Oil palm seeds to cost 30pc more

The increase is due to the recent hike in labour wages and foreign worker levy, fertiliser cost, electricity tariff and packaging material cost, says a director of Applied Agricultural Resources

Sungai Buloh: The price of oil palm seeds, now at RM1.85 each, will be raised by 30 per cent to RM2.35 starting January next year.

Business Times also understands that the higher grade semi-clonal seeds will be priced 45 per cent more at RM2.70.

"Over the years, we have invested heavily in oil palm breeding. This has enabled us to improve the seeds for higher yields. Most of the major seed producers in the country have also made similar price increases for 2012. It has been RM1.85 per seed since 2007," said Applied Agricultural Resources Sdn Bhd's (AAR) director of research Dr Kee Khan Kiang.

AAR, which advises more than 350,000ha of oil palm and rubber estates in Malaysia and Indonesia, is an associate company of Boustead Holdings Bhd and Kuala Lumpur Kepong Bhd, two highly successful public-listed companies.

Kee, in an interview at his office, said the decision to raise the price of oil palm seeds was due to cost rises.

"With the recent hike in labour wages and foreign worker levy, fertiliser cost, electricity tariff and packaging material cost, we have no choice, but to raise seed pricings," he said.

This is because starting this month, plantation firms will pay a minimum wage of RM650 per month to plantation workers, with an additional productivity-linked RM200 incentive.

It is estimated that this 10 per cent wage hike for employees would cost the industry an additional RM300 million per year. The arrears of wages and ex-gratia payment would further incur an additional RM364 million.

On the whole, the implementation of this new wage and extra remuneration will double Malayan Agricultural Producers Association (Mapa) members' oil palm production costs to RM2.2 billion from RM1.1 billion. AAR's parent companies are Mapa members.

"We've tried to absorb these costs, but at the same time, we need to take care of our shareholders' interest," he added.

To add salt to the wound, the Home Ministry has increased overall foreign worker levy by RM50, meaning employers in the plantation industry need to pay a higher levy of RM590 per worker.

"Whatever that is impacting plantation companies has a chain reaction on seed producers like us. We're equally hurt by these inflated costs," said Kee.

Major seed producers like Felda Agricultural Services Sdn Bhd, Sime Darby Seeds & Agricultural Services Sdn Bhd and AAR will, therefore, be facing burgeoning labour cost.

Since 1986, AAR has been one of the 10 licensed seed producers in the country, contributing to the replanting of unproductive trees so as to raise the national oil palm yield.

According to Malaysian Palm Oil Board, some 40 million germinated seeds have already been planted by farmers in the first seven months of this year.

Most of the replanting of old trees have been carried out in Sabah and Peninsular Malaysia while new plantings are undertaken in Sarawak.

For this year, Kee said, AAR is hoping to sell 8.5 million oil palm seeds this year, having sold 7.2 million last year.

"We already have confirmed bookings for 8.6 million seeds in hand with deposits paid. Orders are still pouring in, but unfortunately, we cannot meet the demand for this year," he said.

Read more: Oil palm seeds to cost 30pc more http://www.btimes.com.my/articles/seeds/Article/#ixzz1X914cA00

The Soy Deception: How Palm Oil is Protecting the Amazon Rain Forest

When I searched the net to find out Deforestation : oil palm cultivation vs soybean cultivation, I found this interesting article from the source http://www.coconutresearchcenter.org/soy-deception-article.htm

Have you ever wonder that if oil palm had not been introduced to Indonesia and Malaysia, we would not have cleared jungles for developing into oil palm plantations. Then more jungles in Americas and Europe could have been cleared for soybean and other oil crop during the past 100 years! Perthaps the whole Amazon rain forest could have been gone by now after being cleared for soybean and other oil crop cultivation so as to supply the great demand of cooking oil from Asia.

If the situation is reversed assuming that oil palm can be grown in Europe and Americas, and soybean is grown solely in Malaysia and Indonesia, where do you think the NGOs would be pointing their fingers to? May be the hot topic today is Deforestation for Soybean Cultivation in Malaysia and Indonesia?

Read on and what's your comment, planters and Agronomists in Malaysia and Indonesia?

The soybean industry is up to its old tricks, attempting to demonize the tropical oils. This time, the attacks are in the guise of environmentalism. However, if the truth were told, the soy industry would be exposed as one of the world’s worst offenders. Palm oil production, on the other hand, is protecting areas like the Amazon rain forest from destruction.

