Millers leading the green way

KUALA KUBU BARU: PALM oil millers in Malaysia are leading the way in "greening" the palm oil supply chain by capturing dirty greenhouse gas before it enters the atmosphere and turning it into clean energy.

"A total of 79 palm oil mills across Malaysia have installed biogas plants to capture greenhouse gas," said Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas. 

“If all mills capture and use this biogas, up to 20 million tonnes of carbon dioxide equivalent of greenhouse gas emissions can be mitigated per year," he said.

This, in terms of carbon dioxide emissions, is equivalent to about removing four million cars off the road," he told reporters after launching a bio-Compressed Natural Gas (bio-CNG), the first in the world to source from oil palm waste, here yesterday.

These waste-to-energy plants helps lower greenhouse gas emissions. Planters get to reduce their reliance on fossil fuels, too.

Uggah said the government mandates eco-friendly projects by the palm oil industry in championing Malaysia's commitments to reduce carbon emissions by up to 40 per cent in 2020. 

The bio-CNG Commercial Plant, located at Felda Sg Tengi estate, is a joint project with Malaysian Palm Oil Board, Felda Palm Industries Sdn Bhd and Sime Darby Offshore Engineering Sdn Bhd. 

The plant is able to process 600 cubic metre of raw biogas generated from palm oil mill effluent lagoons.

These are then channelled into closed biogas digesters to produce bio-CNG as an alternative to fossil-based fuels such as liquefied petroleum gas and medium fuel oil.

It must be highlighted that bio-CNG is not able to substitute piped natural gas which is currently sold at an average subsidized rate of RM21.80 per mmBtu. (British thermal units parts per million).

Felda Global Ventures Holdings Bhd chairman Tan Sri Mohd Isa Abdul Samad said the group has, so far, set up 25 biogas plants throughout its estates in Malaysia.

"By 2020, we aim to push this figure to 51. As the world’s largest crude palm oil producer, we're committed to reducing our carbon footprint and improving our environmental friendly practices for the benefit of our community," Isa added.

Sime Darby Bhd is partnering Gas Malaysia Bhd on a 51:49 basis to distribute bio-CNG, a new and growing business. This initiative to supply bio-CNG to new customers will be driven by Sime Darby Offshore Engineering Sdn Bhd.

IOI Corp: CPO prices to firm up next quarter

PUTRAJAYA: IOI Corp Bhd has cut its fresh fruit bunches (FFB) growth target to three per cent amounting to 3.6 million tonnes for the current year ending June 2016 due to ongoing drought and hazy weather.

The group had initially forecast eight per cent growth to 3.8 million tonnes.

IOI Corp chief executive officer Datuk Lee Yeow Chor said the current hazy condition in Malaysia and Indonesia is very likely to curb FFB production.

"With dry weather and the haze leading to less sunlight hours for the trees, fruit yield across Malaysia and Indonesia could drop six months from now," he told reporters after the company's shareholders' meeting, here, yesterday.

However, Lee assured that it will not have a negative impact on the company's profit as low production will likely boost crude palm oil (CPO) prices.

Weather experts have issued several reports stating the ongoing El Nino weather phenomenon can have a significant impact on oil palm FFB output, and, therefore, counter the current weak palm oil price sentiment.

In view of this, Lee expects palm oil prices, now trading around RM2,300 per tonne for the past month, to firm up on the back of seasonal low output.

"There is a good chance for CPO prices to trade up further by the beginning of next year," he said.

On the government's move to raise the minimum wage beginning July next year, Lee said for plantation companies the 11-15 per cent increment is not as steep as the last round of major wage hike for Malaysian estate workers of RM200 per month that occurred from 2011 to 2013.

He said most of IOI estate workers are earning well above the minimum wage threshold. "Out of 25,000 of our staff at the estates, around 15 per cent will be impacted by the 2016 Budget announcement," he said.

When asked if dividend payout for the current year could match last year's nine sen a share, Lee replied, "if CPO prices were to go on an uptrend, we would be able to perform better and then pay out more dividends".

Martin Yan is a big supporter of palm oil

This is written by my colleague Amir Hisyam Rasid.

