Certified palm oil could trade in higher prices

The MSPO certification processes along the palm oil supply chain could increase operation costs

by SHAHEERA AZNAM SHAH

INDUSTRY players could see an increase in trading prices for Malaysian Sustainable Palm Oil (MSPO)-certified palm oil as the government sets a mandatory standard beginning 2020.

The Malaysian Palm Oil Board (MPOB) DG Dr Ahmad Parveez Ghulam Kadir (picture) said the MSPO certification processes along the palm oil supply chain could increase operation costs in order to churn out competitive products.

“The government has yet to say whether prices can increase along the supply chain, but there are millers who have asked for premium prices.

“It is a possibility that the millers or producers who have been certified will start charging extra to cover for the certification fees,” he said at the Palm Oil Familiarisation Programme in Putrajaya yesterday.

He added that the demand for certified palm oil has been pushing the industry players along the supply chain to acquire the MSPO certification.

“I think that will happen next year when we start making MSPO mandatory. There will be price differences between certified and uncertified palm oil as each player in the supply chain will push others to get certified in order to get a competitive pricing.

“Right now, the millers can also accept uncertified fresh fruit bunches (FFB). When all the players down the supply chain are required to process only certified products, then we can see the price increase all at once,” he said.

According to the MPOB data, about 58.5% of the total oil palm plantations in Malaysia were certified with MSPO as at October this year.

Presently, 66.7% or 2.79 million ha of the total oil palm estates owned by companies have been certified.

Meanwhile, about 80% of the land managed by organised smallholders — growers who are supervised under the Federal Land Development Authority and Felcra Bhd — and 8.4% of independent smallholders have been certified.

Last month, Primary Industries Minister Teresa Kok said the government will revoke operating licences of oil palm growers who fail to comply with MSPO beginning Jan 1, 2020.

She said the licence revocation is subjected to growers who operate plantations with a land area of 40ha and above, including the non-certified palm oil mills.

The MPOB has issued letters and notices to industry players who are not complying with the standards.

The government previously aimed to achieve 70% of the total oil palm plantation in the country to receive MSPO certification.

Separately, Ahmad Parveez said the government has identified several African countries as potential new markets for export of the Malaysian palm oil.

“We have to continuously strengthen our presence in the existing market, particularly in India and China. However, we have seen potential in markets in the African region that Malaysia could tap into. It is possible that the region will be our mission next year in promoting the commodity,” he said.