MPOB: Malaysia’s palm oil is deforestation-free but EU ban may impact smallholders
13/12/2022 (The Edge Markets) - The Malaysian Palm Oil Board (MPOB) said while the country’s palm oil and palm oil products are deforestation-free, higher administrative and production costs as a result of due diligence following the new European Union (EU) import ban may impact the industry, especially the smallholders.
In a response to the EU’s agreement to ban the import of several products, which include palm oil, beef, soy, coffee, cocoa, and timber, MPOB director general Datuk Dr Ahmad Parveez Ghulam Kadir said the EU’s regulation only targets the cultivation of commodities from developing economies as the major challenge in protecting the global environment.
“The implication for the oil palm industry is expected to be from the due diligence statement, which will add to the administrative burden and higher cost of production vis-à-vis domestically produced rapeseed oil and sunflower oil.
“There are discrimination here as other crops, such as rapeseed and sunflower, are not targeted. In addition, smallholders may struggle to comply and be excluded from the EU market,” he said.
According to the European Commission's (EC) website, when the new rules enter into force, all relevant companies will have to conduct strict due diligence if they place their products on the EU market.
It also stated that importing companies will have to show that their products are deforestation-free, and subject to proving “precise geographical information on farmland” where the commodities were sourced.
The EU will now have to formally adopt the regulation before it can enter into force, and traders will have 18 months to implement the rules.
Nonetheless, Ahmad said Malaysia is strongly committed to producing palm oil according to sustainable principles and criteria under the Malaysian Sustainable Palm Oil (MSPO) certification scheme, which has been implemented mandatorily from Jan 1, 2020.
According to the EC's website, the EU reached an agreement on Dec 6, 2022 to ban the import of several products that include palm oil, beef, soy, coffee, cocoa, and timber, which have been identified as a “driver of deforestation”, if they come from deforested land after Dec 31, 2020.
“Recently in 2022, Malaysia has revised the MSPO standards to be in line with international norms, increase credibility, and expand broader scopes for recognition from the global market,” said Ahmad.
He said improvements on matters involving social and labour issues, good practices, high conservation values, social impact assessments, and quantification of greenhouse gas emissions were considered in the revision of the MSPO standards.
Ahmad said the development of the Malaysian oil palm industry is also governed by more than 60 regulations and laws, making it the most regulated industry in Malaysia.
Additionally, the country is committed to forest conservation and tropical rainforest biodiversity, and still maintains at least 50% of its land area under forest protection as pledged at the Rio Earth Summit in 1992, he added.
According to the EC's website, the new law will, once adopted and applied, ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the world.
Ahmad said the involvement of the Malaysian oil palm industry in deforestation is very low due to implementation of the regulations and laws in Malaysia.
“This needs to be recognised by the EU. Based on the interpretation, palm oil and its products produced from existing palm plantations before Jan 1, 2021 are considered deforestation-free.
“Malaysia does not allow deforestation for oil palm cultivation. The EU must recognise products based on the country of origin and not globally, as is done for palm biofuel,” he said.
According to him, the State of the World's Forests 2020 reported that the amount of forest loss had decreased globally, and this shows a positive sign where a balance between biodiversity conservation and sustainable forest use or development does exist.
Based on the perspective of Malaysia's commitments including the MSPO certification, the decline in primary forest loss in Malaysia for four consecutive years (from 2017-2020) may have contributed towards this downward trend as reported by the Global Forest Watch in 2021, Ahmad said.
“Malaysia is also fully committed to conducting constructive bilateral cooperation and negotiations to ensure that there is no discrimination in the conduct of international trade for market access for Malaysian products in the EU market,” he said.
Malaysia has a policy and legal framework to ensure that sustainable development balances environmental protection and socio-economic development.
This is evident through the implementation of various programmes and initiatives for the conservation and protection of forests and biodiversity, including, among others, the national forestry initiative, namely the Central Forest Spine and Heart of Borneo, reforestation through the replanting of forest tree species, the establishment of wildlife corridors, and the reduction of greenhouse gas emissions.
Malaysia already enacted an important policy towards sustainable palm oil cultivation in March 2019 which, among others, limits the total area of oil palm cultivation to 6.5 million hectares, halts the cultivation of palm oil in peatland areas, strengthens the regulations regarding the existing cultivation of palm oil on peatlands, and prohibits the conversion of reserved forest areas for oil palm cultivation.
The Government has also established the Malaysian Palm Oil Green Conservation Foundation to support conservation efforts, as well as improve the image of palm oil as a sustainable product in the eyes of the world. This effort shows that the Government is committed and serious about the preservation, conservation and protection of the environment.