Symposium on Sustainable Development London May 18, 2006

Transcription

1 Symposium on Sustainable Development London May 18, 2006 Sustainable Palm Oil Production in Malaysia Dr Yusof Basiron Chief Executive Officer Malaysian Palm Oil Council Malaysian Palm Oil Council

2 A top level team of experts was assembled by the Malaysian Palm Oil Council (MPOC) to descend on London last week (May 19th, 2006) for a symposium on Sustainable Resource Development. This was in response to adverse but unsubstantiated statements published in various London-based print-media. The misinformation was generated by NGOs who have in the past claimed that the destruction of rainforests in Malaysia is due to the expansion of oil palm and such activities allegedly lead to endangering the existence of some species of flora and fauna. The symposium attracted participation from a wide spectrum of delegates representing regulators and government agencies, NGOs and environmentalists, food processors, manufacturers and supermarket chains in the UK. Given Malaysia s position as the word s leading palm-oil producer, it proved to be an eye opener to the audience when facts were substantiated regarding oil palm s sustainability. Even NGOs who had been vocal in the past acknowledged that their efforts were not specifically targeted at Malaysia whose overall palm oil polices were more environment-friendly than other palm oil producers.

3 The best planned sustainable practices are no more than wishful thinking if they cannot be translated into good agriculture practices. Having spearheaded extensive research and development in oil palm cultivation, Malaysia, currently the world s largest producer and exporter, has long been an advocate of sustainable farming practices, maintaining a balance between commercial and economic needs and preservation of the environment. Indeed, Malaysian legislations dating back to the 1960s were already in place to regulate the development of the industry including the Protection of Wildlife Act These legislations coincided with the development of the palm oil industry in Malaysia, which did not witness the initial surge in expansion until the 1980s. Thus, this guaranteed that sustainable development of the Malaysian palm oil industry was actually legislated by the numerous laws of the country. Unfortunately, the current opponents of the industry and the NGOs who claim to portray the flag of sustainability have failed to take note of these check & balance that was already mandated by the country s laws and regulations.

4 Legislations Regulating The Industry 1) Land Acquisition Act ) Land Conservation Act 1960 revised in ) National Land Code ) Protection of Wildlife Act ) Environmental Quality Act 1974 (Environmental Quality) (Prescribed Premises) (Crude Palm Oil) Regulation ) Environmental Quality (Clean Air) Regulation ) Labor Law 8) Workers Minimum Standard of Housing & Amenities Act ) Occupational Safety & Health Act ) Pesticides Act 1974 (Pesticides Registration) Rules ) Pesticides (Licensing for Sale & Storage) Rules ) Pesticides (Labeling) Regulations ) Factories & Machinery (Noise Exposure) Regulations ) Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987

5 Oil Palm Expansion in Malaysia from 1950 to % of the total land area of Malaysia (32.85 mil ha)

6 The accusations on non-sustainability and loss of forest cover do not apply to palm oil when compared to agricultural practices in the UK and the percentage of Malaysian land devoted to forestry, agriculture and oil palm planted. Forests including some of the world s oldest virgin rainforests, account for more than 59% of the total land mass in the country. Despite Malaysia s emergence as the world s largest producer and exporter of palm oil, less than 19% of the country s total land mass of about 32 million hectares has been brought under various agricultural crops, of which two thirds or 4 million hectares are under oil palm plantations. If one takes into account overall green cover provided by untouched forests and planted agriculture areas, a stunning 76% of the total land mass can be counted upon. This is far greater than the green cover that most developed economies around the world could boast of. Despite these impressive comparisons, it is unfortunate that the loudest noise is being made by those from nations that have long devastated their own green cover and are actively contributing to global warming by emitting various pollutants from their industries and wasteful lifestyles.

7 Total Forest and Tree Cover in Malaysia, 2004 TYPES MILLION HA % MALAYSIA Forest Oil Palm Rubber Cocoa & Coconut Total Forest & Tree Cover Other Land Use (housing, infrastructure, agriculture, etc) Total

8 Changes in Land Use of Selected Tree Crops in Malaysia, (mil ha) Rubber Cocoa Total Crop Oil Palm Coconut , Collectively, other agriculture crops have lost mil hectares, which were mainly converted to oil palm, Source: MPOB, MRB, Agriculture Department, MCB

9 Managing hunger among the world s growing population has emerged as a major challenge for all concerned including the FAO and WHO. Fats and oils are macro nutrients that must be provided in sufficient quantities and at affordable prices to ensure a healthy diet, even among the poorest of the human population. After all, fat is a concentrated form of energy which is recommended at the minimum level of at least 20% calories. Unfortunately this target is not being readily met in the poorer economies of the world. The challenge to provide a suitable and sustainable edible oil supply is being met by the palm oil industry. It is in fact difficult to imagine the global commodities markets that are not adequately supplied by palm oil. With world population projected to grow from 6.5 billion in 2005 to 8.0 billion by the year 2028, the demands on all food commodities are expected to put a major strain on global land resources.