KUALA LUMPUR: MARTIN Yan, a Chinese-born Hong Kong-American chef and food writer, is known around the world for his cooking shows and cookbooks. 

This year, he made another TV appearance with his latest cooking show, “Martin Yan: Taste of Malaysia”, which premiered on ntv7 and 8TV stations last month. 

The show focuses on Malaysia and its food, prepared mostly with palm oil. Besides Malaysia, the programme is also slotted for broadcast in the United States and China next year. 

Yan has been a great fan of palm oil. “Palm oil is trans-fat free and cholesterol-free. The oil, which is a great source of vitamin E, can also be used in medication and beauty products besides cooking,” he said. 

He added that Malaysian palm oil is GMO-free. On this aspect, he compared Malaysian palm oil with corn, milk and other protein products. 

Many experts are questioning the use of GMO in food. “Other benefits of palm oil include the fact that it has antioxidant vitamin E tocotrienols and carotenoids, as well as an excellent source of energy,” said Yan. 

For any good chef, top quality ingredients are always the main priority and the single most important factor in making good food, said the award-winning Yan. 

“You need the right oil to make good food. Also, look at the vibrant colour of palm oil. When you stir fry, the oil adds flavour and colour to your food,” he told Business Times. 

“Not just that, palm oil makes an excellent cooking oil for baking, sautéing, dips and medium heat frying,” Yan added. 

In the 'Taste of Malaysia' series, Yan cooks with Raja Permaisuri Agong Tuanku Hajah Haminah and several celebrity chefs using palm oil. “It is a misconception that palm oil contributes to deforestation. This actually has something to do with politics and competition,” he said.    

“I believe there are a lot of people from all around the world who use palm oil for its nutritional benefits and delicious taste,” said Yan, adding that China and India are examples of major users of palm oil in the Asia region. 

There are many ways to learn about the goodness of Malaysia’s palm oil. Netizens can learn more from and win prizes such as tablets and smartphones.

According to the website, Malaysia is the world’s second biggest producer of sustainable palm oil.

Last year, at 19.5 million tonnes, Malaysia also generated 33 per cent of the world’s palm oil production.

The high oil yield from mature oil palm tree averaging close to 4 tonnes per hectare annually means the crop requires the least hectarage of land compared to other vegetable oil crops such as soya, rapeseed or sunflower, to meet the increasing global demand for oils and fats.

Oil palm takes up only 6 per cent of the world's agricultural land devoted to 10 major vegetable oil crops but it accounts for 38 per cent of global vegetable oil production of 135 million tonnes a year.

Sarawak rejects trade barriers

The Council of Palm Oil Producing Countries (CPOPC), made up of Indonesia and Malaysia, has officially rejected the “No Deforestation” pledge signed by major oil palm companies. Sarawak stakeholders tell OOI TEE CHING the Wilmar-Unilever “No Deforestation, No Exploitation, No Peat” pledge hurts their future livelihoods.

THE Malaysian Palm Oil Board data showed that Sarawak produced 3.4 million tonnes of crude palm oil (CPO) last year. This year, with more trees maturing, the state is expected to achieve 3.5 million tonnes. 

In December 2013, Wilmar International Ltd signed a “No Deforestation, No Peat, No Exploitation” pledge in its palm oil trade with consumer goods giant Unilever Plc. 

Wilmar’s refinery in Bintulu, Sarawak, was the main buyer from 41 palm oil mills across the state, absorbing 1.7 million tonnes of CPO, or half of the state’s production. 

In sourcing CPO to feed its refinery, the Wilmar-Unilever pledge dictated to planters in Sarawak that starting January, it will stop buying oil from estates where there are allegations of land grabbing from natives. 

The pledge will also lead to a halt in the sourcing of palm oil from farmers who have planted their trees in areas of “high carbon stock” and peat swamp. In an interview at his longhouse in Silas Estate near Bintulu, village head Meikle Ding spoke about his people’s sentiment.  

When asked if the native customary rights (NCR) landowners had seen any tangible benefits from the Wilmar-Unilever pledge, Meikle replied: “It looks protective of us natives, but in reality our genuine business partner is Ta Ann Plantation.” 

