Govt takes steps to help smallholders up oil palm yield

May 25, 2010, Tuesday

KOTA KINABALU: The government is placing emphasis on enhancing smallholders’ productivity through the adoption of better planting materials, automation, mechanisation and good agriculture practice.

Tan Sri Bernard Dompok

Smallholders, who account for 40 per cent of the crude palm oil produced in the country, at present, only manage to yield an average of between 2.5 and 3 tons of oil per hectare per year. “The industry average is about four tons and we want the smallholders to catch up to this level. The average can even go up to between six and seven tons in the future.

S“There are 300,000 smallholders in the country and we have to see how they can benefit from the experience of bigger plantation companies,” said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok at a press conference after opening the International Palm Oil Sustainability Conference here yesterday.



It is important for smallholders to step up production as the Roundtable on Sustainable Palm Oil (RSPO) initiatives, now limited to big plantation companies, would be ultimately extended to smallholders.



RSPO would be introducing a certification scheme for smallholders and is doing whatever possible for the smallholders to be certified. As it is aimed to help the industry, the smallholders standard would not be the same as that for big producers.

On the impact of the lobby mounted against palm oil in Europe, Dompok said it had not affected offtake from Malaysia as crude palm oil stocks now stood at only 1.6 million against a high of two million tons recorded a year ago. “This is a good sign that exports are on the uptake”, he said, adding that Malaysia was still looking at all avenues of hope, including taking up the issue with the World Trade Organisation (WTO).


Meanwhile, the Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron said the industry was supporting the initiatives of the RSPO but other countries were also embarking on their own certification requirements. “Germany wants to have its own and the United States is trying to come up with a certification programme, so where is this going to end?” he asked.

He said Malaysia was still thinking of the best approach to harmonise and unify into some kind of sustainability standards, perhaps, at a national level in order to be able to respond to the regulatory mandatory certification that the European Union and United States were trying to put in place.



Dr Yusof said both countries were trying to put in their own version, bypassing even the RSPO, and this was very troublesome for the producers who have to handle three or four certification schemes. “This is beyond the affordability of smallholders as well,” he added. —

Weaker April CPO production numbers

Boreneo Post

May 18, 2010, Tuesday

KUCHING: April’s crude palm oil (CPO) production numbers came in slightly weaker than March with month-on-month (m-o-m) numbers down 5.2 per cent while year-on-year (y-o-y) numbers were increased 1.8 per cent.

WEAKER PRODUCTION: April’s CPO production numbers comes in slightly weaker than March with month-on-month numbers down 5.2 per cent while year-on-year numbers were increased 1.8 per cent.

According to ECMLibra Capital Sdn Bhd (ECMLibra), exports were weaker as expected and fell 8.2 per cent m-o-m. On a y-o-y basis though, exports increased 8.1 per cent and on a cumulative basis, increased 7.4 per cent year to date (YTD).

The research house pointed out that this had been driven predominantly by China. It stated that cumulative exports to China were now 33 per cent increased y-o-y but could taper off from here as the country had reported high stocks level.

It reported that causing some drag however on export was India. The switching of CPO to soy oil appeared prevalent there since y-o-y, exports to India had dropped 25 per cent.

ECMLibra reported that stock levels declined a slight two per cent into April following the slight decline in production and also likely due to local disappearances. This was in line with its expectations and the research house believed that more of the same can be expected into May. Again, judging from historical movements, stock levels typically dropped going into May and June before picking up.

Meanwhile, the research house revealed that CPO future closed down week-on-week (w-o-w) by 2.5 per cent as prices took a cue from crude oil. Soy prices reacted the same as this was despite there being much bearish news in the market. In fact for CPO, May export numbers from the first to fifteenth had so far looking positive as shipments were reportedly increased 18 per cent to 23 per cent. Shares at home were generally negative w-o-w with only Genting Plantations Bhd and Boustead Holdings Bhd gaining slightly.

ECMLibra stated that corporate news for the week includes Kuala Lumpur Kepong Bhd purchase of a glycerine and fatty acids plant in Germany for some RM245 million. Little details on the company had so far been disclosed but a ballpark base case contribution of RM21 million for next year had been mooted.

The research house also stated that most attention over the next two weeks would be on corporate results. IOI Corporation Bhd announced its results last Friday which was as expected a weak quarter.

Annualised and adjusted, the ninth month for the current financial year (9MFY10) was 2.8 per cent above house estimates but 15.4 per cent below street. The group recorded a CPO average selling price of RM2,330 for year to date this year, lower than the Malaysia Palm Oil Board average of RM2,376.

ECMLibra saw that CPO prices have potential to weaken slightly further if crude oil continues to do so as well. Otherwise, prices have no reason for major gyrations given the lack of catalysts.

