Palm oil income to hit RM70bil

obmar · Palm oil income to hit RM70bil

Nation
Friday May 25, 2007

Palm oil income to hit RM70bil

By STEPHEN THEN

MIRI: Malaysia’s income from palm oil is expected to hit the RM70bil-mark by the end of this year, up RM8bil from last year.

»The Prime Minister likes to remind people that palm oil is an oil given by God« DATUK PETER CHIN FAH KUI
Minister of Plantation Industries and Commodities Datuk Peter Chin Fah Kui said the anticipated sharp increase in income from palm oil was because of the continuous surge in demand from global markets.

“Last year, palm oil generated RM62bil in revenue for the nation. This year, it is expected to bring in RM70bil.

“The price of crude palm oil is about RM2,400 per tonne now. International price focus is that the price will be between RM2,400 and RM2,600 per tonne for the year at least.

“We exported 14.8 million tonnes last year. Local consumption was about 600,000 tonnes. These figures are expected to increase also,” he told The Star in an interview yesterday.

Chin said the worldwide demand for edible oils such as palm oil had surged because of increasing populations and awareness of the benefits of the “golden oil”.

“That is why the Prime Minister likes to remind people that palm oil is an oil given by God,” he said.

Blue1moon

Came across this though:

Palm Oil Puts Squeeze on Endangered Orangutan
By Gillian Murdoch
Reuters

Monday 28 May 2007

Palangkaraya, Central Kalimantan - Bound hand and foot, dishevelled orangutans caught raiding Borneo's oil palm crops silently await their fate as a small crowd of plantation workers gather to watch.

Lacking only hand-cuffs and finger-printing to complete the atmosphere of a criminal bust, such "ape evictions" have become part of life for Asia's endangered red apes.

Thousands have strayed into the path of international commerce as Indonesia and Malaysia, their last remaining habitats, race to convert their forests to profitable palm crops.

Branded pests for venturing out from their diminishing forest habitats into plantations where they eat young palm shoots, orangutans could be extinct in the wild in ten years time, the United Nations said in March.

Fighting against this grim prediction is the Nyaru Menteng Borneo Orangutan Survival (BOS) centre in Central Kalimantan, which rescues orangutans and returns them to the wild at the cost of US $3,000 per ape.

"They will kill the animals if we don't go ... It's cheaper to kill the orangutan than put up a fence or snares," said Lone Droscher-Nielsen, the Danish-born founder of the centre.

While harming the apes is illegal, her centre has amassed a slew of photographs of the grisly fates of some plantation trespassers: Apes with their hands cut off and slashed to death with machetes, and others with bullets through their foreheads.

With dozens captured this year, cages are full, and finding secure land for releases is a constant challenge for the centre.

"It's not just orangutans - bears, gibbons - everybody is losing their home," said Droscher-Nielsen.

"If it was only the orangutan, people just say: 'Well it's only one species that's going to go extinct.' But it's not just one species. Those forests have millions of animals in them that are all going to go extinct if we continue."

Squeezed Out

Indonesia and Malaysia together produce 83 percent of the world's palm oil. Made by crushing fresh fruit, the reddish-brown oil is riding high in the commodities charts, with crude prices up over 15 percent this year after rising 40 percent in 2006.

Used in cookies, toothpaste, ice cream and breads it is the world's second most popular edible oil after soy.

Demand is also soaring for palm oil-derived biofuel, despite objections from critics who slam the "green" alternative to pricey crude oil as "deforestation diesel" because of the destruction wreaked on forests to make way for palm plantations.

Of 6.5 million hectares cultivated in Malaysia and Indonesia in 2004, almost four million hectares was previously forest, environment group Friends of the Earth calculated.

For orangutan, the clearances are a matter of life and death.

"You can see how desperate the situation is," said forestry department official Sugianto, 43, as he gestured at row after row of palms in the ape's last stronghold, Central Kalimantan.

"The company knows the orangutan has a protected status ... if they have a permit to clear 60,000 hectares they clear 60,000 hectares, orangutan or not. They only care about their profit."

Caught and reported to the Borneo Orangutan Survival centre by plantations who say they are trying to be responsible stakeholders, healthy animals are re-released deep in the forest. Those too injured or too young to survive alone join 600 others at the rehabilitation centre.