He said Ta Ann, as the 60 per cent shareholder in Silas Estate, had taken considerable risk in coming up with up-front capital to lay in infrastructure to plant oil palms. From the start of planting, even before the trees have started to bear fruit, it had given incentive payments to landowners. 

“What our business partner promised, it delivered. Ta Ann has shown commitment to this long-term partnership. Throughout the years, we have received tangible benefits, we have received our dividends,” he said.  

“Our land is now a lot more valuable compared with the time when it was left idle. Since 2010, the state government has been carrying out perimeter and individual lot surveys. 

"Pending this initiative, our joint-venture partner has issued letters of confirmation to all NCR landowners in the estate. We are assured of land ownership,” he said. 

“As rural folks, we are simple people, but we’re certainly not simple-minded. 

Many of our children are working as doctors, lawyers and high-ranking diplomats serving the government in overseas missions. 

When asked to comment on anti-palm oil campaigns run by green activists, Meikle explained that natives were landowners as well as shareholders in the business of oil palm planting.  

“When our 60 per cent business partner is unfairly hurt by false allegations of exploitation, we, as 30 per cent partners in this business, suffer as well. Throughout the years, we know who are our genuine friends and who are looking to take advantage of us,” he said. 

Just like the soyabean and rapeseed farmers in Western countries, Meikle said his people were equally deserving of their right to sell their palm oil without trade hindrance. 

He noted that his people felt Wilmar and Unilever’s pledge was restrictive of Sarawak’s freedom to export to an open market.  

“The Wilmar-Unilever pledge dictating to planters in Sarawak to comply with it by the end of the year is discriminatory. We prefer a meaningful pledge that states “Yes” to high palm oil prices, “Yes” to our right to prosperity and “Yes” to business growth,” he added.  

Meikle also questioned whether the Asia-Pacific Economic Cooperation (Apec) and Trans-Pacific Partnership (TPP) agreements would address discriminatory and oppressive business dictates from buyers like Wilmar and Unilever. 

His query has struck a poignant chord on global edible oils trade politics.  

Earlier this week, Indonesia and Malaysia agreed to harmonise and combine palm oil certification standards. 

 Indonesia’s Chief Natural Resources Minister Rizal Ramli told the Parliament that it was time for Indonesia and Malaysia to fight and regain sovereignty on their own turfs.  

“We are the biggest palm oil producers. Why should consumers from developed countries set the standards for us?” he asked. 

Indonesia and Malaysia, which account for 85 per cent of the world’s total palm oil output, have since August last year been discussing a plan to set up an inter-governmental organisation called the Council of Palm Oil Producer Countries (CPOPC). 

The move came after major palm oil firms in Indonesia and Malaysia signed the Indonesian Palm Oil Pledge and Sustainable Palm Oil Manifesto. 

Rizal said the pledge protected the interests of developed countries’ vegetable oil markets, adding that CPOPC would instead set a standard that take the welfare of smallholders into account. 

In a separate interview, Sarawak’s Land Development Minister Tan Sri James Masing welcomed the move by Malaysia in joining hands with Indonesia to tackle non-tariff trade barriers that are increasingly disguised as environmental protection or concerns for human right. 

Masing likened the Wilmar-Unilever pledge’s unreasonable prohibitions on its palm oil suppliers to economic bullying. “The Wilmar-Unilever pledge is very disastrous because it could stop the government’s poverty eradication programmes.”

The Wilmar-Unilever pledge prohibits cultivation of oil palm on peat land and confines the opening up of oil palm plantations to only young schrub and cleared/open areas. 

“The state government will not succumb to baseless allegations. 

"We do not agree with the argument that planting oil palms in logged-over areas and peat swamps is bad for the environment,” he said, adding that good peat soil management was the basis for sustainable food production and was a preventive measure against the spread of fire. 

“We need to differentiate between managed and unmanaged peat,” he said. He explained that land compaction and establishment of a trench system was a prerequisite to any oil palm development in Sarawak’s peatlands. 

A lot of efforts go into ensuring water levels in the maze of trenches are at 50cm to 75cm from the surface. This is achieved through a series of stops, weirs and water gates. 

“Oil palm planters in Sarawak follow a set of proven, good agricultural practices that balance the needs of the people, planet and profits,” he said. 

