The growing palm oil sector
Some 600,000 smallholders in Malaysia have benefited from Felda and the government’s efforts
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.