in 2011 put the country’s net total emission of CO2 at 27.28 million tonnes. The energy sector accounted for 76% of this, while the waste sector contributed 12%.

Datuk Seri Wan Junaidi said Malaysia had reduced an estimated 8.57 million tonnes of CO2 emission in these sectors by cutting down processes that result in greenhouse gases, and by planting 13 million new trees since 2011.

Source: New Straits Times, July 26, 2016

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Malaysia committed to B10 biodiesel policy

The Plantation Industries and Commodities Ministry is working to implement the use of B10 biodiesel in Malaysia this year.

Its Minister, Datuk Seri Mah Siew Keong, said discussions are going on with various parties and that the ministry has received a lot of feedback.

“We have met car-makers [and] petrol station operators, and I think we will have a few more meetings,” he told reporters, adding that their concerns would be studied and addressed.

Earlier reports had said that the implementation of B10 biodiesel (blending of 10% palm methyl ester with 90% petroleum diesel) had been delayed due to inadequate data.

The new standard will raise the minimum bio-content of biodiesel from the current 7%, taking up more palm oil supplies and supporting local prices.

Blending to the new standards is expected to consume 709,000 tonnes of palm oil annually versus estimates of 500,000 tonnes under the current biodiesel mandate.

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“The implementation of both the B10 and B7 programme requires coordination and cooperation from all petroleum companies, including Petronas, Shell, Chevron, Petron and BHP,” said the ministry in an e-mail reply to Reuters.

State-owned Petronas, Royal Dutch Shell, Chevron, Petron and BHP are responsible for blending diesel with PME at 35 blending depots throughout Malaysia, according to the ministry.

Current facilities at the depots are able to handle blending of up to 10%, the ministry said, as the infrastructure had been designed to take into account the upgrading of the biodiesel mandate.

“The petroleum companies only need to reset the blending ratios to B10 and B7 respectively,” the statement said.

Construction of the blending facilities was funded by the government through the Malaysian Palm Oil Board.

Palm oil traders, plantation companies and analysts had earlier questioned the feasibility of the government’s B10 programme, citing low crude oil prices and weak implementation policies as barriers to the mandate’s effectiveness.

Malaysia has 18 biodiesel plants in operation with 2.3 million tonnes in annual capacity, the ministry said.

The biodiesel programme will help stabilise palm oil prices, and the government will as well look for other strategies to support prices, such as accelerating re-planting activities, the ministry said.

Sources: Compiled from Bernama & Reuters reports, July 26, 2016

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CPO average price forecast for 2016 

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The crude palm oil price is seen averaging RM2,678 per tonne this year, up nearly 18% from last year. This is due to higher demand from top consumer India and replenishment of stocks by China, according to the Malaysian Palm Oil Council (MPOC).

Benchmark palm oil prices on the Bursa Malaysia Derivatives Exchange had surged 11.3% up to Aug 22, on the back of tight supplies and improving export data.

“In 2016, palm oil prices will average at RM2,678 per tonne, stabilising in a range between a low of RM2,162 and a high of RM3,195,” said Tan Sri Dr Yusof Basiron, the MPOC chief executive, in remarks posted online for a palm oil seminar.

The forecast price, up from the year-to-date average of RM2,528, is on the back of strong demand from the world’s two largest consumers, he said.

India will maintain its position as the world’s largest consumer and importer of palm oil, he said, while China is expected to import more oils and fats for the rest of the year.

“The utilisation of the high carryover stocks in China caused it to import less oils and fats especially in the first half of 2016, but imports will be increased to replenish stocks in the second half of 2016,” said [Tan Sri] Yusof.

Palm oil shipments from Malaysia, the world’s second-largest producer after Indonesia, rose 26.5% in the first 20 days of August from the same period in July on improving exports to India.

[Tan Sri] Yusof also pegged Malaysia’s output at 19.1 million tonnes this year and Indonesian production at 32.8 million tonnes.

“[Malaysian output] from August onwards is expected to be higher as the dryness associated with effects of El Nino in early 2016 [will] no longer hamper production,” he said.

Rapidly rising palm oil prices, however, could narrow the spread with rival soybean oil, reducing its competitiveness.

The share of palm oil in India’s edible oil imports is already seen falling to a record low in this marketing year, as the price rally slashes its discount versus soybean oil.

The palm oil discount to soybean oil is about US$110 (RM441), compared to a spread of US$140 a year ago.