In a separate interview, community leader Enyang Menchol, 55, who represents some 2,000 households in Sengan and Menyan neighbourhoods, testified that his people rejected the Wilmar-Unilever “No Deforestation, No Peat, No Exploitation” pledge. 

“We reject the Wilmar-Unilever directive. We were not consulted; we were just told it will take place. After discussion with others we find that it hinders my people from making productive use of their idle land,” said Enyang. 

When asked to elaborate on the “No Exploitation” aspect of the Wilmar-Unilever pledge, the community leader noted that there were land disputes and natives had the option of going to the courts for resolution. 

He also said many years ago, rumours were rife that some people fell victim to broken promises and were cheated of their land. After some time of uncertainty, Enyang said he and his family finally decided to partner with the Teamplete Group in developing his plots. 

“After a few years, many more neighbouring lots joined in when they saw how oil palm planting is a profitable and honest business venture that will sustain for generations to come,” he said. Since joint-venture companies have started to pay yearly incentives many more NCR landowners are now signing up with the Teamplete Group. 

Teamplete Group executive director Lawrence Leow confirmed that oil palm development necessitated identification of land boundary and this had helped settle arguments and disputes over ownerships.  

NCR landowners’ participation in commercial oil palm planting is voluntary as Leow’s team has been actively engaging in dialogue sessions on the risks and prospects of the business. 

“As business partners, we trust and respect each other. Teamplete Group has been paying out yearly incentives to NCR landowners via e-banking. This is to ensure the exact amount is paid to the correct landowner,” he added.

Enhancing value of NCR land

NCR landowners in Sarawak are deserving of their right to progress and prosperity. Oil palm planting present the highest return on their investments. With government support, landowners can reap better potential in their real estate and see better living standards. OOI TEE CHING writes.

In the small town of Sebako in Sarawak, some 20-odd people had waited patiently for the latest planting updates from officials of Sarawak Land Consolidation and Rehabilitation Authority (Salcra).  

Led by their headman Salimin Asiew they are native customary rights (NCR) landowners who are appealing for government funding to expand planting areas and have more natives benefit from more productive use of their land.  

NCR land refers to rights acquired by the native landowners in accordance with the native customary law of the communities prior to January 1 1958 as set out in Section 5(2) of Sarawak Land Code. 

Land ownership is life to rural natives of Sarawak. It is a heritage and inheritance, both from a cultural as well as an economic viewpoint. Prior to government-funded perimeter and individual lot surveys, Salimin noted proof of land ownership was very tenuous. 

Many elders, when asked to identify their land, would make an arm sweeping motion from left to right spanning from fruit trees, bamboo clumps, river, valley and marked burial sites. 

Left to right: Konsel Aho, Sijon Ngajak, Joen Hokia, Nyalo Bilok and Salimin Asiew, at the Sebako Oil Palm Estate in Semantan, Sarawak. NCR landowners want to expand their planting area and have more of their relatives and neighbours benefit from more productive of their land use. Photo by Salhani Ibrahim.

Through Salcra’s oil palm development, Salimin noted NCR landowners have had their boundaries properly surveyed and given their respective land titles. 

“Allegations of rampant land grabbing that you read on the Internet are not entirely true. There are land disputes. We have native courts to settle them,” he said.  

Asked about free, prior and informed consent in oil palm development, he replied: “From the start, Salcra officers explained their management policy." 

“There is mutual trust and respect in our dialogue sessions. Many more among our community have gained confidence and applied to Salcra to plant oil palms for them. 

“Our children, although many are working in Kuala Lumpur, see oil palm planting, here, as good investments. In time, our children will inherit the land. We want to pass on this business that they can build on with better agronomic expertise,” he said. 

“With more government funding for proper land terracing,  better seedlings and higher quality fertilisers, more NCR land can be developed via economies of scale. We would like to see more of our neighbours and relatives reap the benefits of commercial scale plantings,” Salimin added. 

Under the 11th Malaysia Plan covering from next year to 2020, Sarawak government aims to upgrade the value of these NCR lands as a means to improve the people’s income. 

Sarawak’s Land Development Minister Tan Sri Dr James Masing noted NCR land development is handled by four organisations, namely Sarawak Land Development Board (SLDB), Land Custody and Development Authority (LCDA), Federal Land Consolidation and Rehabilitation Authority (Felcra) and Salcra. 