During the 1970s and 1980s the soybean industry was troubled by emerging evidence that soybean oil consumption lowered immunity, increased susceptibility to infectious disease, and promoted cancer.

At this same time saturated fats were being scrutinized because of their tendency, in general, to raise blood cholesterol levels. The bigwigs in the soybean industry got the bright idea that if they could demonize the competition, by making saturated fats appear to be the cause of heart disease—the nation’s number one killer—people wouldn’t pay much attention to the negative findings coming out about soybean oil. Starting in the mid-1980s the soybean oil industry began a multi-million dollar anti-saturated fat campaign. Saturated fats increased cholesterol, they said, and high cholesterol causes heart disease. The tropical oils (coconut, palm, and palm kernel oils) were singled out as being the worst offenders because of their high saturated fat content.

Some, but not all, saturated fats do raise total cholesterol, but there was no solid evidence that high cholesterol actually caused heart disease. That is why high cholesterol is only considered a “risk factor” rather than a cause. But that didn’t stop the soy industry. Gullible consumer advocate groups like The Center for Science in the Public Interest (CSPI) and The American Heart Savors Association were swayed by the misleading information and began their own campaigns against saturated fats. In these groups the soybean industry found very vocal, high profile allies which spearheaded much of the criticism against saturated fats, and particularly against the tropical oils. These organizations placed anti-saturated fat ads in the media, published newsletters and magazine articles, and books, and lobbied for political action against the use of tropical oils and other saturated fats.

The soybean industry fed misleading information to these groups and allowed them to fight the battle. The soybean industry took a back seat and stayed out of the limelight. This was very clever from a marketing perspective because now the soybean industry wasn’t viewed as openly attacking their competition. Since the bulk of the attack came from supposedly impartial third parties, their message had more impact. People were swayed against saturated fats and the tropical oils.

Restaurants and food manufactures sensitive to customer fear of saturated fats, began removing these fats from their foods and replacing them with vegetable oils. Tropical oil consumption plummeted while soybean oil sales skyrocketed. In the United States soybean oil soon accounted for about 80 percent of all the vegetable oil consumed.

During this time, one thing the soybean industry conveniently neglected to tell the public was that the saturated fats were not being replaced with ordinary vegetable oil, but by hydrogenated soybean oil! Hydrogenated soybean oil contains toxic trans fatty acids and is far more damaging to the heart than any other fat. It has also been linked to numerous other health problems including diabetes, cancer, and various autoimmune diseases. In terms of health, it is absolutely the worse fat that could be used.

The soy industry was aware of many of the detrimental effects associated with hydrogenated vegetable oils and trans fatty acids, that is why it was never publicly announced that saturated fat would eventually be replaced by hydrogenated vegetable oils. They succeeded in demonizing all saturated fats, including healthy coconut and palm oils, for the sake of profit. The plan was an overwhelming financial success. Over the next two decades hydrogenated vegetable oils found their way into over 40 percent of all the foods on supermarket shelves, amounting to about 40,000 different products. Hydrogenated soybean oil consumption dramatically increased, so did numerous diseases now found to be associated trans fatty acids.

In recent years, however, coconut and palm oils have been making a comeback. Careful review of previous research and more current medical studies have exonerated the tropical oils from the claim that they promote heart disease. In fact, if anything, they appear to help protect against heart disease as well as many of the other diseases now known to be linked to hydrogenated vegetable oils.

With the growing awareness of the dangers of trans fatty acids in hydrogenated vegetable oils and the landmark announcement in 2002 from the United States Institute of Medicine stating that “no level of trans fatty acids is safe in the diet,” tropical oils are returning. Coconut and palm oils are naturally trans fat free. Palm oil in particular has enjoyed a resurgence internationally as a preferred cooking oil. Its excellent stability and high smoke point (437 degrees F) make it ideal for cooking and frying. In terms of health, it is far superior to hydrogenated soybean oil.

Many restaurants and food manufactures are now replacing their hydrogenated soybean oil with palm oil. Consequently, hydrogenated soybean oil sales are declining. The soybean oil industry is alarmed. In an effort to protect their profits they’ve returned to their old tried and true means of demonizing the competition in order to make their products more acceptable.

