Industry fraternity: The Star Roundtable on Palm Oil 2016 moderator Errol Oh (centre) with industry captains (from left) Paul Wong, Tan Sri Lee Oi Hian, Tan Sri Dr Yusof Basiron, Datuk Lee Yeow Chor, Datuk Carl Bek-Nielsen and Datuk Zakaria Arshad.

05/12/2016 (The Star) - At the fifth The Star Roundtable on Palm Oil held recently at Menara Star in Selangor, industry captains – IOI Corporation Bhd CEO Datuk Lee Yeow Chor, Malaysian Palm Oil Council CEO Tan Sri Dr Yusof Basiron, United Plantations Bhd vice chairman and chief executive director Datuk Carl Bek-Nielsen, Felda Global Ventures Holdings Bhd group president and CEO Datuk Zakaria Arshad, Kuala Lumpur Kepong Bhd CEO Tan Sri Lee Oi Hian and Sarawak Oil Palms Bhd group CEO Paul Wong – joined in the forum led by The Star’s executive editor Errol Oh. With 2017 marking 100 years of commercial oil palm cultivation in the country, the roundtable assessed the industry and the challenges it faces; market competition; MSPO and RSPO certification and standards; and the road ahead

From an agricultural commodity, palm oil has transformed into a well-diversified industry.

Next year will mark the 100th year of commercial planting of oil palm in Malaysia. The centennial is a big landmark, and something we should celebrate. What do you think are the industry’s greatest achievements and contributions thus far, locally and abroad?

Yusof: Over the last 100 years, we have pushed palm oil to become a globally-recognised commodity. In the early years, palm oil was used in the production of soap and in the steel industry in processing, to prevent the rusting of steel plates. In fact, in some countries such as Iran, it was considered inedible oil. Later, when the Palm Oil Research Institute of Malaysia (Porim) was established in 1979, more intensive research was conducted to study the food potential of palm oil.

Through our investments in research, we were able to characterise and popularise palm oil into what is now recognised as a major source of food oil, cooking oil, raw material for the production of cooking fats, margarine and shortenings. The applications have also further expanded into the oleochemical and biodiesel sectors.

When I began my career in this industry in 1980, palm oil production in the world was about three million tonnes – 2.5 million tonnes from Malaysia and half a million tonnes from Indonesia.

Today, it is over 60 million tonnes, and all this happened within a span of about 35 years – this is a 20-fold increase. Markets have been developed to consume almost all this oil. Producers also enjoy better prices in addition to the higher volume through global market expansion of palm oil.

Palm oil is a major contributor to global food supply, making up almost 30% of global oils and fats supply of about 220 million tonnes. Today, it is the most dominant oil and its acceptance is global. Almost every country in the world imports or uses the oil due to its competitive pricing and versatility. The world population of seven billion is highly dependent on the availability of affordable palm oil.

I would say this is a major achievement of the industry over the years. It started as an insignificant, unknown commodity, and we have taken it to the global stage. It is now a daily commodity that is meeting the necessities of life and feeding the world population.

Zakaria: I would like to share my views from the perspective of the smallholders, as the son of a Felda settler. I was born in the 1950s in Jelebu. It is a very remote area in Negri Sembilan. My family and I moved to Felda Palong in the 1970s. We came from a poor family and I have nine siblings. We went there as settlers and from there we developed the land we were given and we improved our livelihood.

There are two things I can share here. First is the role of the local palm oil industry in poverty eradication. They gave us about 12 acres of land and we developed it. Of course in the beginning we struggled, earning very little. In the 1970s we only earned about 75 ringgit per family each month. Today we are much better off.

So to me, one of the major contributions of palm oil is how it has lifted so many families out of poverty.

Secondly, look at how the Government developed the area in Palong and the areas surrounding other Felda settlements.

Palong was a jungle area in the early days, but now during Hari Raya you can see traffic jam there. There are so many cars – each family has two or three cars.

This is a personal experience I can share. One contribution of palm oil to smallholders is poverty eradication and the other is marginal land development.

Lee Oi Hian: From the perspective of consumers, we cannot imagine a world without palm oil.

Palm oil accounts for one-third of the world’s edible oil production. Without palm oil, poverty in the consuming nations would be worse, because the price of consuming oil would probably have to be about 50% higher, and they would have to ration the oil.

The same goes for palm kernel oil. Without palm kernel oil, coconut oil alone cannot meet the increase in demand for oleo chemicals and specialty fats. It will have impact on the lives of the consumers globally. In fact, the effect of palm oil extrapolates itself to benefit not just the poorer countries but also developed economies like the people in the European countries.

Like Datuk Zakaria said, this raw material has benefited so many families, created so many industries and benefited the industrialisation of this nation.

Wong: In Sarawak, oil palm cultivation only started around 50 years ago. In 1968, the Commonwealth Development Corp­oration (UK) took up a joint venture with the Sarawak government to pioneer the development of palm oil in the state. At that time, people in Sarawak were still involved in shifting cultivation.

Today, we have planted 1.4 million hectares of oil palm and produced close to 3.7 million metric tons of palm oil last year. We can see the social and economic transformation of Sarawak people – from relying on shifting cultivation and collecting goods from the jungle, to working in plantations.

In addition, oil palm has given opportunities to the local native landowners to better utilise their land in generating income. Many of them are owners of plantations today. The livelihood of the people has tremendously improved. Oil palm has helped substantially in poverty eradication particularly in the rural areas of Sarawak.

With the increase in world population and the rising demand for vegetable oil, just imagine if we didn’t have palm oil. How much more land would need to be cleared to feed the world population?

As oil palm is six to 11 times more productive than other soft oil plants, it contributed much to the reduction of land use for the production of vegetable oil in the world. Therefore, palm oil has contributed much to the environment of the world.

Bek-Nielsen: The palm oil industry has played many roles, not just in terms of providing Malaysia with a key role in supplying the world with a steady source of versatile and healthy yet inexpensive source of oils and fats.

More importantly, this crop has played a very significant role in poverty alleviation, especially among the smallholder fraternity, where hundreds of thousands of families have seen their livelihood improve.

Lee Yeow Chor: Firstly, palm oil has played a major role as an instrument for rural development and poverty eradication. Malaysia was well-known as an agricultural nation, and palm oil and rubber were important commodity crops for the country. But now, we have transformed the palm oil industry from being just an agricultural commodity to a well-diversified industry.

The uses of palm oil today are so diverse – it is not just general food, but also provides nutrition. It is used in nutraceuticals like tocotrienols, Vitamin E and Vitamin A. For oleo-chemicals, it started with fatty acids and soaps, but now we are looking at the production of very specialised forms for pharmaceuticals and cosmetics usage as well.

In that sense, the development of palm oil has been very much in line with how Malaysia has transformed economically.