As at 30th September this year, about 235,000ha of NCR land had already been planted with oil palms.  

“In 20 years, Sarawak has targeted another 500,000ha for oil palm development on NCR land. We hope the federal government will agree to allocate RM571 million for the next five years as per our application to help us raise our people’s standard of living,” said Masing. 

With a funding boost from the federal government, he said LCDA and Salcra can help more NCR landowners develop idle plots to raise the value of their real estate.  

He also said the issuance of land titles has helped settle disputes and enabled NCR landowners to mortgage their land for start-up capital to leverage on more value-added activities. This is line with the state government’s vision of a native middle-class. 

“Planting oil palms on idle land has always been for the benefit of business owners and landowners. 

"It is regretful that many of these non-governmental organisations make false allegations of land grabbing and sow distrust among our community in order to gain political mileage and stop the growth of the industry," said Masing. 

In a separate interview at Sri Aman, community leader for Pakit longhouse Briku Busang expressed a similar view. He noted that before his people embraced oil palm planting, life was tough because his community only planted padi and had just about enough to eat.  

“In the 1970s, my people were still shifting cultivators. We have no capital to invest in heavy machinery and no technical knowledge on planting oil palm commercially. 

“In 1980, Salcra suggested this new method to make NCR land more productive without ownership sacrifice.  We started with Phase 1 and today, we have engaged Salcra to manage around 3,000ha,” he added. 

Briku noted it has been 25 years since his people started planting oil palm. “We’re due to replant a second cycle of oil palms. We would like for the federal government to allocate specific funding for replanting of oil palms and rubber on NCR land.” 

“What we’re getting from the federal government for the construction of internal village roads and bridges is not enough. “As taxpayers, we too want equal opportunities for development that will help bridge the rural and urban gap,” he said.

NCR landowners of Lemanak Oil Palm Estate at Lubuk Antu, Sarawak. Sarawak government aims to upgrade the value of their land as a means to improve rural folks' income. Photo by Salhani Ibrahim.

NCR landowners eye RM571 million under 11MP

KUCHING: Sarawak has applied for RM571 million under the 11th Malaysia Plan (2016 to 2020) to fund the development of native customary rights (NCR) land, said Sarawak’s Land Development Minister Tan Sri Dr James Masing. 

“This is the first time Sarawak is applying to federal government for grants to develop NCR land. This RM571 million should be able to cover the planting of oil palm and rubber trees across 36,000ha, in the next five years.

“We hope the federal government will fund this cause to raise the living standards of natives here,” he told Business Times in an interview here recently. 

NCR land essentially means rights acquired by the native landowners in accordance with the native customary law of the communities prior to 1 January 1958 as set out in Section 5(2) of Sarawak Land Code.

With a funding boost from the federal government, Masing said his ministry’s agencies such as the Land Custody and Development Authority (LCDA) and Sarawak Land Consolidation and Rehabilitation Authority (Salcra) can help more NCR landowners develop idle plots and reap the benefits of economies of scale.

He explained that when idle land of the NCR landowners is developed into modern plantation estates, their families get faster access to basic infrastructure such as roads, bridges, piped water and electricity on their land. 

Other amenities such as housing, healthcare, schools and access to public transportation that come with this collaboration also go to raising the value of their land, in the years ahead.

As at 2014, the minister said around 235,000ha of NCR land is already planted with oil palms. The development of NCR land is being carried out by Salcra, Federal Land Consolidation and Rehabilitation Authority (Felcra), independent smallholding and on joint venture basis via LCDA.

Masing said boundary survey of NCR land is capital intensive but a pre-requisite for land development. The Sarawak state government recognises that issuance of land titles would ensure that NCR land ownership can be properly passed down to the younger generations via inheritance. 

Land titles would also settle disputes and enable landowners to venture into business and commerce by mortgaging their land for start-up capital. This is line with the state government's vision to create more middle-class natives earning high income.

Masing noted the Sarawak government had also applied for RM200 million to the federal government under the 11th Malaysia Plan for perimeter and individual lot survey. “More funding to carry on this initiative will certainly help solve many boundary disputes cases at the courts,” he said.

