‘Black day’ for free trade practice
Malaysia condemns EU Parliament’s decision to ban palm oil from its biofuel programme
PUTRAJAYA: Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong has condemned the decision by the European Union (EU) Parliament on Wednesday to ban the usage of palm oil in the economic bloc’s biofuels programme by 2021.
He described the EU Parliament’s discriminatory act against palm oil as a “black day” for free-trade practice.
“This is not about the sustainability issue, but more on discrimination against palm oil. How can they blame palm oil for everything? This is not about deforestation but more on the protectionism policy towards the European oilseed farmers.
“A fair share of treatment should be given to other vegetable oils used in the biofuel mix in Europe, such as grapeseed. But then, the EU Parliament has always been antipalm oil,” he told a press conference after opening the one-day Palm Oil Economic Review and Outlook 2018 seminar organised by the Malaysian Palm Oil Board (MPOB) here yesterday.
Last year, the EU Parliament passed two resolutions – to impose a single certified sustainable palm oil scheme for Europe-bound palm oil exports after 2020, and phase out palm oil from the EU biofuel programme by 2021.
One consolation, however, is that the reported number of voters agreeing to the ban had dropped to 429 MEPs (members of the parliament) at the EU Parliamentary meeting on Wednesday as opposed to the 640 MEPs who had voted for the ban in April 2017.
Hence, Malaysia would be looking at intensifying its efforts to explain the significance of the palm oil industry to the European ministers and the European Commissioners before the bloc makes its final decision on banning the use of palm oil in its biofuel programme, explained Mah.
He pointed out that “before the ban is legalised as a law, it needs to go through two processes, namely, approvals from the council of the EU council of ministers as well as the European Commissions.
“We will explain to them through our embassies in 16 European countries as well as engage with EU members’ offices in Malaysia to ensure that all the facts, correct information on palm oil as well as our objections to the ban are com- municated to them,” Mah added.
About 600,000 tonnes of two million tonnes of palm oil and palm oil products exported to the EU are used for biodiesel, and the EU imports 215,000 tonnes of biodiesel directly from Malaysia.
Mah pointed out: “The EU’s total demand for palm oil-based biodiesel stands at 2.8 million tonnes annually, whereby we supply 800,000 tonnes and the remaining two million tonnes are from Indonesia.”
Meanwhile, MPOB director-general Datuk Dr Ahmad Kushairi Din expected palm oil exports to the EU to continue declining gradually following the bloc’s proposal to ban palm oil from entering its market.
Last year, palm oil exports to the EU dropped by 3.3% to two million tonnes from a year earlier.
However, Kushairi noted that the demand from top traditional export markets such as India and China remained intact. Last year, India imported 2.02 million tonnes and China imported 1.92 million tonnes of palm oil.
Earlier, in his presentation, Kushairi said MPOB has projected better prospects for the local oil palm industry this year.
This is given the anticipation of higher production, better exports demand and higher export earnings.
For 2018, the industry’s key indicator, namely, crude palm oil (CPO) production is slated to rise 2.9% to 20.50 million tonnes from 19.92 million tonnes a year ago.
This is followed by palm oil exports, which is expected to increase 5.1% to 17.40 million tonnes and palm oil export earnings estimated to be 2.6% higher at RM80bil.
The palm oil stock level, which stood at 2.73 million tonnes as at end-December 2017, is also expected to drop by 15.8% to 2.30 million tonnes in 2018.
As for the CPO 2018 price outlook, the influencing factors will include higher palm oil production, the strengthening of the ringgit against the US dollar and a potential marginal decline in the prices of soybean oil and rapeseed oil.
It was a roller coaster ride for CPO prices in 2017, trading from a high of RM3,268 per tonne in January to a low of RM2,407 per tonne in December.
He added that the average CPO price rose to RM2,783 per tonne in 2017 from RM2,653 per tonne in 2016 – thanks to the higher soybean oil, Brent crude oil prices and an increase in palm oil exports.
In reviewing 2017’s performance, Kushairi said the local oil palm industry showed a better performance following higher production, prices, exports and export earnings.
Of Malaysia’s 5.81 million planted hectarage, some 5.11 million ha (88%) are mature, while 0.70 million ha (12%) are immature. Fresh fruit bunch (FFB) yield rose by 12.4% to 17.89 tonnes per ha in 2017 from 15.91 tonnes per ha in 2016.
There were 454 palm oil mills in operation last year, with the FFB processing capacity at 112.19 million tonnes per year. The oil extraction rate, however, eased 2.3% to 19.72% last year from 20.18% a year earlier.