Source: Reuters, Aug 22, 2016

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Technique found to double oil palm yield on peatland

Oil palm yield on peatland can be doubled by undertaking mechanical soil compaction, according to scientific research by the Sarawak-based Tropical Peat Research Laboratory.

Sarawak Chief Minister Tan Sri Adenan Satem said this has changed the economics of agriculture on peatland.

“Mechanical compaction has also brought the unintended benefit of reducing susceptibility to peat-fire outbreaks,” he said when opening the 15th International Peat Congress in Kuching, Sarawak.

Tan Sri Adenan said the laboratory had also established that the carbon dioxide (CO2) emission from peatland with oil palm plantations was half that claimed by some parties; and that such emission was actually lower than that from undisturbed peatland or forests.

He said these scientific facts, combined with proper enforcement and good governance, have enabled the Sarawakgovernment to formulate informed and sound policies pertaining to agriculture on peatland.

The laboratory, which was set up under the Chief Minister’s Department in 2008, is aimed at developing scientific and technical knowledge, and clear understanding of the sustainability of oil palm cultivation on tropical peatland.

At the same event, Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said the laboratory was given RM39.1 million from 2008-2015 for research activities in collaboration with the Malaysian Palm Oil Board (MPOB), including best practices to ensure the suitability of oil palm development to peatland.

Tan Sri Adenan said about 1.6 million ha, or 66% of Malaysia’s 2.43 million ha of peatland, is located in Sarawak, andthat many rural farmers are involved in small-scale oil palm cultivation on peatland.

Datuk Seri Mah said about 27.5% of the country’s peatland has been used to grow oil palm. However, the practice has come under scrutiny from environmental organisations and ethical consumer advocacy groups for various reasons.
These include allegations of degradation of peatland, deforestation, loss of biodiversity, increase in greenhouse gas emissions and global warming.
“In order to address these issues, the government will continue to ensure that the industry complies with existing rules and regulations, including Good Agricultural Practices and adopting a sustainable approach in development.”
The Minister said the MPOB has come up with guidelines on a standard operating procedure for oil palm cultivation on peatland. Malaysia now has 5.64 million ha under oil palm estates.
Source: Star Online, Aug 16, 2016

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Indonesia’s new moratorium on oil palm concessions

Indonesia plans to issue a five-year moratorium on new oil palm plantation concessions through a presidential instruction. This is in line with President Joko Widodo’s priorities for a healthy and sustainable environment.

It also follows international criticism of weak environmental policies that had heightened due to devastating fires in Kalimantan and Sumatra, as well as the spread of toxic haze to other parts of Southeast Asia between June and October 2015.

San Afri Awang, Director-General of Spatial Forestry Planning at the Environment Ministry, said the moratorium will include plantation concessions that are not used in accordance with the prevailing stipulations; plantation concessions transferred to a new owner; and plantation concessions that include productive forested areas.

Indonesia is the world’s largest producer and exporter of crude palm oil (CPO); therefore, the industry is a key foreign exchange earner and provides employment to millions of Indonesians.

President Joko had previously emphasised that he does not want to weaken palm oil output by curtailing the establishment of plantations. Instead, he wants to boost productivity of existing plantations by using more efficient farming techniques and seeds, as well as the replanting of new trees (rejuvenation).

The planned moratorium on new palm oil concessions is one of a series of such moves. In May 2011, a two-year moratorium was placed on the issuance of new permits to clear rainforests and peatland. This has been extended twice and is still in effect.

Chief Economics Minister Darmin Nasution said the government will make use of its ‘Single Map Policy’ – a single reference map that harmonises all maps from different state agencies to a scale of 1:50,000 – to prevent overlapping land concessions. By taking this map as a point of reference, it will be known whether new plantations are added over the next five years.

A side-effect of the five-year moratorium is that existing palm oil plantations will become more valuable.

Meanwhile, a recent study published in Scientific Reports says the fires in Sumatra and Kalimantan in late 2015 had released about 11.3 million tonnes of carbon each day (exceeding the 8.9 million tonnes of daily carbon emissions in the European Union).

More than 100,000 man-made fires destroyed 2.6 million ha of land within a five-month period. This was among the worst natural disasters ever recorded. According to the World Bank, Indonesia lost IDR 221 trillion (about US$16 billion) or 1.9% of the GDP.

Traditionally, Indonesian farmers use slash-and-burn practices to clear forests for the expansion of oil palm, as well as pulp and paper plantations. Although such practices are illegal, weak law enforcement has enabled them to continue.

Source: www.indonesia-investments.com, July 16 & 19, 2016

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