Malaysia keen to meet demand for sustainably produced palm oil
12/03/2010 (The Hindu Business Line) - Even as palm oil production and trade has been expanding strongly in recent years with prices staying at attractively elevated levels, the commodity continues to face risks from environmental activists. Malaysia and Indonesia are two of the world's largest producers of this vegetable oil. Oil palm essentially grows in the world's tropical regions because of the suitable agro-climatic conditions for oil palm plantations.
In recent years, palm oil has been under attack from the civil society and non-governmental organisations, especially in Europe and the US, for following practices that are environmentally not sustainable. Deforestation or destruction of forests to clear land for large-scale commercial oil palm plantation, indiscriminate burning of trees and threat to wildlife and biodiversity are some of the major allegations against industrial expansion of oil palm.
Price outlook meet
Sustainability is a key issue that can potentially create downside risk for palm oil demand, especially in the western world. Worry among top Malaysian officials was palpable at the price outlook conference held here. The Minister of Plantation Industries and Commodities was at pains to explain the Malaysian initiatives for meeting the demand from global markets for sustainably produced palm oil.
Good agricultural practices, laws to ensure zero burning and conservation of high value forests have been put in place, he asserted, adding the industry has been advised on sustainable approach with regard to integrated pest management, agricultural practices and discharge of wastes.
The country has established what is called Roundtable on Sustainable Palm Oil (RSPO), a business-to-business initiative towards ensuring production of sustainable palm oil through credible global standards and engagement of stakeholders. It is unclear though if stakeholders include major importing countries such as China, India and Pakistan. If not, then the RSPO will have to live with the label of a being a producers' club, rather than a multiple stakeholders' consultative body.
According to the minister, to fight disinformation about palm oil, Malaysia is engaging the civil society, researchers and academics in Europe to put across its views and disabuse consumers' minds. Clearly, Malaysia is in no position to ignore Europe (EU-27) because it is still a growing market with annual imports as large as 5.5 million tonnes (mt).
However, what goes unstated is that Malaysia must consider itself fortunate that the growing attack on palm oil from environmentalists has not spread to large Asian importing countries such as China, India and Pakistan.
Eventually, it may be a question of prices and profits. There are not many businesses in the world that consistently give a profit margin of 150 per cent. While the cost of production of crude palm oil is admittedly around Ringgit Malaysia 1,000 a tonne (or slightly less), the selling price is over RM 2,500 a tonne. Plantation companies have raked in extraordinary profits in recent years because of high and rising price; and now they are worried the economics could be under threat.
However, Malaysia seems to have a long way to go before claiming any success in sustainable production of palm oil. Out of total 4.5 million hectares currently under oil palm cultivation, a planted area of 157,000 hectares producing about one mt has been certified by RSPO.
Talking about sustainability of palm oil, the Vice-Chairman and Executive Director of United Plantations, Mr Carl Bek-Nielsen, showed what his company was doing to ensure production of sustainable palm oil. Balancing social, environmental and economic aspects is key to sustainable development, he asserted, adding conservation means responsible development as much as it does to protection. He, however, admitted there was always room for improvement and that the plantation companies have a moral obligation to pursue it.
Malaysia keen to meet demand for sustainably produced palm oil
12/03/2010 (The Hindu Business Line) - Even as palm oil production and trade has been expanding strongly in recent years with prices staying at attractively elevated levels, the commodity continues to face risks from environmental activists. Malaysia and Indonesia are two of the world's largest producers of this vegetable oil. Oil palm essentially grows in the world's tropical regions because of the suitable agro-climatic conditions for oil palm plantations.
In recent years, palm oil has been under attack from the civil society and non-governmental organisations, especially in Europe and the US, for following practices that are environmentally not sustainable. Deforestation or destruction of forests to clear land for large-scale commercial oil palm plantation, indiscriminate burning of trees and threat to wildlife and biodiversity are some of the major allegations against industrial expansion of oil palm.
Price outlook meet
Sustainability is a key issue that can potentially create downside risk for palm oil demand, especially in the western world. Worry among top Malaysian officials was palpable at the price outlook conference held here. The Minister of Plantation Industries and Commodities was at pains to explain the Malaysian initiatives for meeting the demand from global markets for sustainably produced palm oil.
Good agricultural practices, laws to ensure zero burning and conservation of high value forests have been put in place, he asserted, adding the industry has been advised on sustainable approach with regard to integrated pest management, agricultural practices and discharge of wastes.
The country has established what is called Roundtable on Sustainable Palm Oil (RSPO), a business-to-business initiative towards ensuring production of sustainable palm oil through credible global standards and engagement of stakeholders. It is unclear though if stakeholders include major importing countries such as China, India and Pakistan. If not, then the RSPO will have to live with the label of a being a producers' club, rather than a multiple stakeholders' consultative body.
According to the minister, to fight disinformation about palm oil, Malaysia is engaging the civil society, researchers and academics in Europe to put across its views and disabuse consumers' minds. Clearly, Malaysia is in no position to ignore Europe (EU-27) because it is still a growing market with annual imports as large as 5.5 million tonnes (mt).
However, what goes unstated is that Malaysia must consider itself fortunate that the growing attack on palm oil from environmentalists has not spread to large Asian importing countries such as China, India and Pakistan.
Eventually, it may be a question of prices and profits. There are not many businesses in the world that consistently give a profit margin of 150 per cent. While the cost of production of crude palm oil is admittedly around Ringgit Malaysia 1,000 a tonne (or slightly less), the selling price is over RM 2,500 a tonne. Plantation companies have raked in extraordinary profits in recent years because of high and rising price; and now they are worried the economics could be under threat.
However, Malaysia seems to have a long way to go before claiming any success in sustainable production of palm oil. Out of total 4.5 million hectares currently under oil palm cultivation, a planted area of 157,000 hectares producing about one mt has been certified by RSPO.
Talking about sustainability of palm oil, the Vice-Chairman and Executive Director of United Plantations, Mr Carl Bek-Nielsen, showed what his company was doing to ensure production of sustainable palm oil. Balancing social, environmental and economic aspects is key to sustainable development, he asserted, adding conservation means responsible development as much as it does to protection. He, however, admitted there was always room for improvement and that the plantation companies have a moral obligation to pursue it.