Thursday, 3 December 2009

Green concerns or trade barriers?

Tuesday, December 1, 2009
News Source: New Straits Times

Malaysia's palm oil shipment to Rotterdam Port, the gateway to Europe has fallen by an average of 12 per cent every year since 2006's peak of 1.7 million tonnes. This year, it is poised to shed another 30 per cent to 900,000 tonnes.

At the Roundtable on Sustainable Palm Oil (RSPO) conference last month, environment activist Wetlands International called for an address of "the alarming emissions from forest and peat swamp areas' conversion into oil palm plantations". The Netherlands-based non-governmental organisation (NGO) alleged that "the continuous emissions caused by drainage of carbon rich tropical peatsoil in Indonesia and Malaysia are enormous." At the end of the meeting, Wetlands lamented that its attempts to insert a Greenhouse Gas Emission criterion had been frustrated by members representing Indonesian and Malaysian oil palm planters.

In an interview with Business Times, Malaysian Palm Oil Association chief executive Datuk Mamat Salleh shed light on the ulterior motive and double standards deployed by the NGOs to the detriment of the global palm oil industry.

Under RSPO, palm oil has to be sustainably-produced. On the other hand, other vegetable oils like canola and soyaoil only need to be responsibly-produced. "Did you know that the term 'responsibly-produced' allows for genetically modified oilseeds?" Mamat questioned.

Greenpeace, Friends of the Earth (FOE), and Wetlands International claim oil palm cultivation cause tropical deforestation. But these NGOs are silent on soyabean, rapeseed and sunflower farming causing deforestation in temperate countries.

"How come these NGOs do not lobby for reforestation in Europe and the US? At the very least they should campaign for 10 per cent of the 100 million hectares planted with soyabean, rapeseed and sunflower to be with replanted with trees to absorb carbon dioxide from the polluted air there.

"How come these NGOs do not tell their own governments to replant forest and restore the habitats for racoons, beavers, frogs, wild foxes, deers and bears?" Mamat posed more questions.

The United Nations Copenhagen Climate Summit, scheduled to run from December 7 to 18, will see 192 countries meet to set targets on carbon emissions. As the summit draws near, Greenpeace and its affiliates have become more vociferous for a moratorium on the forest and peatland in Malaysia and Indonesia.

Without providing scientific evidence that can be verified, these pressure groups claim oil palm planting on peatland pollutes the air to the extent that this agriculture activity makes Indonesia the world's third biggest polluter, after the US and China.

Surprisingly, there is no such call by these NGOs for a moratorium on cars, ships, airplanes, oil exploration, coal mining and petrochemical processing industries, which all emit more carbon dioxide to the air than agriculture. "Isn't it ironic that the carbon emission of 3.5 tonnes from one tonne of depleting fossil fuel is tolerated while biofuels, which have the advantage of being renewable, are abhorred even though they are proven to be 35 to 65 per cent less polluting than fossil fuels?" Mamat asked.

Human settlement, forest clearing, industrial revolution in developed countries have long emitted the large portion of greenhouse gas in the atmosphere now.

"These Europe-based NGOs just close two eyes to unsustainable farming in their home countries. When we questioned their silence, they concede with their own governments' view that it was their grandfathers' right to clear-cut forest for industrialisation.

"But what about our grandchildren's rights to progress and prosperity?" Mamat asked.

On the one hand, Malaysia and Indonesia face threats from Greenpeace, FOE and Wetlands activists who are skilful at propaganda to impose moratorium on tropical forest and peatland.On the other hand, global vegetable oils trade thrives best when markets open up for free competition and more respect is accorded to representative governance.

When placed together - it doesn't take a PhD in economics or political science to conclude that the true motive of these NGOs is to put up trade barriers against tropical nations' palm oil to benefit rapeseed and sunflower farmers who are heavily subsidised by the EU government.

In a separate interview, Malaysian Estate Owners Association (MEOA) president Boon Weng Siew explained how Malaysia's small and mid-sized oil palm estates are already practising sustainable oil palm planting by virtue of compliance with the country's environmental and labour laws.

Established in 1931, MEOA represent 153 small and medium-sized estates of more than 40 hectares. All oil palm planters, whether smallholders or estate owners, comply to the Environmental Quality Act 1974 and the Environmental Impact Assessment Order 1987.

"We prepare and submit EIA reports for agriculture land development covering an area of 500 hectares or more. Open burning of plant residue is prohibited," he said. Apart from eco-friendly laws, oil palm planters observe the Employment Act, the Industrial Relations Act and the Minimum Standard of Housing and Amenities Act.