Since 2011, Sarawak's Land and Survey Department had started to gazette plots of NCR land under Section 6 of the Sarawak Land Code, after perimeter surveys. As of todate, the state government has conducted perimeter surveys across 650,000ha of NCR land.

Masing explained perimeter survey determines the boundaries and size of land to rightful owners. Once gazetted as Native Communal Reserve under Section 6 of the Sarawak Land Code, the record is kept at the Land and Survey Department and the District Office. 

A copy is also extended to the community head. “Basically, the gazette itself is legal proof that their land  has been surveyed and rightfully belongs to the community.” After gazetting, the plots of land are then surveyed in detail for individual plots under Section 18, where NCR landowners are accorded their individual titles. 

“There had been many disputes and controversy when boundaries of NCR and state land is not easily determined. We want to continue with this perimeter and individual lot surveys to establish the boundaries and rightful owners of the estimated 1.5 million ha of NCR land in Sarawak,” he added.

Tube wells to mitigate peat fires in Indonesia

JAKARTA: Malaysia recommended the use of tube wells as a long-term measure to help Indonesia mitigate fires on peat soil, said Prime Minister Datuk Seri Najib Razak.

The method, he said, was used widely in Malaysia and could be seen as an alternative method to the water canals as fire barriers proposed by Indonesia as part of the country's effort to curb fires. 

"The tube wells will help to dampen the soil in areas that are in danger of burning. We believe it will also be a faster method compared to the water canals, which will take three years before they are seen to be effective," he said. 

Najib was speaking to reporters after meeting with Indonesia president Joko Widodo at the Indonesian presidential palace in Bogor, as part of a two-day working visit to the republic. 

"This is too long for both countries, because it means we will have to face the threat of haze for another three years," Najib said, adding both countries viewed the haze problem seriously, given its life-threathening effects. 

"The target is to put out the fires in about two weeks. The bigger scale of water-bombing operations means an accelerated process," Indonesia's Jokowi said.

Meanwhile, Indonesia's Coordinating Minister for Political, Legal and Security Affairs Luhut Panjaitan will summon plantation companies to discuss plans on effective ways to tackle uncontrolled spread of peat fires, which has become a regional life-threatening health hazard.

During his visit to Ogan Komering Ilir, Luhut went deep into the forest to one of the hot spots. He stepped on the dry and brittle peatland that firefighters had doused with water and found smoke coming out from beneath.

"This is a big challenge... the fire is smouldering underground. There is a lot of smoke because the fire is still burning inside. It takes an abundant amount of water to get rid of it completely," Luhut said.

Indonesia and Malaysia agreed to have a new set of standards to produce environmentally sustainable palm oil, while the latter pledged to increase cooperation to help prevent land and forest fires in Indonesia.

The agreement was reached as a joint water-bombing operation by Indonesia, Singapore and Malaysia kicked off over the weekend in South Sumatra, which is among the worst- hit provinces. 

It was the largest water-bombing mission ever carried out in an Indonesian province, with seven helicopters and three fixed- wing aircraft tackling the fires raging in two regencies - Ogan Komering Ilir and Musi Banyuasin.

Defending Jokowi, Najib said land clearing in Indonesia was too expensive with many poor workers forced to resort to harmful techniques such as slash-and-burn, leading to uncontrolled underground fires in peat area. 

"The reality is that it is 40 times more expensive to clear land without slash-and-burn. But it's being carried out on large tracts of land and when it's combined with drought brought on by El Nino, it leads to fires which have spread quickly," he said.

On the setting up of the Council of Palm Oil Producing Countries (CPOP), Najib said it would set global standards and allow the two countries to cooperate on determining global palm oil inventory. 

The CPOP is open for membership to other palm oil producing countries. It would be headquartered in Jakarta, with Indonesia represented by its former coordinating minister for economic affairs Rizal Ramli. Malaysia is represented by Plantation Industries and Commodities Minister Datuk Douglas Uggah Embas. 

Najib said the two countries had also agreed to establish several green economic zones to develop more downstreaming of palm oil businesses throughout Indonesia.

"We know that 85 per cent of global palm oil output comes from Indonesia and Malaysia. We will create a new global standard to produce sustainable palm oil," Indonesia's Jokowi told reporters at a joint news conference after the meeting.