Relying on old friends, such as CSIP, a new wave of attacks have been focused on palm oil. CSPI reverting back to its old standard of trying to create fear in the minds of the public, continues to harp on the saturated fat issue. They have even published full page ads in the New York Times suggesting that palm oil is worse than hydrogenated soybean oil. The impact the CSPI has had with this approach has generally been flat. Too many people now are aware of the benefits of the tropical oils and the dangers of hydrogenated vegetable oils. Their anti-saturated fat rhetoric isn’t having the same impact as it did in previous years. There is just too much scientific evidence to refute their unfounded claims.

Desperate to find an alternative means of attack, the soybean industry has found a new ally in the Friends of the Earth, a highly vocal politically active environmental group. Fueled by support and misleading data from the soy industry, the Friends of the Earth have now waged a war against palm oil on the grounds that palm cultivation is destroying the environment. They claim that rain forests are being leveled to make room for palm plantations, destroying the ecology and bringing endangered species, such as the orangutan, to the brink of extinction. Anyone with any sense of responsibility for the environment would be emotionally swayed by this argument.

The problem, however, is that it’s not true. Like a magician, the soybean industry is a master of illusion. They were successful in creating the illusion that tropical oils caused heart disease and that hydrogenated soybean oils were a better option. Now that we have discovered the secret to that illusion, they are trying to trick us again. This time they are attempting to create an illusion that their competition is harming the environment while they, on the other hand, are environmentally friendly. In reality, the soybean industry is causing more destruction to the environment than probably any other agricultural industry on the planet.

In the time it takes to read this entire article, an area of Brazil’s Amazon rain forest larger than 200 football fields will have been destroyed, much of it for soybean cultivation.

Brazil holds about 30 percent of the Earth’s remaining tropical rain forest. The Amazon Basin produces roughly 20 percent of the Earth’s oxygen, creates much of its own rainfall, and harbors many unknown species. The Brazilian rain forest is the world’s most biologically diverse habitat. Close to 20 percent of the Amazon rain forest has already been cut down.

Now, industrial-scale soybean producers are joining loggers and cattle ranchers, speeding up destruction and further fragmenting the great Brazilian wilderness. Between the years 2000 and 2005, Brazil lost more than 50,000 square miles of rain forest. A large portion of that was for soybean farming.

Soybean production in the Brazilian Amazon soared after heat-tolerant varieties were introduced in 1997. In just ten years, exports of soybeans grown in the Amazon Basin have reached 42 million tons a year. Total annual soybean production in Brazil is about 85 million tons. Brazil will soon surpass the United States as the world’s leader in soybean production.

At the current rate of clearing, scientists predict that 40 percent of the Amazon will be destroyed and a further 20 percent degraded within two decades. If that happens, the forest’s ecology will begin to unravel. Intact, the Amazon produces half its own rainfall through the moisture it releases into the atmosphere. Eliminate enough of that rain through clearing, and the remaining trees dry out and die. Currently trees are being wantonly burned to create open land for soybean cultivation. Consequently, Brazil has become one of the world’s largest emitters of greenhouse gases.

There are few paved roads into the Amazon. The most controversial is the 1,100 mile long BR-163 highway which runs straight into the heart of the Amazon Basin providing an alleyway for industrial-sized soybean operations to grab up millions of acres of land. Because of the thousands of tons of soy transported over this road it is nicknamed the “soy highway.”

The decimation of the Amazon is, for the most part, done legally. Even the governor of the state of Mato Gross, on the edge of the Amazon Basin is a part of it. Governor Blairo Maggi is the world’s largest single soybean producer, growing 350,000 acres. That’s equivalent to 547 square miles of Amazon rain forest that has been leveled for soybean production. He is just one of many industrial-sized soybean operations in the area. In 2005 Greenpeace awarded Maggi the Golden Chain Saw award for his role in leveling the rain forest.

Clearing the land for soybean production is only part of the problem. Soybean cultivation destroys habitat for wildlife including endangered or unknown species. It increases greenhouse gases, which are believed to contribute to global warming and disrupts the life of indigenous tribes who depend on the forest for food and shelter. Soybeans need large amounts of acid-neutralizing lime, as well as fertilizers, pesticides, and herbicides. All of which are creating an environmental hazard. Toxic chemicals contaminate the forest, poison rivers, and destroy wildlife. Indigenous Indian communities complain about poisoned water and dying fish.