Estate owners are not required, by law, to provide accommodation, schools, clinics and places of worship but many of MEOA members do so as part of their corporate social responsibilities. "However, when accommodation for workers is provided, the site and buildings must comply with the Minimum Standard of Housing and Amenities Act 1990. The clinic also has to comply with the Private Healthcare Facilities and Services Act 1998," Boon said.

To date, Malaysia's oil palm plantations span across 4.5 million hectares. To a question on Greenpeace and FOE's claim that monoculture oil palms are unable to support wildlife diversity, making the estates sterile, Boon replied, "That is not true. Shrubs, ferns, fungi and herbs, monkeys, birds, wild fowls, squirrels, rats and snakes flourish in oil palm plantations."

Plants, mammals, insects, reptiles and birds have adapted to the oil palm ecosystem. "Oil palm estates are the green lungs that generate oxygen which the developed part of the country breathes, fulfilling many of the rainforest functions," he said.

Boon also said planters today do not just plant, harvest and sell. "Oil palm planters are now more aware of the whole supply chain from the point of applying fertiliser to milling. We are also familiar with traceability, food safety, environmental and social responsibilities," he said.

"Malaysia's palm oil production is already sustainable by virtue of compliance with national environmental and labour laws," Boon added

Palm oil has become an accurate measure of the global markets

In 2009 palm oil has not changed its colour or texture, but as an economic indicator it is unrecognisable. In a world of food and energy crises, of credit implosions, green politics and the rise of Asia, it has become the gauge that straddles them all — the ultimate global speedometer.

Through its price fluctuations and ever-changing trade destinations, palm oil has become an accurate measurement of hundreds of global markets.

Its versatility is the key, which is the main reason why the world consumes 42 million tonnes a year — twice as much as it did a decade ago. For all of the criticism that palm oil plantations attract for destroying the rainforest and endangering wildlife, the demand is a reading of a global population trying to feed and power itself under challenging circumstances.

The growth of palm oil has tracked the rising wealth of the middle classes in China and India, which buy up a quarter of all global supplies every year. Those who can afford to fry more of their food, and when other edible oil stocks can not keep up, or when prices rise too far, palm oil becomes the alternative.

As a biofuel feedstock, palm oil can meet a similar demand with energy, offering an alternative strategy when the markets are knocked out of kilter.

Palm prices tell us how rich the average Chinese family feels at new year, and with what sort of food the Muslim world will be breaking the fast each night of Ramadan. It tells us where London brokers think crude oil prices are heading and what Chicago futures traders think of this year’s soya bean crop and how badly El NiƱo is hurting South-East Asia this cycle.

In Malaysia and Indonesia, which between them meet about 87 per cent of the global demand, palm oil price movements dictate government policy, shape economic prospects and draw billions of dollars of direct investment.

For Malaysia, palm oil competes with tourism and manufacturing as the three biggest sources of economic growth. A couple of years ago, a bumper haul and dazzling prices allowed the Government in Kuala Lumpur to give a bonus to every civil servant in the country.

In Indonesia palm oil plays an even more central role in the country’s economic future. One popular view is that Indonesia belongs in three of the world’s most promising and exciting, emerging markets. The theory is backed by the idea that an industry that already employs two million people has the scope to double its output by 2014.

Perhaps most critically of all, palm oil is the canary in the mine for biofuel policy-making around the world. Setting stomachs and cars against each other in direct competition for calories is a finely balanced game, more likely to go wrong than right.

A poorly calculated subsidy in one country can cause dangerous price rises in a food commodity on another continent. In almost all cases, the price of palm oil is where the folly emerged.


Palm oil help feed an increasingly hungry world

Monday, November 16, 2009
Source: New Straits Times

INDONESIA’S 7.1 million hectares (ha) of oil palm plantation’s current average oil yield of 2.8 tonnes per ha per year is set to surpass the 3-tonne mark by 2015, as trees mature and bear more fruits, says Indonesian Palm Oil Commission (Ipoc) executive chairperson Dr Rosediana Suharto.

"By 2015, the average oil yield at matured plantations should surpass 4 tonnes per ha per year as more young trees reach their prime fruit bearing age,” she told Business Times at the International Palm Oil Congress (PIPOC) 2009 in Kuala Lumpur last week.