Malaysia gov unwittingly hurt own industry

This is written by Khoirul Amin of Jakarta Post.

Jakarta: The Indonesian government expressed its regret over a Malaysian palm oil group’s decision to temporarily halt imports of palm oil from Indonesia, saying the move was against the spirit of free trade.

Gusmardi Bustami, who is chairman of an Indonesian trade policy forum and a former senior official at the Trade Ministry, said that the measure imposed by the Malaysian Palm Oil Board (MPOB) was not in line with the spirit of the ASEAN Free Trade Area (AFTA) and the World Trade Organisation (WTO). 

“It is also suspected that Malaysia is trying to prevent its processed goods made of imported Indonesian CPO from being banned from entering into various export destinations due to speculations that the CPO producers might be involved in forest fires [in Indonesia],” he told Jakarta Post recently.

The plan to halt Indonesia’s palm oil imports was contained in a circular by the MPOB dated 30th September. The rationale given for the directive was oversupply but it did not state how long suspended imports would be maintained. 

“In light of that [the oversupply condition], the MPOB decided to temporarily suspend importing palm oil until the domestic supply gets back to a manageable level,” according to a statement in the circular obtained by The Jakarta Post.

The circular, which is signed by MPOB director general Datuk Dr. Choo Yuen May, also states that Malaysia’s palm oil volume is at a level where it cannot be stored at its domestic storage facilities.

Indonesian Trade Ministry officials were not available for comment when the Post asked for clarification at the time of writing.

Gusmardi said that the measure would affect Indonesia’s palm oil producers, who are currently under pressure due to a sluggish market. 

Indonesia’s palm oil exports to Malaysia, both raw and processed, hit US$566.197 million, with a total export volume of 730,902 tonnes last year, according to the Agriculture Ministry’s data.

During the January-July period of this year alone, the export value hit US$595.53 million or around 42 per cent of Indonesia’s total palm oil export value during the period.

Mahmud Syaltout, an international trade law and policy expert with the University of Indonesia, said that the oversupply condition acted as a common reason for many importers to halt their import activities, but it raised eyebrows if a government agency should be actively intervening to halt imports.

“In a liberal multilateral trade system, the condition should be left to the market mechanism,” he said. According to Mahmud, Indonesian government should request clarification from the Malaysian government.

However, Indonesian Palm Oil Producers Association (GAPKI) executive director Fadhil Hasan said that the measure imposed by the MPOB would not threaten Indonesia’s exports as it would be imposed temporarily until Malaysia’s palm oil stocks reached manageable levels.

“In addition, Indonesia's CPO exports to Malaysia are not as big as those to China, India or even Pakistan,” he said.

Fadhil also said that most Malaysian importers imported CPO from Malaysian palm oil companies operating in Indonesia, arguing that the measure would just harm their own companies. 

Indonesia and Malaysia, the world’s top CPO producers, contribute about 85 per cent of total world production.

Haze: Msia help fight Sumatera fires

KUALA LUMPUR: The Royal Malaysian Air Force (RMAF) and the Malaysian Maritime Enforcement Agency (MMEA) deployed assets to Palembang, Indonesia yesterday.

Malaysia is helping Indonesian authorities to battle widespread forest fires responsible for the choking haze affecting Malaysia and Singapore. 

The deployment comes after the Indonesian government had requested for assistance, specifically in the form of aircraft with the capability to put out fires over large areas. 

Defence Minister Datuk Seri Hishammuddin Hussein said his ministry sent a Bombardier CL415MP amphibious aircraft last night. He said the operation will be coordinated by both the RMAF and MMEA.

"I received a call from the Prime Minister Datuk Seri Najib Razak yesterday and he instructed me to coordinate assistance to put out forest fires in Indonesia. 

"This order came after the prime minister received a request from the Indonesian president Joko Widodo himself for Malaysia's assistance to battle the blaze in areas around Palembang, south of Sumatera. 

"For this mission, the government will be sending a Bombardier CL415MP aircraft, which will be deployed there by today," he told a press conference at the Defence Ministry in Jalan Padang Tembak, here yesterday. 

