EU deferment allows adjustment on palm oil production standards

The country should also focus on improving the productivity of its cultivated land area, says an expert


THE European Union’s (EU) decision to defer the ban on palm biofuel to 2030 instead of 2021 has given Malaysia 12 years to buck up on a more sustainable approach to harvest the commodity.

Industry consultant MR Chandran (picture) said it is high time for the local palm oil industry players to work towards delinking the vegetable oil — one of the country’s biggest exports worth US$20 billion (RM80.6 billion) a year — with deforestation.

Chandran said the EU’s compromise to gradually eliminate palm oil in transport fuel by 2030 has given the country a gap to “get our act together”.

He suggested the government to impose a moratorium on further landbank expansion in the country as one of its first orders of business.

He said the move would send a clear signal to the international community on Malaysia’s commitment to sustainable palm oil.

“It would send a good message to the people out there that the new government is putting a stop to expansion, but is improving productivity of its plantation,” Chandran told The Malaysian Reserve.

Malaysia is the world’s second-largest producer of the edible oil after Indonesia, with the two countries accounting for nearly 90% of global output. Exports of Malaysian palm oil to the EU alone stood at two million tonnes last year, out of the total 16.6 million tonnes it shipped.

The latest available data indicate that Malaysia has used over 5.7 million ha of land for oil palm cultivation. The figure is half of Indonesia’s existing area of oil palm plantation of 12 million ha.

However, unlike its neighbour cum competitor, Malaysia does not have a moratorium on land expansion.

Jakarta has so far made three extensions to its forest moratorium introduced in 2011, which have effectively reduced the rate of land expansion in the country.

A spokesperson of Indian conglomerate Godrej International Ltd reportedly said the expansion across Indonesian plantations has slowed to 150,000ha per year, from 500,000ha per year.

Chandran said, in addition to the moratorium, the country should also focus on improving the productivity of its cultivated land area and increase its national average from four tonnes of crude palm oil (CPO) per ha to about 4.8 tonnes of CPO per ha.

“We have been stagnating between 3.6 tonnes and 4.1 tonnes in the last 15 years when we have the potential to go to seven tonnes per ha. With the new hybrid, it is possible to reach that figure.

“But even if we increase the national average by 20% from four tonnes to 4.8 tonnes per ha, it is good enough. We can reduce production costs from RM1,800-RM1,900 to RM1,600-RM1,700 per tonne, and that would send very good signals to anti-palm oil lobbyists,” he said.

Chandran said the maturity of the industry in the country has given it the technology and research to differentiate Malaysian palm oil with others.

“At the moment, palm oil is in the spotlight for all the wrong reasons. Some 90% of our production is exported and this is critical to take note of. We need to do the right things and rev up our marketing skills,” he added.