The push by developed economies against palm oil – the most produced, consumed and traded edible oil – in favor of protecting the soybean (the second most-produced edible oil) trade is well-known.
The European Union (EU) Parliament has voted for palm oil-based biofuels to be banned entirely by 2021. In contrast, other crop-based biofuels will be capped at 7% and enjoy a gradual reduction to 3.8% by 2030.
Such a ban is linked to the EU’s belief that oil palm cultivation is responsible for deforestation. Another trade ban that has often affected Malaysian palm oil exports is the US Customs and Border Protection (CBP) curtailing palm oil imports into the world’s largest economy based on forced labor allegations.
In EU’s case, palm oil exports to the continent face numerous hurdles even with Asian palm oil exporters voluntarily abiding by the sustainable certification ruling under the Roundtable on Sustainable Palm Oil (RSPO) scheme.
In fact, putting in place mandatory sustainability requirements is not an issue for exporters, given that sustainable volumes will receive a market price premium.
However, the EU’s failure or hesitance in recognizing the national sustainability standards in Malaysia (the MSPO or Malaysian Sustainable Palm Oil standard) and Indonesia (the ISPO or Indonesian Sustainable Palm Oil standard) is a severe worry for both the top two global palm oil producers.
This is ironic, considering Europe only represents 6.4% of the global palm oil market. Yet, the cartel-like RSPO endeavors to apply pressure from consumers in affluent Western markets on Asian palm oil producers.
To recap, Indonesia was the first to initiate its national certification scheme (the ISPO) in 2011, with Malaysia following suit four years later (with the MSPO). Since then, both countries have been campaigning globally to win recognition for their standards and the right to define sustainable palm oil on their own terms.
hectares of agricultural land.
As highlighted by Gambian Centre for Sustainable Palm Oil Studies (CSPO) member Muhammed Magassy, it should come as no surprise if significant palm oil producers (like Malaysia and Indonesia) regard the EU’s anti-palm oil stance as “crop apartheid” given that such behavior reanimates the exploitative, colonial origins of the industry.
While the EU biofuel ban is in place, it simultaneously evokes subtle protectionism by exempting European oilseed products such as rapeseed and sunflower, which require more land, water and fertilizers than palm oil, from any economic penalty.
“We in Africa know this too well. The EU’s Common Agricultural Policy (CAP) provides domestic farmers €42 billion (RM196.2 billion) in annual subsidies, hence strengthening their ability to export at artificially low prices to the developing world,” argued Muhammed Magassy in “Green Trade War on Palm Oil” published by the London-based The Parliament e-magazine.
“This gives European producers an unfair advantage in markets such as Africa, bankrupting local farmers.”
Imagine such biases are allowed to prevail even though palm oil boasts numerous health benefits. This has led to the Malaysian Palm Oil Council (MPOC) unveiling the “Malaysian Palm Oil Full of Goodness” campaign to showcase the country’s palm oil industry’s sustainable initiatives and management.
Denial of entry is already fuelling deep concerns among global industry players concerned that such a ruling may influence other major export destinations to follow suit.
Of late, there has been a resurgence in anti-palm oil campaigns — even at the school level — by associating the emergence of oil palm plantations with the disappearance of orangutans.
As mentioned earlier, such a stigma surfaces even though there is legislation to protect and prohibit the expansion of oil palm cultivation under existing conservation programs. It just seems that no matter how many preventive measures are put in place, they are never enough.
As much as Malaysia and neighboring Indonesia, which are the world’s two largest palm oil producers, harbor no intention of making enemies, it is obviously high time for the palm oil industry to take a more proactive and aggressive stance to dispel baseless claims by powerful competitors who are out there to champion other types of edible vegetable oils.
It is time for all concerned certification bodies to come forward to defend palm oil, dispelling all the allegations.
Slim chance or otherwise, Malaysia and Indonesia must proactively pursue their legal recourse filed with the World Trade Organization (WTO) against the EU’s restrictions on palm oil biodiesel.
Truth must be told
FGV Holdings Bhd’s group CEO Nazrul Izam Mansor had highlighted at the Future-Proofed Palm Oil Summit (FPPO 2021) in November last year that as a global agribusiness and food producer, it is strongly committed to environmental, social and governance (ESG) considerations in all its undertakings.
This is clearly embedded in the group’s sustainability policy where FGV has adopted the “no deforestation, no planting on peat and no exploitation” commitment.
In its quest to conserve biodiversity and wildlife, the group has embarked on a new three-year initiative to protect and enhance high conservation value and high carbon stock areas within the vicinity of its plantations by planting fast-growing indigenous or native tree species and wild fruit trees.
“Wildlife protection and human-wildlife conflict management remain a high priority for FGV. One of our conservation projects involves the rescue, rehabilitation and release of injured or displaced Malayan sun bears,” he said in a special address at FPPO 2021.
“While this project is ongoing, we have expanded our protection of the rare, endangered and threatened species programme to include pygmy elephants, gibbons and pangolins.”
Regarding the social component, FGV has been focusing on efforts in the past several years towards ensuring compliance with human rights and labor standards.
These efforts have been intensified since early 2019, especially with our affiliation to the Fair Labor Association (FLA), which is a long-term program to improve structures and systems for the enhancement of FGV’s labor practices.
Even then, it is worth noticing that FGV was slapped with a CBP Withhold Release Order (WRO) in September last year on allegations of forced labor.
Nevertheless, FGV has appointed independent auditing firm Elevate Ltd to expedite the auditing process which will eventually pave the way for the lifting of the WRO.
FGV is not alone in facing such a quandary as another Malaysian palm oil giant, Sime Darby Plantation Bhd (SDP), too, has not been spared WRO action.
The world’s largest producer of certified sustainable palm oil (CSPO) is expected to deliver its impact report submission to the CBP by end-April. This will go towards the lifting of the WRO imposed on the company since December 2020.
Interestingly, SDP has recently revealed that it is transforming all its 33 Malaysian palm oil mills into certified food safety facilities by end-2023, after which the same standards will be rolled out across the group’s operations in Indonesia, Papua New Guinea and the Solomon Islands.
On my part, I am seeking meetings with the CBP and the EU by July this year to set the record straight on forced labor allegations and once and for all address the fallout from WROs issued by the CPB to FGV Holdings and SDP.
Also, Malaysia will be represented at the dispute proceeding on the EU’s alleged discrimination against the national palm oil industry from May 8 to 18 for us to provide our side of the story on the matter.
I call on all Malaysians to work together with us to address the anti-palm oil propaganda by Western countries, which is clearly aimed at bringing down our country’s palm oil industry.
I will ensure we put up an “aggressive” fight against these foreign pressures and provide them with all the relevant evidence.
We will show them that Malaysia is not a nation to be fooled around with. By Zuraida Kamaruddin
(*) Zuraida Kamaruddin is Malaysia’s plantation industries and commodities minister.