10 It is in this context the oil palm shows most promise as a sustainable crop. The oil palm has already been demonstrated to be the most efficient and biologically superior oil bearing crop compared to all other oilseed crops in terms of land utilization efficiency and productivity. As demonstrated below, average oil yields from oil palm are 3.66 MT/ha/year while other oilseed crops pale in comparison (eg. Soya, 0.36 MT/ha/year; rapeseed, 0.60 MT/ha/year; sunflower seed 0.46 MT/ha/year). As a result of this superior oil yield, it requires only 9.2 million hectares of agricultural land devoted to oil palm to produce 31.8% of the global fats and oils output whereas for a similar output, soybean cultivation required million hectares. Thus, if the target is to feed the growing world population and better utilize available land for cultivation, it makes good sense to look at palm oil as a sustainable commodity. Although these quantifiers have assisted Malaysia in evolving as the world s largest producer and exporter of palm oil, further projected developments in the plantation sector are being closely scrutinized to ensure that they adhere to international environmental standards. In addition, research strategies have focused on improving oil palm yields and it is projected that yields up to 6.0 MT/ha/year could be made a reality within the next decade.

11 Oil Palm VS Oil Seed Crops Malaysia as % of total vegetable oils and fats exported worldwide, 2005 Malaysia accounts for 29% of global oils and fats trade India 1% Argentina 13% Others 20% Malaysia 29% Brazil 6% USA 5% Indonesia 23% China 0% EU 3% Source: Oil World With a population of only 26 million, domestic consumption of vegetable oils is relatively low in Malaysia. Therefore, 86% of total palm oil produced in Malaysia is exported. As a result, Malaysia accounts for 29% of total vegetable oils and fats exported globally.

12 With only 0.4% of the world s population, Malaysia produces 11% of the global vegetable oils and supplies 29% of export trade in oils and fats. This is carried out on <2% (4 million hectares) of the total area (216 million hectares) under global oilseeds cultivation. Yet, the 4 million hectares released approximately 85 million tones of oxygen through photosynthesis and related activities whereas the entire agriculture acreage in the United Kingdom (17 million hectares) generated only 43.5 million tones of oxygen or half that of the Malaysian oil palm cultivation. Carbon dioxide levels are already at their upper limits of acceptability in the Western Hemisphere due to the use of more fossil fuel and the lack of adequate green cover. Carbon dioxide absorption / sequestering were similarly under oil palm cultivation, 117 tones for oil palm versus 60 tonnes for the vast area of 17 million hectares of agricultural crops of the UK. It therefore comes as no surprise that the oil palm is unsurpassed in its ability to generate oxygen and effectively absorb carbon dioxide for the benefit of the world population.

13 Palm Oil - A Malaysian Sustainable Achievement Year 2005 Market Share Production Export/Trade (mil tonnes) (mil tonnes) 1. Malaysian Palm Oil World Palm Oil World Oils & Fats < 13% of Malaysia s total land bank (33 million ha) is covered with oil palm With only 0.4% of the world s population, Malaysia produces 11% of the global vegetable oils and supplies 29% of export trade in oils and fats. This is carried out on < 2% of the total area (216 mil ha) of oilseeds.

14 Comparison of UK s Agriculture and Malaysian Oil Palm Plantation, 2004 Country Utilized Agricultural Area (mil ha) Industry Output (EURO) Average Output per hectare (EURO/ha) CO 2 absorbed (mil tonne) O 2 released (mil tonne) United Kingdom Agriculture bil 1, Malaysian Oil Palm Plantation bil 1, Source: European Commission, FAO, UNSO, MPOB

15 According to FAO data, the UK has less than 12 % of land under forest, most of it has been converted to agriculture. In comparison, % of land has remained as rainforests in Malaysia. The agricultural land in UK makes up 70 % of the total land area compared to less than 19 % for Malaysia. Oil palm plantations represent two thirds of the agricultural land. This has in fact not led to reduced biodiversity and loss of fauna and flora under oil palm cultivation as generally claimed by several NGOs.

16 In 2004, the UK received Euro 4.06 billion for agricultural subsidy to support its agriculture sector, which earned Euro billion per year. This produced an earning of Euro 1,448 per hectare, of which Euro 238 was the subsidy component, leaving net revenue of Euro 1,210 per hectare per year. Meanwhile during the same year, the Malaysian palm oil industry earned Euro 6.53 billion per year or Euro 1,687 per hectare of revenue yearly, which exceeded the UK agricultural unit earnings. If the purchasing power parity is applied to the revenue, the Malaysian palm oil industry is far superior in terms of the sustainability indicators, when compared to UK agriculture. Without the subsidy, the EU agriculture would be totally unsustainable. With the subsidy, they contribute to environmental damage, due to the over-use of fertilizers, pesticides, and the inexorable destruction and removal of their forests. Compared to the other major annual oilseed crops planted in the US and the EU, it is well known that per hectare of oil palm produces 10 times more oil with fewer resulting emissions and pollutants. Combining such natural efficiency and a productive lifespan of years ensures the world a sustainable and steady supply of this essential food commodity that feeds millions around the globe. This makes Malaysian oil palm cultivation a comparatively superior and sustainable crop compared to any current large scale agriculture in the tropics or temperate countries.

