What are your priorities for development of the palm oil industry?
Malaysia will mark its centennial of oil palm planting next year. I want to see to it that the industry expands and becomes more competitive globally, while keeping the empowerment of smallholders at its heart.
To do this, we must first counter unjustified negative and discriminatory perceptions of palm oil in European countries. Efforts must be sustained to engage with these countries, and to reinforce the many beneficial attributes of palm oil. We have to defeat anti-palm oil campaigns to ensure continued market access and to maintain our market share.
Secondly, we will have to move toward new downstream activities for further addition of value. With home-grown natural resources at hand, it will be more cost-competitive to add value to downstream products. Higher demand for palm oil will ultimately deliver more revenue to the country and income to smallholders.
I am confident that these approaches, coupled with relevant incentives, will go a long way towards empowering smallholders and contributing to the economic growth of the country.
How important is the palm oil industry to the Malaysian economy?
The industry’s significance cannot be overstated. It contributes around 8% of the national GDP and more than one-third of agricultural GDP. Palm oil exports are worth RM63.2 billion – or 8.1% of all exports.
Over one-third of the oil palm acreage is planted by more than 300,000 farmers and their families. In total, more than 1 million people are dependent upon smallholder farming. This is an enormous contribution to the well-being and success of these families, their communities, and the nation as a whole.
Over the years, the industry has helped bring down the poverty rate from 50% after Independence to less than 5% today. Some 40% of Malaysia’s oil palm acreage now belongs to small farmers. This is proof that palm oil is truly a commodity that distributes wealth throughout the population, while bringing about social and economic benefits especially in rural areas.
The benefits for Malaysia are clear. Are there advantages from the palm oil trade for importing countries?
There are positive economic impacts for countries choosing to import palm oil. In China, for example, palm oil imports are associated with over 900,000 jobs and up to 59 billion Yuan in GDP benefits. In the European Union, downstream palm oil industries contribute up to 117,000 jobs and up to US$2.9 billion in tax revenue.
These figures, calculated by the London-based consultancy Europe Economics, show how important palm oil is as a global commodity. It is a competitive, low-cost vegetable oil that can be used in food and manufacturing, as evident in the major markets of China and India. This is a win-win situation for both producer countries such as Malaysia and for importing countries.
What are your views on the current debate on the environment, in relation to palm oil production?
Let me first state that Malaysia is a world leader in environmental protection: our commitment to preserve 50% of the country’s land area under forest has been recognised by the United Nations. We have also adopted Good Agricultural Practices, such as the zero-burning policy in clearing stands of old oil palm trees.
Moving forward, the Malaysian palm oil industry is giving greater attention to research in order to increase productivity and the oil extraction rate, rather than rely on expanding the planted acreage. Environmental protection and economic growth are not mutually exclusive: Malaysia has demonstrated this with the oil palm sector.
The global market is large enough for all edible oils to compete in, but the question we need to ask is: are we able to fulfill growing demand as the world population increases? This demand is easily met by the oil palm, as it is the highest yielding oil crop. It produces 4.2 tonnes of oil per hectare in contrast to 0.42 tonnes and 0.36 tonnes per hectare from sunflower and soybean respectively.
Furthermore, the oil palm is a perennial crop. It therefore provides a sustainable and steady supply of palm oil. As the world population increases, the superior productivity of the oil palm is the solution to issues like the scarcity of land and food insecurity. In addition, palm oil has a unique composition of texture, efficiency and nutrition, which has made it popular with companies and consumers across the globe.
Priorities for Malaysian Palm Oil was last modified: October 8th, 2016 by GOFB