The environmental destruction caused by soybean farming isn’t limited to the Amazon, it occurs throughout the world wherever soybeans are produced. That’s hundreds of thousands of acres of deforestation, over cultivation and destruction of the land, and billions of tons of toxic chemicals spewed into the environment year after year, contaminating our soils, water, and destroying wildlife, not to mention what it is doing to us. New genetically modified soy was specifically developed to withstand the toxins so farmers could spray even more pesticides on them without diminishing yields. Talk about destroying the environment, the soybean industry has to rank near the top of the offender’s list.

Now, let’s take a look at the palm oil industry. When you compare soy cultivation to that of palm, there is a huge difference.

Palm cultivation is perhaps, the world’s most environmentally friendly commercial crop. After oil palms reach maturity they are commercially productive for at least a quarter of a century. That means that once the trees are planted, the soil remains essentially undisturbed for decades. Unlike soy, were the ground is dug up and recultivated every year, year after year. The soil in a palm plantation remains essentially undisturbed. Native grasses and scrubs are allowed to repopulate the space between trees. The natural habitat returns, complete with wildlife. An oil palm plantation takes on the appearance of a rain forest, filled with vegetation.

Wild boar, monkeys, birds, and other wildlife are allowed to roam in and out of the plantations, just as they do in the wild. Chemical fertilizers and pesticides are rarely, if ever, used. Since the ground is continually covered with trees and growth, the soil is not eroded, maintaining the integrity of the environment from the tiniest soil organisms to the largest land animals. So a palm plantation blends into the environment without causing untold disruption.

Compare that with a soybean plantation where all trees and other vegetation are killed and removed. Only soybeans are allowed to grow. And what about wildlife? Animals would trample or eat the crops, so they are fenced out, shot, or poisoned.

Unlike soy and most other crops that produce once a year, oil palms produce fruit year round, so they are always in season. This allows for a high yield of fruit on comparatively little acreage. For this reason, the oil palm produces more oil per acre than any other vegetable source. For example, in one year on one acre of land a farmer can produce 18 gallons of corn oil, or 35 gallons of cottonseed oil, or 48 gallons of soybean oil. However, on the same amount of land you can produce 635 gallons of palm oil! No, that is not a misprint. You read that correctly, 635 gallons of palm oil compared to just 48 gallons of soybean oil.In terms of land use, you would need to plant 13 acres of soy or 35 acres of corn to produce an equal amount of oil from just one acre of palm.

So, soybean cultivation requires 13 times more land to produce the same amount of oil. And this land is stripped of all other vegetation, and continually plowed and replowed, and poisoned with pesticides. While oil palms are planted once and then the land is allowed to return mostly to its natural state without harming the environment.

More soybean oil is produced annually worldwide than any other oil. What that means is that millions of acres of land has and is being destroyed under soybean cultivation. More land, like that in the Amazon Basin, is being leveled and forests and wildlife habitat being destroyed to meet the increasing demand for soybean oil.

Replacing soybean oil with palm oil, is not only a healthier option, but would save countless acres of land from untold environmental damage. In the Amazon we have no idea how many rare species of plants and animals are becoming extinct in the name of corporate profit.

The Brazilian government acknowledged the lost 5,420 square miles of rain forest during 2006. This is an area more than twice the size as the entire state of Delaware! The good news is that the Brazilian Environment Ministry reported that the rate of Amazon destruction dropped 20 percent in 2007. Why the slowdown? You can thank the palm oil producers. Competition with palm oil has lowered the demand for soybean oil causing the soybean market to decline. With less of a demand for soybean oil, there is less incentive to clear the Amazon rain forest. The rising demand for palm oil (much of it as a replacement for hydrogenated soybean oil) has made a significant impact in slowing down the careless, yet legal, destruction of the Amazon.

Last year competition from palm oil saved 1,087 square miles of Amazon rain forest from being leveled for soybean cultivation. Some people might look at this and say, but places like Malaysia (the world’s biggest palm oil producer) also convert rain forest into farmland. However, in the past four years more Amazon rain forest in Brazil has been destroyed to make room for soybean cultivation than Malaysia has cleared in the past 100 years for palm oil production. Do the math.

When you compare palm oil to soybean, and in fact to any other oil crop, palm oil is by far the most environmentally friendly. There is no comparison. Hopefully, as demand for palm oil increases, the demand for soybean oil will decrease, saving even more of the Amazon rain forest, and the earth as a whole, from needless destruction.

