The grow­ing palm oil sec­tor

Some 600,000 small­hold­ers in Malaysia have ben­e­fited from Felda and the gov­ern­ment’s ef­forts

New Straits Times - - Business - FARAH ADILLA PUTRAJAYA bt@me­di­aprima.com.my

MALAYSIA’S palm oil in­dus­try has come a long way from 100 years ago, along with chal­lenges and greater suc­cesses. “The last 100 years had seen big ad­vance­ments in the Malaysian palm oil in­dus­try. Over the last 100 years, we have be­come a ma­jor pro­ducer of palm oil and there has been much progress to the whole in­dus­try to date,” Plan­ta­tion In­dus­tries and Com­modi­ties Min­is­ter Datuk Seri Mah Siew Keong told NST Busi­ness in an in­ter­view re­cently.

The in­ter­view was held in con­junc­tion with the 100th year cel­e­bra­tions of the Malaysian palm oil in­dus­try.

Mah said since oil palm was first planted com­mer­cially in 1917 in Ten­na­ma­ram Es­tate in Se­lan­gor, one of the big­gest achieve­ments in the last 100 years in­clude the ef­forts by the Fed­eral Land De­vel­op­ment Au­thor­ity (Felda) in as­sist­ing peo­ple in the es­tates, giv­ing them land and jobs, which ben­e­fited hun­dreds of thou­sands small­hold­ers.

To date, there are 600,000 small­hold­ers in Malaysia that have ben­e­fited from Felda and the gov­ern­ment’s ef­forts.

Mah said land owned by small­hold­ers forms more than 40 per cent of the land planted with palm oil in Malaysia.

And out of all the agri­cul­tural land planted in the coun­try, more than 73 per cent is oil palm, ac­count­ing for 5.7 mil­lion hectares of planted area.

He said in fur­ther ex­tend­ing as­sis­tance to small­hold­ers for fu­ture growth, the gov­ern­ment was now try­ing to im­part the lat­est tech­nol­ogy in en­sur­ing higher and more sus­tain­able yields.

“We have as­sis­tance pro­grammes to get them to form co­op­er­a­tives so that they can get a bet­ter price.

“We have Tu­nas (Tun­juk Ajar dan Nasi­hat Sawit) of­fi­cers im­part­ing lat­est good agri­cul­tural prac­tices and pro­vid­ing small­hold­ers with mech­a­ni­sa­tion funds and as­sist­ing them on us­ing bet­ter har­vest­ing ma­chines to re­duce man­power,” he said.

Mah said it would be in­creas­ingly chal­leng­ing to ex­pand palm oil cul­ti­vated ar­eas as new land in Malaysia was lim­ited.

How­ever, he said it was cru­cial for the palm oil in­dus­try to in­crease pro­duc­tiv­ity and ef­fi­ciency.

Mah said re­search has shown that palm oil pro­duc­tion can reach as high as seven tonnes per hectare.

But right now, Malaysia’s av­er­age pro­duc­tion per hectare stands at 3.8 tonne per hectare.

Some of the bet­ter man­aged plan­ta­tions in the coun­try have started to pro­duce six tonnes of palm oil per hectare.

He said the gov­ern­ment con­tin­ues to ad­vise small­hold­ers to re­plant palm oil trees which have reach 25 years and above as it has been proven that it’s more dif­fi­cult to har­vest old trees.

He said another area that has shown ma­jor ad­vance­ment in the palm oil in­dus­try is genome science.

A few weeks ago, Sime Darby Plan­ta­tion (SDP) was recog­nised as Malaysia’s first com­pany to re­ceive the Edi­son Award for its genome ini­tia­tive to de­velop oil palms with higher yields.

SDP was cho­sen from 400 nom­i­na­tions glob­ally, by 3,000 panelists com­pris­ing the world’s top se­nior busi­ness ex­ec­u­tives, aca­demics, and in­no­va­tion pro­fes­sion­als.

Mah said SDP has started to plant plan­ta­tion ar­eas with the new spe­cial breed seedlings.

“And of course, we want more au­to­ma­tion to re­duce man­power. This is to en­sure that the oil palm re­mains sus­tain­able in the fu­ture,” he said.

Mah said to sus­tain steady global de­mand for palm oil, it was im­por­tant to have Malaysian Sus­tain­able Palm Oil (MSPO) cer­tifi­cate in place.

“This was nec­es­sary to show that we are ahead and se­ri­ous about the en­vi­ron­ment by im­ple­ment­ing good agri­cul­tural prac­tice. It is all about sus­tain­abil­ity,” he said.

He said only four per cent of the palm oil pro­duc­ers in Malaysia are MSPO cer­ti­fied.

“We are go­ing all out in the next two years. We need to be ahead of the game,” he said.

He said the dead­line for MSPO for big­ger plan­ta­tion com­pa­nies is De­cem­ber 2018 and De­cem­ber 2019 will be the dead­line for small­hold­ers.

While there was a lot of con­cern over the costs of get­ting them­selves MSPO cer­ti­fied, Mah said the move was im­por­tant to up­keep sus­tain­abil­ity and en­sure a long term steady de­mand for palm oil.

“We have no choice. This is for the long term. We are fac­ing a lot of com­pe­ti­tion from other oil palm pro­duc­ing coun­tries.

“We must have our own brand, which should be of pre­mium value as we are fol­low­ing good agri­cul­tural prac­tices and are sus­tain­able.

Mah said the palm oil in­dus­try needs to trans­form to be more pro­duc­tive and have dif­fer­ent high value prod­ucts, with the min­istry look­ing into ex­pand­ing the prod­ucts to phar­ma­ceu­ti­cal and oleo­chem­i­cals, among others, and be a part of the Fourth In­dus­trial Rev­o­lu­tion.

“Re­cently, re­search by the Malaysian Palm Oil Board showed that palm oil de­riv­a­tives, to­cotrienols vi­ta­min E de­riv­a­tives can help pre­vent can­cer.

“There was a lot of po­ten­tial for palm oil in the phar­ma­ceu­ti­cal space,” he said.

Be­sides that, he said, the palm ker­nel is only 10 per cent of the value of a palm oil tree. A lot more that can be ex­tracted from the trunk and frond.

“Apart from its us­age for biomass, the trunk of the palm oil tree has been man­u­fac­tured into fur­ni­ture.

“As for biomass, Malaysia palm oil in­dus­try in 2015 pro­duced 88 mil­lion tonne of biomass, which can be turned into en­ergy and sold to the elec­tric­ity grid.

He said another sig­nif­i­cant ad­vance­ment of the palm oil in­dus­try is that some of the es­tates have now started us­ing bar­code elec­tronic tags on their palm, which can be done at a rea­son­able cost to track trace­abil­ity.

“Go­ing dig­i­tal was vi­tal for ev­ery in­dus­try to move for­ward and we hope that the palm oil in­dus­try,” he said.

Plan­ta­tion In­dus­tries and Com­modi­ties Min­is­ter Datuk Seri Mah Siew Keong says the fu­ture ex­pan­sion for the palm oil in­dus­try is all about in­creas­ing pro­duc­tiv­ity and yield.

The gov­ern­ment con­tin­ues to ad­vise small­hold­ers to re­plant palm oil trees which have reach 25 years and above as it has been proven that it is more dif­fi­cult to har­vest old trees.

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