Palm oil demands fair game
KUALA LUMPUR: Being one of the largest vegetable oil producers and contributing some 31 per cent of the 235.4 million tonnes of world oils and fats production globally, Malaysia’s palm oil went through a very treacherous journey especially in recent years.
As the top two biggest producers, Indonesia and Malaysia, which contribute 87 per cent of the global palm oil supply, thus creating a duopoly market, strive to meet the growing global demand, but obstacles in the form of insufficient supply, volatility in crude palm oil (CPO) price and labour shortage still remain for Malaysia.
Such challenges are common for the golden crop.
But at the international level, it often faces odd disputes that revolve on specific themes such as tropical deforestation and continued misleading anti-palm oil campaigns, especially by the European Union (EU).
The question is; is there is any truth in these allegations, or is it mere stone pelting by a certain group with the sole purpose of protecting their crops and the wellbeing of the smallholders?
Malaysia develops its palm oil industry responsibly
The truth is that the country has over the years displayed serious commitment and working towards achieving the sustainability standard in the palm oil industry.
This includes the development of ecosystem monitoring systems, replanting of trees, rehabilitation, ecosystem-based projects, nature-based solutions, ecosystem services, and sustainable management of natural areas and resources.
Malaysia, which has celebrated its 100th anniversary of oil palm planting, is also working on improving yield and productivity of the commodity without expansion of land while making the Malaysian Sustainable Palm Oil certification mandatory from January 2020.
Out of the 23.4 million hectares of the global oil palm cultivation area, Malaysia currently has 5.8 million hectares of land used for the crop and it has pledged to set a maximum arable land for oil palm at only 6.5 million hectares by 2023.
The most efficient oil
It is expected that there will be rising demand for oils and fats by 2025 in line with the increasing world population.
To meet this demand, it is estimated that there is a need to harvest an additional 60.7 million hectares of land for rapeseed, 84.2 million hectares for sunflower and 115 million hectares for soybean.
This compared with only 15.2 million hectares of land needed if the oil and fats were provided by palm oil.
Last year, out of the 235.4 million tonnes of world oils and fats production, 31 per cent was contributed by palm oil, followed by 25 per cent soybean and 11 per cent rapeseed.
Studies have also proven that oil palm, which covers 23.4 million hectares of cultivated land (globally), is five times smaller than the cultivated areas under soybean, one of its closest competitors, but produces on average 3.24 tonnes oil per hectare annually.
At this 3.24 tonnes CPO produced per hectare every year, it equals to seven times more than soybean oil and four times more than rapeseed and sunflower oils. So, do the math. Truth be told Every five years, the Food and Agriculture Organisation of the United Nations (FAO) will release its Forest Resources Assessment, and for 2020, it said that total burn land area in Asia was less than in Europe for the period between 2001 and 2018.
“Despite ongoing hysteria about Indonesian fires, the total land area burnt at this time in Europe was slightly higher than in Asia (281 million hectares versus 262 million hectares).
“The forest area burnt in Asia was around half of that burnt in South America, and less than 10 per cent of the area burnt in Southern and Central Africa,” it said.
The report also noted that Malaysia has increased its forest area.
Both the Indonesian and Malaysian data are clear demonstrations that oil palm development, and the economic gains that accompany it, leads naturally to greater environmental protection over time as societies become more prosperous, it said.
“Rather than attempting to crimp the economic gains from palm oil, the EU and other critics would be better off supporting proactive development measures (including oil palm) to accelerate income growth and therefore usher in greater local support for environmental protection,” the report stressed.
EU will not meet vegetable oil demand: OECD Meanwhile, the Organisation for Economic Co-operation and Development (OECD), via its OECD-FAO Agricultural Outlook 2020-2029 report, said the vegetable oil demand looks set to grow by around 20 per cent over the next decade.
It said that all major producers of vegetable oils are expecting production to increase, with palm oil annual production growth estimated at 1.5 per cent, but the EU is looking at a slight decline of 0.2 per cent annually for vegetable oils.
“This underlines the lack of competitiveness of the EU oilseed producers.
Although the EU is the second-largest producer of oilseeds (excluding palm and soy), it is not an exporter of significance.
“It will never be able to produce vegetable oil to meet demand from global biodiesel and vegetable oil markets.
This further underlines why EU farm groups and policymakers remain consistently paranoid, defensive and protectionist about vegetable oil in the EU,” it said.
Despite the data provided, the EU maintains its discrimination and launching more and more anti-palm oil campaigns.
Its measures to phase out palm oil and palm crop-based biofuels have led to Indonesia and Malaysia requesting for consultations under the World Trade Organisation (WTO) dispute settlement mechanism.
For Indonesia, the request was circulated to the WTO members on Dec 16, 2020 while Malaysia filed its request on Jan 19, 2021 – marking WTO’s 600th trade dispute since the organisation was established in 1995.
The consultations will give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation.
After 60 days, if the consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.
The EU has embarked on a major plan committing member states to build a carbon neutral economy by 2050, including by promoting the use of biofuels.
But it has deemed that palm oil production is not sustainable, and palm oilbased biofuels cannot be counted towards the EU’s renewable targets.