Despite the massive destruction caused by the soybean industry, you never hear people crying out against the use of soybean oil. You don’t see the CSIP or the Friends of the Earth attacking the soybean industry for destroying the environment. Why is that? Why are the environmental and consumer advocate groups mysteriously quiet about soy, yet violently active against the palm oil industry? The answer is power, money, and influence. The soybean industry is very rich and powerful. They know how to manipulate the media and these special interest groups and use them as unknowing puppets. They feed them lies, half-truths, and misconceptions in order to con them and the public.

In the following months and years you will no doubt hear many graphic reports depicting how palm oil cultivation is destroying the earth, contributing to greenhouse gases, and driving animals into extinction. The truth is that palm oil cultivation has only a minor impact on the environment. Most of the cultivation is done in a very environmentally friendly manner. So don’t be fooled. The real danger is coming from the soybean industry. It took us over two decades to realize the harm the soybean industry caused to our health with the replacement of tropical oils with hydrogenated soybean oil. Let’s not make another mistake with the environment.

References
Severson, K. Clues on labels reveal hidden trans fats. The San Francisco Chronicle July 31, 2002.
Wallace, S. Last of the Amazon. National Geographic 2007;211:40-71.
Lehman, S. Brazil says Amazon deforestation is down. USA Today December, 7, 2007

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 Niño 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.

News Source:business.timesonline.co.uk

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.

GREEN GREEN GRASS OF HOME - PART 2

I just bought a new pair of walking shoe. It was written in an article of a local Chinese newspaper that one should change his shoes after walking for 800km. Since I had started my morning walk in the golf course of Segamat Country Club last December after returning from Medan, Indonesia, I suddenly realized that it’s time for me to change my shoes. The old pair, indeed, had already worn out.

There is a Chinese saying, “Walking up the hill is easy but walking down is difficult”. Well, I used to join the regular walkers, Dr. Lim & wife, Law Pak Yee and Tan Teck Pow, to walk up and down Tee No. 8 of the golf course. It’s good for the heart and after 2 rounds I started sweating. Initially, due to the pain in my right leg, I could not keep up the pace with them. So I used to trail behind them. At that time, I said to myself, “It’s ok. They have been walking for years and I just join them.”

Then I started counting my steps. I counted about 150 – 155 steps walking up but to my surprise, it took me about 170 -175 steps walking down the slope. In other words, my steps were shorter while walking down because of the whole body weight exerted on my knees. Automatically, I was walking on my heels as if I was holding back the brake to slow down avoiding a possible fall if I was not careful. No wonder walking up I could take bigger steps because there was no worry of a fall at all.

After walking for almost a year, I am able to walk together with them at the same pace. Normally, we walk up and down for half an hour, and then we will walk on the green, green grass along the fairway back to the parking lot of the club house. Of course, we will come back the following morning unless we go outstation or because of rain.

Difference between Focusing on Problems and Focusing on Results

Case 1

When NASA began the launch of astronauts into space, they found out that the pens wouldn't work at zero gravity (ink won't flow down to the writing surface). To solve this problem, it took them one decade and $12 million.
They developed a pen that worked at zero gravity, upside down, underwater, in practically any surface including crystal and in a temperature range from below freezing to over 300 degrees C.

And what did the Russians do…?? They used a pencil.


Case 2

One of the most memorable case studies on Japanese management was the case of the empty soapbox, which happened in one of Japan's biggest cosmetics companies. The company received a complaint that a consumer had bought a soapbox that was empty. Immediately the authorities isolated the problem to the assembly line, which transported all the packaged boxes of soap to the delivery department. For some reason, one soapbox went through the assembly line empty.

Management asked its engineers to solve the problem. Post-haste, the engineers worked hard to devise an X-ray machine with high-resolution monitors manned by two people to watch all the soapboxes that passed through the line to make sure they were not empty. No doubt, they worked hard and they worked fast but they spent a whoopee amount to do so.

But when a rank-and-file employee in a small company was posed with the same problem, he did not get into complications of X-rays, etc., but instead came out with another solution. He bought a strong industrial electric fan and pointed it at the assembly line. He switched the fan on, and as each soapbox passed the fan, it simply blew the empty boxes out of the line.


Something2Share:

I think this simple principle applies to Plantation Management.

Always look for simple solutions.

Devise the simplest possible solution that solves the problems.

Always focus on solutions; not on problems.

Do not focus on the wrong thing to find a solution to a problem. I always believe that we need to solve a problem on site and not beating around the bushes and coming out an Action Plan which is time consuming and costly to implement. In certain cases, somehow a decision was made to solve a problem with another problem and later ended up with too many problems.