Forty local Dayak women look after the current crop of 18 palm oil "orphans," whose mothers have been killed; bottle-feeding them milk, administering medicine and supervising their climbing and nest-building.

"Some people still think it is a strange job, but others think it is normal now," said 31-year old Sukawati.

After "forest school," the apes graduate to eventual release.

"They are cute and funny," said Sukawati. "They make me laugh."

Balancing Act

Orangutans once ranged across Southeast Asia. Now an estimated 7,300 remain on Indonesia's Sumatra island and 50,000 on Borneo island. An estimated 5,000 disappear every year.

Decades of habitat loss through rampant illegal logging, lethal annual forest fires, and poachers who earn hundreds of dollars for capturing orangutans for the illegal pet trade have all taken their toll.

But this latest threat is the worst, experts said.

"The orangutans can withstand a certain degree of logging, as most loggers don't take the orangutan food trees," said Bhayu Pamungkas of the World Wide Fund for Nature.

"But they have no chance with oil palm - there's no chance for the orangutan if they clear-cut all the forest."

To rescue the industry's green credentials, several Indonesian and Malaysian palm oil companies have joined the Roundtable on Sustainable Palm Oil (RSPO), whose voluntary criteria include a ban on clearing primary forests and areas of high conservation value, such as forests containing orangutan.

Its more than 150 members also include major European end-users like Cadbury-Schweppes, Unilever and the Body Shop, that together take 40 percent of Asian exports, and who want to buy non-destructive palm oil.

But securing private sector support is a balancing act, said Fitrian Ardiansyah, 32, an RSPO board member.

"There is some genuine intention from progressive companies to distinguish between them and the bad guys," he said.

"But if the push is too hard for them it's not going to be too difficult to switch the market to China and India, and emerging markets like the Middle East and Africa."

Trees and Priorities

Like whales, pandas, polar bears, and tigers, shaggy orange orangutan are classed "charismatic megafauna" by academics - endangered animals whose plight provokes compassion and concern.

Cute as they may be, their supporters need to keep perspective, said Derom Bangun, executive chairman of Gapki, the Indonesian Palm Oil Association, and an RSPO member.

"We should see the whole picture, not only the orangutan. They try to manipulate emotional side of orangutans so that housewives in Europe find it very pitiful," he said.

The country's clearance of almost 1.9 million hectares of forest a year between 2000 and 2005, Asia's worst deforestation rate, also needs to be seen in its economic context, Bangun said.

While the government does need to better define which forest areas are to be preserved, not all will be kept, he said.

"Other countries chopped down their forests when they were developing their countries. If they would like us to preserve more than we can, they should do something to help us."

But while plantation workers have some choice whether they want to buy into the motorbikes and mobile phones offered by palm's economic opportunities, orangutans have no such choice, those on the front-line point out.

"I'm not against palm oil," said Droscher-Nielsen. "(But) if there's not proper protection of the forest the orangutans are not going to make it."

http://www.truthout.org/issues_06/053007EB.shtml

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Additional reporting by Mita Valina Liem in Jakarta.

obmar

That's the balancing act Man have to undertake.

Guthrie: Strong CPO prices can boost revenue by 50pc
By Zaidi Isham Ismail
bt@nstp.com.my

June 8 2007

KUMPULAN Guthrie Bhd expects revenue to jump by about 50 per cent should crude palm oil (CPO) prices average at RM2,400 a tonne throughout the year.

It raked in a revenue of RM2.4 billion and a net profit of RM284.1 million for the year-ended December 2006.

Guthrie is one of the three companies being merged to form Synergy Drive Bhd, which is set to float its shares on Bursa Malaysia as early as October this year.

The other two companies are Golden Hope Plantations Bhd and Sime Darby Bhd.

Speaking to reporters after the company's annual and extraordinary general meetings in Kuala Lumpur yesterday, group chief executive officer Datuk Abd Wahab Maskan said even if CPO prices average RM2,000 a tonne, the company can expect a revenue increase of 30 per cent.

CPO price hit a record high of RM2,700 a tonne on Tuesday on fears of a shortfall in national production by year-end and global demand outpacing supply.