17 Energy Oil palm is an energy efficient crop that requires less energy input to produce 1 tonne of oil Energy, gj/ha Oil Palm Soybean Rapeseed Source: United Plantations Berhad 50 CROP The energy expressed by the ratio of energy output to input is wider for Oil Palm than any other commercially grown oil crops. 70 Input Output The Oil Palm s cultivation and processing requires lower inputs of agrochemicals (pesticides), fertilizers and fossil fuels to produce one tonne of oil, with fewer resulting emissions and pollutants

18 If forest conservation for environment sustainability is truly the required intention, one can campaign for agricultural land to be reverted back to forest and the EU and UK agriculture is the most appropriate target for reversion, as they are abusing their land by planting rapeseed for biofuel when this could be converted to forest. The energy balance for rapeseed biofuel is negative, meaning that they spend more energy to generate one unit of biofuel energy besides contributing to more carbon dioxide emission. It should be ideal for the EU or UK to follow the standard set by Malaysia to have 50 % of their land under forest cover by converting back their agricultural land into forest for generating conditions of higher conservation and biodiversity by reducing their agriculture land use from 70 % down to less than 20 % as practiced by Malaysia.

19 Roundtable on Sustainable Palm Oil (RSPO) Roundtable on Sustainable Palm Oil (RSPO) Stakeholders in the supply chain including NGOs to address the production, procurement and consumption of sustainable palm oil

20 The RSPO whose primary objective is to promote the growth and use of sustainable palm oil through co-operation within the supply chain and open dialogue with its stakeholders is a way of explaining how superior the Malaysian palm oil sector is in terms of sustainability. Currently Malaysia would have no problem implementing such requirements when the certification is eventually ready. It is a concept to challenge other oilseeds and food crop producers to evolve their own Sustainability Round Table, which will be interesting to see as it is a big effort for them to achieve sustainable standards of production which has already been achieved in Malaysia. The following are examples of various practices that are routine within the Malaysian palm oil industry to underscore its commitment towards sustainable palm oil

21 Soil Conservation Practices Planting of leguminous crops as a cover to mitigate and minimize soil erosion

22 Soil Health Measures taken during planting a) EIA Report b) Terracing for slopes greater than 6-8 c) Leguminous cover crops d) Livestock integration to maximise use of land

23 Environmental Replanting Shredding Mulching 2 months after replanting 6 months after replanting High-yielding oil palms

24 Recycling Nutrients Empty fruit bunches, old fronds and palm oil mill effluent are recycled to return nutrients to the soil thus; saving on the use of inorganic fertilizers

25 Pest Management Integrated pest management is increasingly practised in the plantations

26 Waste Management Waste not, want not is the goal of the industry Empty Fruit Bunches (EFB) are now increasingly used for mulching oil palms The fibre from the EFBs after separation can be used for pulp & paper and production of panel products Palm fibre Paper

27 Unfortunately NGOs have tried to portray palm oil negatively by asking consumers to avoid products which come from unsustainable sources. Judging by the facts one can say that this unfounded accusations have been wrongly targeted at Malaysia It would probably be far more logical for those pointing a finger at Malaysia to ask their consumers to boycott their own farm products as their sustainability is far below that of Malaysian palm oil. To further underscore Malaysia s seriousness in its implementation of sustainability we are implementing the Malaysian Palm Oil Wildlife Conservation Fund with an anticipated outlay of RM20 million. The NGOs should be alerted that they have no basis for singling out palm oil when their very own agriculture is unsustainable. If forest conservation for environment sustainability is truly the required intention, one can campaign for agricultural land to be reverted to forest. The EU and UK agriculture is the most appropriate target for reversion, as more land is planted with rapeseed for biofuel while this could be easily converted to forest.

28 Malaysian Palm Oil Wildlife Conservation Fund Initial contribution of RM 10 million from the industry, government agencies and the public Operated as matching grant basis To achieve RM 20 million target Aimed at enhancing conservation of wildlife and biodiversity efforts Beneficial to all palm oil stakeholders worldwide In conclusion we wish to assert our commitment to the following: Malaysian palm oil is already produced under sustainable practices Those needing assurances on sustainability should import Malaysian palm oil The Malaysian palm oil industry is open to collaboration efforts to improve its already high degree of sustainability Misinformed NGO s and negative media campaign against palm oil should study the true underlying facts before accusing an industry that is well entrenched in its various sustainable practices while feeding the global population. Tan Sri Datuk Dr Yusof Basiron Chief Executive Officer Malaysian Palm Oil Council (MPOC) Malaysian Palm Oil Council