M’sia’s palm oil industry to reach RM60 billion

May 6, 2010, Thursday Borneo Post

KUALA LUMPUR: Malaysia’s palm oil industry is worth about RM50 billion annually and chances are that revenue may even touch RM60 billion this year, if current prices remain steady until the end of the year.

PALM OIL: The EC’s position will therefore recognise that the important property of tropical forests for climate change policy is the high sequestering capacity of tropical foliage, tall wooded plants and multi-decade crop rotation. That crude palm oil is being sold at RM2,550 a tonne is certainly good news for planters, smallholders and all those associated with the industry. But then there are detractors.

It has been reported that the European Union (EU), through its environmental ministries and commissions, has been involved in funding up to 70 per cent of the operating budgets of environmental NGOs in efforts to paint a not-so-rosy picture about palm oil.

And these NGOs have been viciously campaigning against palm oil imports into the EU, especially for biofuels, says Tan Sri Dr Yusof Basiron, CEO of the Malaysian Palm Oil Council, who regards this as a “senseless and immoral attack on exported commodities such as palm oil produced by developing countries.” Writing in his blog, he said, such funding implicates the EU for creating barriers to trade for agricultural products from developing countries. “Unlike the EU, developing countries do not have access to financial resources to fight such government funded vicious campaigns.

The eventual outcome will be untold miseries where poor farmers in developing countries lose their source of income as their export commodities are unable to enter the EU market,” he said. This is something which palm oil-producing countries will have to seriously address if the livelihood of their planters and farmers is to be safeguarded. Almost half a million people are employed by the palm oil industry in Malaysia.

Interestingly, a campaign by Friends of the Earth to pressure the European Commission (EC) to rule a tree plantation is not a forest that restricts the recognition of palm oil as a renewable biofuel in the EU may have failed. According to a newsletter produced by “Palm Oil and Green Development Campaign”, this means that the EC may classify oil palm plantations as forests, which would therefore meet the sustainability criteria of the EU’s Renewable Energy Directive (RED).

Under RED, land which used to contain primary forest prior to 2008 but no longer does, cannot be used for biofuel feedstock to meet the EU’s 10 per cent target under RED. It has been reported that the draft guidelines define a “forested area” as “areas where trees have reached, or can reach, at least heights of five metres, making up a crown cover of more than 30 per cent”. They would normally include forest, forest plantations and other tree plantations such as palm oil.

“The EC’s position would therefore recognise that the important property of tropical forests for climate change policy is the high sequestering capacity of tropical foliage, tall wooded plants and multi-decade crop rotation.

Short rotation coppice the practice of repeatedly cutting young tree stems down may qualify if it fulfils the height and canopy cover criteria,” the newsletter stated. It would seem that the EC has recognised the environmental benefits of palm oil as highly energy efficient, high yield and economically beneficial biofuel as the oil palm trees sequester or remove more carbon dioxide than other biofuel crops.

Another development that has put palm oil in positive light is research from Wageningen University in the Netherlands which shows that palm oil is the most efficient energy crop. The university’s finding is a rejection of environmental NGOs and the anti-palm oil lobbyists who consistently claim that palm oil is unsustainable.

Its research found that palm oil, sugar cane and sweet sorghum are currently the most sustainable energy crops. These commodities also produce “far smaller quantities of greenhouse gases than fossil fuels”.

The university’s analysis considered nine different energy crops against nine different sustainability criteria with palm oil coming out on top while biofuel from maize from the United States and wheat from Europe scored far lower. The report’s author, Sander de Vries, concluded that sustainable sugar canes and oil palms get the most energy per hectare and cause the least environmental damage.

De Vries also highlighted a major advantage of the oil palm crop was that, unlike other energy crops, it produces enough residue to power the oil extraction processes. Another positive development for palm oil took place in the European Parliament recently when Dr Gernot Pehnelt, founder and director of GlobEcon, an independent research and consulting institute based in Germany, released a new study that revealed the prejudiced nature of the EU’s Renewable Energy Directive towards foreign biofuels.

The report, entitled European Policies Towards Palm Oil: Sorting Out Some Facts demonstrated that the assumptions contained in the directive about the ecological impact of foreign biofuels reflected political and not scientific or economic reality. Dr Pehnelt came to the defence of the rich biodiversity in oil palm plantations, their excellent crown cover that oil palms provide and the yield per hectare advantages of this low-energy and low-fertilizer crop.

“Sadly, many of the claims that foreign biofuels, specifically palm oil, are a threat to the environment are seriously flawed, some even completely unfounded,” he said, adding that the side effects of the flawed policies could give rise to political friction and trade disputes to severe economic handicaps for developing countries. “This new study makes a strong case that RED discriminates against non-EU producers of biofuels, such as Asian palm oil. “Perhaps most importantly, palm oil acts as a substantial driver of economic growth in the developing world, drastically reducing hunger and poverty in regions that actively cultivate this valuable crop.” — Bernama