For instance, there is shortage of harversters in one division and the harvesting interval has been prolonged. You try to shorten the harvesting interval by mobilising harvesters from other division to help out. However, there is no surplus of harvesters in that division. By doing so, you are putting the other division in trouble. The obvious solution is to get in more workers as per requirement.

Another problem is pruning backlog. You do not have enough harvesters to do the pruning and you want your harvesters to concentrate on harvesting only. When there are so many unpruned fronds, a harvester has to take longer time to cut a ripe bunch. When the harvesters find difficulty to earn wages through productivity, they may abscond from your plantation and you will end up with acute shortage of harvesters. There is no other way but go to find a special gang of workers to clear the pruning backlog even you have to pay more. Do not still think of saving expenditure while trying to solve an overdue problem.

Branding Malaysian Palm Oil

PALM oil is palm oil, right? As it is a commodity, should it matter who produces it or where it comes from? Is there such a thing as branding for a commodity? If you ask the Malaysian Palm Oil Council (MPOC), the answers would probably be “Not necessarily”, “Yes” and “Yes”.

MPOC chairman Datuk Lee Yeow Chor says the council aims to develop the branding and image of Malaysian palm oil as a strategy to differentiate the oil from other commodities in the global edible oils and fats market.

“We will emphasise the good quality backed by R&D and the fulfilment of sustainability criteria. We will be using publicity material to link Malaysia-produced palm oil to these positive attributes,” he adds.

This is has been done before with other agricultural commodities, and with lasting results, in some cases. One example is the longtime use of the Woolmark logo to help the marketing of wool products. Another is the Got Milk? advertising campaign in the United States, which features famous people sporting milk moustaches.

The Malaysian palm oil industry has always maintained that palm oil is a good product, but clearly, it needs to be promoted more strongly. Lee says this is not because the various stakeholders here have not put in the effort.

“It’s just that we need to be a bit more innovative in employing new strategies and using more financial resources in order to promote palm oil, whose worldwide revenue has expanded by more than four times in the last 10 years to RM65bil last year,” he adds.

“If you use as a gauge that a commercial enterprise typically spends 1% of its turnover on marketing, that would mean the industry spending RM650mil on marketing and promotions. Of course, we’re spending far less than that.”

The Malaysia Palm plan is among the marketing and promotional measures that the MPOC will undertake in the coming months to boost Malaysian palm oil’s market expansion.

These efforts are increasingly necessary following developments in recent years that have altered the industry landscape.

For one thing, the rising concern over climate change, deforestation and other environmental issues, has turned oil palm cultivation in Indonesia and Malaysia into a target for activists and politicians because the industry has been accused of contributing to the planet’s woes.

In addition, the surge in crude oil prices has pushed palm oil into the biofuel arena, thus adding another dimension to the dynamics of the edible oils market.

These changes meant that the palm oil players have to deal with new stakeholders and new perceptions. The international environmental non-government organisations (NGOs) are strident voices in the lobby against the opening of plantations, particularly in Borneo and Sumatra.

The overseas media have covered the NGOs’ campaigns and in many instances, have adopted editorial stances in support of the NGOs. This, in turn, has influenced and will continue to sway the public and politicians in matters such as energy policy and the consumption of products containing palm oil.

Healing the damage caused by naysayers is nothing new to the Malaysian palm oil industry. In fact, the MPOC was formed in the early 1990s to thwart a smear campaign in the US, driven by soybean growers, that portrayed palm oil as bad for the heart.

The battle is different this time, and it calls for tactics not normally employed in Malaysia. The MPOC intends to do its own lobbying.

“It is found to be effective in certain countries. So we will do that, and in doing so, we will not just rely on our internal resources. We will have to outsource more and employ specialists in these areas that are new to us,” Lee explains.

“We believe there is a lot of misinformation out there about palm oil, which has not been corrected effectively. We believe palm oil has a credible story to tell. Whatever lobbying that will be done will be fact-based and well-researched, using various channels effectively.”

At the same time, the council will rely more on direct engagement with stakeholders. It has travelled to Europe to meet the NGOs, and it has organised seminars and brainstorming sessions with the NGOs and the media. It has also invited stakeholders to visit plantations in Malaysia.

Lee points out, “You’d be surprised that a lot of the NGOs have not seen what’s happening here. They make a lot of allegations against palm oil, and a lot of it is hearsay.