“Big planters have their own replanting schedule. Since 2008, however, we’ve extended a helping hand to smallholders via the revitalisation programme. We want to increase our national average oil yield,” she said.

Ipoc collaborates with local commercial banks to facilitate cheaper loans to smallholders to replant their trees. High yielding seeds are sourced from the Indonesia Oil Palm Research Institute (Iopri), which contracts out hybrid seed breeding to 11 producers.

“Some of the Malaysian oil palm investors also have gentlemen agreements to supply high yielding seeds to smallholders within their plasma schemes,” she added.

Under the plasma scheme, the Indonesian government requires foreign investors to set aside 20 per cent of land to nurture smallholders in oil palm planting. While not all Malaysian investors are registered with Ipoc, Rosediana estimates that they operate 1.1 million ha of oil palm plantation there.

On this year’s palm oil output, Rosediana estimates it to be some 20 million tonnes, rising to 21 million tonnes in 2010, barring the occasional El Nino drought.

The United Nations Copenhagen Climate Summit, scheduled to start next month, will see 192 countries meet to set targets on carbon emissions. As heads of states from around the world prepare for the summit, Amsterdam-based Greenpeace stepped up its campaign for a forest moratorium in Indonesia.

Without providing data that can be verified, Greenpeace alleged destruction of Indonesia’s peatland forests alone accounts for 4 per cent of global annual emissions and placed the country third biggest polluter, after the US and China.

Is Greenpeace really a green group? Does it plant trees?

Greenpeace International 2007 annual report shows it received an annual contribution of €212 million (or RM1.07 billion) and the money was spent on propaganda. About €10 million (or RM50.7 million) was used for “forest campaign” but not a single cent went to tree planting. It organises theatrical demonstrations and dangerous publicity stunts that sometimes end up causing grevious bodily harm and property damage. In the last few years, Greenpeace’s fleet of ships with fancy names like “Rainbow Warrior” and “Esperanza” have terrorised palm oil tankers at seaports in Indonesia and New Zealand.

As the Copenhagen Summit draws near, it has become apparent that Greenpeace, Wetlands International, Friends of the Earth (FOE) and World Wide Fund For Nature (WWF) are political extensions of the ruling majority in the European Union that assumes changes in tropical forest aggravates global warming.

The fact is oil palm planting has helped reduce poverty in developing countries like Malaysia and Indonesia. In balancing economics and ecologics, Rosediana noted these Europe-based environmental group tends to negate agriculture’s socio-economic contribution to the people of developing nations.

At the PIPOC 2009 evening forum on “Palm Oil: Balancing Ecologics with Economics”, United Plantations Bhd executive director and vice chairman Datuk Carl Bek-Nielsen made a poignant statement before an audience of more than 1,000 people.

“There is nothing like poverty and hunger that hastens environmental degradation. Conservation means responsible development as much as it means protection. Today there are more than 1.4 billion people living on less than US$1.25 (RM4.22 ) per day. Whatever strategies these enviromental activists pursue to save Brazil or Borneo’s biodiversity must first offer ways for its residents to improve their lives,” he said.

International banks and funding institutions need to change their way of thinking about this. Better health, better education, better economic conditions — that will help to protect the environment.

“Very often we speak of the 3-P principle of People-Planet-Profit. Lets us not forget the basic needs of the people ...the right to clean water, electricity, proper housing, healthcare and education,” he said.

Bek-Nielsen then referred to the latest United Nations Food and Agriculture Organisation (FAO) 2009 report, which shows there are now more than one billion starving people in the world. After gains in the fight against hunger in the 1980s and early 1990s, the number of undernourished people started to climb in 1995. Hunger now affects a record of 1.02 billion people globally, or one in six. Among chief causes are financial meltdown, high food prices, drought, flood and civil wars.

FAO director-general Jacques Diouf was reported as saying that in the fight against hunger, the focus should be on increasing food production. “It’s common sense that agriculture should be given priority but ...the opposite has happened,” he said.

Falling agricultural investment in developing countries over the last decade has lead to rising hunger worldwide. Arable land for agriculture stays the same but the world’s population continue to grow. Today, it has surpassed 6.5 billion people.

Going forward, it is inevitable that oil palm trees, with its high oil yield, offers a sustainable solution to help feed the world. Farmers in temperate countries have a choice of planting sunflower for vegetable oil or wheat for flour. With more global consumption of palm oil, more land can be free from the less efficient-yielding sunflower, to plant wheat to ensure enough global supply of bread and noodles.