Abdul Wahab said Guthrie is headed for a good year because out of the 200,000ha of palm oil estates it owns in Indonesia, 175,000ha are either in the process of completing planting or maturing.

Guthrie owns a total of 309,730ha of oil palm estates, of which 220,428ha are in Indonesia. Its palm oil operations in Malaysia have stabilised.

Abdul Wahab said the road ahead is smooth for Guthrie where land ownership issues in Indonesia have been cleared and the company is seeking permission from the Indonesian authorities to extend its land lease to an additional 45 years from its current 60 year lease.

"We now have no capacity problems because with the completion of three new mills, Guthrie now has a total of 20 mills in Indonesia with a combined mill capacity of 880,000 tonnes per hour."

He said Guthrie has spent RM500 million in Indonesia on upgrading and building new mills in the past few years.

"We plan to spend an additional RM200 million to build three more mills in Indonesia by 2010," he said.

On its property division, which contributes between 20-25 per cent to its yearly revenue, Abdul Wahab said it will continue to contribute profits for the group.

"There are a few projects in Bukit Jelutong which can bring in between RM2 billion and RM3 billion in revenue for Guthrie but we will announce these projects in strategic timing."

Blue1moon

obmar

http://www.mpob.gov.my/

Unfair Lobby Against Palm Oil and its Nutritional Benefits

(This article was published in the The Planters- Editorial 82(965): 511-514 (2006))

There are two statements of truths as the Malaysian palm oil industry journeys into the beginning of the 21st Century. The first is that 'success has its problems' and the second is that the industry to ward off these problems has 'to look to the future in truth'.

On the first truth, Malaysia as a developing nation has been working hard to build up its agriculture with palm oil leading in its export to over 150 countries. Such a global brand for a Malaysian product is achieved through hard work and collaboration between public and private sectors, research and good government support and policies. The Malaysian palm oil industry has become the world foremost supplier in the oils and fats market. As the oil palm growers continue to demonstrate its sustainability, there are the growers of the other competing vegetable oilseed crops that inherently do not give as much oil yield per ha having to resort to distort facts and joining a pool of palm oil critics who are competitors of palm oil with their unfair lobby. Hence the first truth that 'success has its problems' is borne out by such unfair lobby

On the second truth, the Malaysian palm oil industry for over a quarter of a century since the 1980s has been facing a series of major attacks yet it chose to remain calm by not resorting to counter campaigns but rather to continue to tell the world about the goodness of palm oil. This has led the Malaysian palm oil industry into subscribing to second statement 'to look to the future in truth'.

The overall maxim of 'No legacy is so rich as honesty' written by William Shakespeare in "Alls Well That Ends Well" will be the industry's clarion call. This editorial forms the first of a three-part series to put the records straight. We will begin firstly, to tell the truth about the nutritional benefit of palm oil that is sustainably produced. Over the next two editorials, we tell the truth that Malaysia supports biodiversity conservation and is not destroying orangutan and its habitat; and thirdly, Malaysia practises sustainable forest management and is not sacrificing its pristine forests for producing palm oil for biofuel. Through out these three editorials there will be presentations of facts and figures for our readers to judge for themselves about the unfair lobby by the competitors. Undoubtedly honesty, more than any thing else, when use in highlighting the facts, undertaking research, developing and marketing products, and in disseminating information on palm oil is the way forward for the industry to journey into the future.

Foremost in agriculture perhaps is how to deal with the most outstanding issue of sustainability. As a start, palm oil has been produced in Malaysia for the past 100-150 years and this is already a demonstration of sustainability. In attaining sustainable development, the challenge is to tackle simultaneously all three fronts of the ecological, the economic and the social viewpoints. Each is equally important and must be treated holistically without neglecting any. The three-pronged issue calls for:

Firstly, to address the ecological viewpoint, the Malaysian palm oil industry has to push its modern and advanced large-scale technologies of oil palm plantations as the leading model for developing future agriculture in the global scene. The use of chemicals in a.i. per ha is already very low in the palm oil industry and despite this, the industry has been complemented by the wider use of integrated pest management (IPM) to further reduce use of pesticides, together with the recycling of co-products like empty fruit bunches (EFB) and palm oil mill effluent (POME) back to the fields to reduce chemical fertilizers, zero burning to reduce emissions and planting of leguminous ground covers to reduce the use of fossil fuel derived nitrogenous fertilizers. The overall goal is to demonstrate that both productivity and growers' income through ecological farming will be backed up with data and facts from now onwards.