“That’s why we have to sponsor good research. We have done this in the past, but now, we want to do it through respected organisations in the US and Europe, so that there’s a credible message and it goes to the right forums.”

The idea is to commission more market-oriented studies on nutrition, science and the environment that are more accessible and easier to digest.

Lee acknowledges that it likely that some of the smaller plantation players and smallholders do not employ sustainable practices when clearing land and cultivating oil palm.

He argues, “In this kind of agricultural industry involving so many players, there are bound to be some black sheep. But we should not discredit the whole industry when the majority observe good agricultural practices.”

Lee, who is IOI Corp Bhd executive director, was appointed MPOC chairman earlier this year, replacing Datuk Seri Lee Oi Hian of Kuala Lumpur Kepong Bhd, who had stepped down after chairing the council’s board of trustees for 13 years.

The current MPOC chairman believes that the council should be “a Malaysian-based global organisation”.

“It has to be seen to be present and effective in all the countries that import palm oil. It has to be interacting with stakeholders at various levels in each of those countries,” he explains.

He adds that there is room to diversify palm oil’s export base, considering that the top five importers of Malaysian palm oil – China, Europe, Pakistan, India and the US – account for slightly more than 65% of the total export.

Something2Share:

It's, undoubtedly, a good move to market Malaysian Palm Oil worldwide.

As far as meeting the NGOs, let learn from Sun Tzu, who once said,“Know yourself, know your enemy. One hundred battles, one hundred victories.”

Dry spell may lift CPO above RM2,500

Phenomenon will result in lower production and supply shortage

A looming El Nino phenomenon, which brings in dry spells, can result in lower crude palm oil (CPO) production towards year-end and help restore prices to stay above RM2,500 per tonne, say analysts.

A mild El Nino is believed to have taken place over the past one month in South-East Asia and a full-blown effect could be felt by November.

Analysts said CPO prices on average would appreciate by 45% to 62% year-on-year based on the previous El Nino events.

The El Nino, which occurs irregularly once every two to seven years, would normally last 12 to 18 months each time.

Every few years, an unusually warm current flows off the western coast of South America. Its appearance after Christmas lead sailors in Peru to christian it El Nino, the Christ-child in Spanish.

Regions prone to El Nino include South-East Asia, southern Africa and northern Australia with prolonged dry periods while heavy rain falls, sometimes with flooding, in Peru and Ecuador.

A foreign-based brokerage, in its latest plantation report, said: “If El Nino hits as expected in November, this will be a bonus for (oil palm) planters.”

It said two potential CPO price catalysts in the final quarter of 2009 would be El Nino and production shortfall in both palm oil and soyoil.

According to Malaysian Palm Oil Board statistics, local CPO production had been below market expectations for the past two months.

For May, CPO production was up slightly at 1.39 million tonnes from 1.29 million tonnes a month earlier.

Malaysian Palm Oil Estate Owners president Boon Weng Siew said a strengthening El Nino could affect the growth of oil palm fresh fruit bunches (FFB).

“Due to the dry weather, the size of the palm fruits will be smaller and lesser in weightage. Smaller fruits will translate into lesser oil being extracted,” he told StarBiz.

He added that past experiences had shown that FFB production turned 10% to 15% lower in the event of an El Nino.

The La Nina’s (opposite of El Nino) reign last year, which brought heavy rainfall, was favoured for FFB development and higher yields in palm oil.

Boon said the full effect of the El Nino on FFB and CPO yields in local oil palm plantations could be felt within 18 months.

“This would mean CPO prices will likely trade above RM2,500 and even touch RM3,000 per tonne by 2010 on fear of shortage in supply linked to the El Nino impact,” he added.

It is expected that production from Indonesia and Malaysia, which control over 80% of the world’s palm oil production, could be affected by the El Nino phenomenon.

Last month, Malaysia – via Agriculture and Agro-Based Industry Ministry – announced plans to set up a committee to study the impact of El Nino on the agriculture industry.

Something2Share:

Obviously, lower potential yield of FFB is expected as a consequence of hot and dry weather caused by El Nino phenomenon. There will be lesser Total Bunch Number and lighter Average Bunch Weight, the 2 important factors contributing to Yield per Hectare.

CPO price trading between RM 2,500 - 3,000 corresponding to lower crop production is predictable based on the 'Theory of Supply and Demand".