As the Malaysian palm oil industry occupied 4 million ha at the end of 2005 the area is well within the six million ha out of the 33 million ha in the country allocated to agriculture. Malaysia will continue to enjoy 64% of its land area under forests and as recorded by FAO and if we include the perennial plantations tree crops the areas covered by greens will be bigger than 84%. Such a forest cover is likely to have higher level of biodiversity with greater numbers of fauna and flora over countries that are having less than say 20% forest cover left.

Secondly, to address the economic viewpoint, the Malaysian palm oil industry has represented a form of modern agriculture that is well run by professional planters. It has to shoulder the heavy taxes and at the same time, not given any subsidy yet it is highly sustainable. On top of all these, the industry has endured problems of unfair lobby for its competitors because Malaysian palm oil is lumped with Indonesian palm oil for criticism. As seen from the ENGOs like the Friends of the Earth (FoE) and American Centre for Science in the Public Interest (CSPI) criticisms through their documents that the oil palm plantation causes allegedly wanton destruction of forests and annihilation of orangutans' habitats.

The WTO is trying but not seen to be doing enough to ask the rich countries to reduce their subsidies. The latest round of WTO talks in Geneva had failed. On the contrary, these developed countries have set up high tariffs thereby punishing the commodity producers from the developing countries with Malaysia included. Such a protectionist position of these developed countries only favors restriction of freer trade propagated behind a cloak of some environmental or health issues. What the Malaysian palm oil industry is asking is for a level playing field and Agencies such as the WTO are not known for speedy, decisive action on this. In fact the longer the deliberations take the greater likelihood for complex unsatisfactory resolutions to arise.

Despite this, Malaysia, being blessed with the gift of palm oil to the world, is outdoing the competitors by achieving annual yield production per ha at five times more than rapeseed and 10 times more than soya bean. All these go to show that these oilseeds, without their countries' subsidy, will be unsustainable in face of intensive competition from palm oil. Yet palm oil production with its supremacy over the vegetable oilseeds, has not followed the path taken by these competitors such as rapeseed where, for example, has most of its oil being used as a major source of biodiesel capable of supplying about 84% of Europe's needs. Malaysian palm oil has a social responsibility to supply oil firstly as food to the highly populated major customers of China, Pakistan, India, Bangladesh before serving EU and USA. Malaysia and Indonesia have recently jointly decided to use up to 40% of their palm oil for the biofuel despite the fact that the premium and profit margins for the food sector is better at the moment.

Palm oil, even when all of it is used in the biodiesel production, represents a meager 13% share of the world total 570 million gallons of the world's raw resource for biodiesel. And this is equivalent to 5% of the world petroleum consumption. Since the total oil palm area cannot meet even 5% of the world energy needs, there is no fear as envisaged by the environmental NGOs (ENGOs) posing the ethical question of how much of our palm oil will be utilized for fuel over that of food. Perhaps the same question should first be posed to the other vegetable oilseed producers, especially the rapeseed but it is not done. Instead, the likely negative campaigns from palm oil competitors and market detractors have begun and greater intensity can be expected. This aspect of accusing palm oil for fuel by ENGOs will be dealt with in greater detail in the third section of a three-part editorial.

Thirdly, to address the social viewpoint, the composition of the Malaysian palm oil industry being made up of 60% private investors, 30% as organized small holders and 10% as independent smallholders has the responsibility to look after 1.5 million people employed indirectly or about 0.5 million people directly over the value supply chain. Already the Malaysian palm oil industry has embarked on a programme to change the mindset by building a new paradigm with policies of demonstrating sustainable development that the industry has been practising all this while. Only thing is that these will have to be communicated properly and widely where most of the publications are to be simplified non technically to be understood by the end users or they must reach the end users in the locations where the information needs to reach. This positive approach has started in consultation with the science-based ENGOs and other stakeholders during the current meetings of the Roundtable on Sustainable Palm Oil (RSPO). Certainly in the detailed discussions of the principles and criteria there is an opportune platform when engaging with the NGOs and other stakeholders that the initiative does not undermine the future development of oil palm plantations or palm oil production. Notwithstanding the good intention of the RSPO and that the current RSPO Principles, Criteria for Sustainable Palm Oil Production (P&C) are undergoing a two-year trial period the support for this has been increasing even before their full implementation and opening the P&C for certification and enforcement may be considered in the near future. By participating in the test, valuable feedback will be forth coming or protest of any criteria that are not practicable can be provided as important lessons.

It is likely that the plantations will qualify as sustainable because many of these sustainable practices have been incorporated into the draft Malaysian Standards of oil palm good agricultural practices (MS OPGAP) where most of them have already been implemented for many years. This standard, upon publication in August 2006 is expected to have a wider chance of adoption since the small holders' involvement was there right from beginning of the consultation process and that RSPO allows for national interpretation of the criteria and indicators. When MS OPGAP is implemented over the whole industry, it is likely that Malaysian palm oil industry is ready to consider for certification by the relevant Malaysian authorities for sustainable palm oil. Hence socio-economically, providing employment, feeding the poor, preventing human disease and improving the living standards of the small holders and indigenous populace, particularly those of the rural areas, are honest and attainable socio-economic goals of the Malaysian palm oil industry. Much excitement and many challenges lie ahead of us but these must best be met with truthfulness in our endeavor.

These three fronts, continuously evaluated and resolved in an integrated manner are likely to demonstrate the sustainabilty of palm oil with valuable backup data. All indications point to the fact that Malaysian palm oil production is sustainable. Since Malaysian palm oil is likely to be proven to come from sustainable sources in the new future, there is yet the resurfacing of unfair lobby on its nutritional benefits. It is an old story emanating from the earlier days of soya bean Anti-Palm Oil Lobby.

Lately, much concern has been expressed regarding the safety of the presence of trans fatty acids in food products due to the hydrogenation of the soyabean oil. After many years of study, the Food and Drug Administration (FDA) issued its first final ruling on July 11, 2003 with the enactment on 1st January 2006. This has allowed the food industry in USA to adjust to the new food requirement. Against this requirement many food manufacturers are currently seeking alternatives to the trans fat and natural semi-solid fats like the palm oil would be a good choice but this is not to be so.

Instead food scientists have been coerced to shun natural fats like palm oil as ingredients and turn to unnatural highly processed fats that already carried health concern. The ENGOs like FoE and CSPI in their documents "The oil for Ape Scandal" launched in Britain by FoE and "Dying for a Cookie" in US by CSPI respectively have both been found not factual. This aspect will be dealt in greater details with the second section of a three-part editorial.

There is an axiom in business that "the customer is always right" And if your products is good why do you need to put down your competitors. Sooner or later the public will come to know the truth that palm oil is always better. Thanks to the rapid transmission of all types of information buyers and customers are well informed to nullify the unfair lobby. So let the buyers be beware that "Knowledge is power" by Francis Bacon in "Meditationes sacrae" (1597).

Dr Chan Kook Weng, FISP

Blue1moon

I'm glad to hear that despite the critics your country is working hard to make sure it does not harm the environment.

I do not see much in the way of palm oil available in the U.S. - but perhaps I have not looked - I will check it out!

How par for the course for the food manufacturers to look for fake stuff instead of taking the real thing - the fake is always later proved unhealthy in comparison, if not just plain old bad for you.

The Inquisitor

obmar,

The subsidies and tariffs that currently exist in the developed countries are going to stay put for the foreseeable future. I wouldn't look for a substantial way into those markets for a while to come. I think your country needs to develop new markets that don't have a regular, steady supply of palm oil or its alternatives. Markets like China and India are ripe for the taking, especially given their enormous sustained growth over the past 10 years or so.

The inroads into the developed countries will only come once the need outweighs the production + subsidies that currently exist. With the advent of ethanol as a viable fuel for autos, this need may be sooner than later. If corn is to be used to produce ethanol, then the ability to use it for corn oil will be reduced and palm oil can then catch on. We're about five years away from that happening in any substantial way.