Hishammuddin said an inter-ministries and agencies meeting will also be held soon to discuss other forms of assistance that Malaysia can offer.

Separately, at a palm oil conference a scientist said governments cannot stop small farmers from using fire to clear land for the planting of cash crops but they can place preventive measures to stem the spread of underground peat fires.

"In rural areas of developing nations, 'no burn means no food'. Small farmers are not able to afford heavy machinery to clear land to plant padi, sweet potato or even sweet corn," said Param Agricultural Soil Surveys (M) Sdn Bhd managing director Dr S. Paramananthan.

In Sarawak, he highlighted that the state government allows for controlled burning within the fire barriers of water canals to ensure peat fires do not spread underground.

"I have been invited to meet with the Indonesian government to lay down practical solutions to prevent uncontrolled peat fires and polluting haze. I will be flying to Jakarta to meet with President Joko Widodo next week," he told Business Times at the sidelines of Malaysian Palm Oil Board's International Palm Oil Congress and Exhibition here.

Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas launched the book 'Soils of the lower and middle Baram River Basin' written by Param.

When asked what he would suggest to the Indonesian president, Param noted that Indonesia could map out underground water sources below peat areas. 

Just before the drought season, the government can pro-actively pump up water via tube wells to moisten the soil. This will prevent the spread of fire, should small cash crop farmers set fire on dry peat to clear land.

This is a more sustained solution than the current reactive measures of water-bombing and cloud seeding for rain, said the veteran soil hydrologist who has close to 50 years of experience in surveying peat areas in Malaysia and Indonesia.

"When there are accidental peat fires triggered by carelessly thrown away cigarette butts, firefighters can quickly pump up underground water from aquifers and channel it via trenches to the affected area.

"During the drought season, the unmanaged spongy peat becomes combustible and flammable. Fighting fire is challenging because it spreads and smoulders underground," he said. 

By investing in tube wells drilled into aquifers below the peat in coastal areas and putting in water-filled trenches to act as fire barriers, Param noted the Indonesian government can prevent recurrence of haze that killed many lives and racked up millions of dollars in medical bills.

Uggah: Malaysia restrict CPO imports

KUALA LUMPUR: Malaysia has issued a directive to traders that crude palm oil (CPO) imports will be restricted, to bring down the current inventory of 2.49 million tonnes to two million tonnes.  

Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the country aims to “bring down stocks at a comfortable level of about two million tonnes... give and take 5 per cent tolerance."  

He then highlighted this CPO import restriction directive is consultative. It was made known to the Indonesian government during the bilateral meeting in Jakarta over the weekend. 

"I brought this up in the recent bilateral meeting and explained the rationale to restrict CPO imports into Malaysia. The Indonesian government understood that we are trying to manage our stocks and accept it," Uggah said at a press conference after launching the Malaysian Palm Oil Board's International Palm Oil Congress and Exhibition here yesterday. 

The minister clarified this directive to traders in Malaysia is not an outright ban, as they can appeal to his ministry in cases where long term contracts have already been committed to. 

"I wouldn't call this a CPO import ban because traders can appeal to my ministry for exceptions. I prefer calling this move as managing stocks. We want to minimise Malaysia's CPO import volume," he said. 

"If we don't do anything now, palm oil inventory could exceed three million tonnes by November. For CPO imports that involve long-term contracts, they can appeal to my ministry," he added. 

Apart from the CPO import restriction, Uggah said the government plans to raise the biodiesel mandate from B7 to B10 in efforts to spur more palm oil consumption locally. 

He, however, declined to reveal the targeted date for the B10 biodiesel introduction. The B10 mandate is a blend of 10 per cent palm methyl ester and 90 per cent petroleum diesel. 

"We will present the B10 biodiesel proposal in the upcoming Cabinet meeting and continue to engage with industry players on this matter," Uggah said. 

On the conclusion of the Trans-Pacific Partnership agreement (TPP), Uggah said, "through the TPP, our palm oil, rubber, timber and value added derivatives should not face trade barriers in these member countries. We hope to see better market access and therefore rising exports to this trading bloc," he said.

Regional palm oil group

JAKARTA: MALAYSIA and Indonesia will establish  a formal working group among palm oil producing countries called Council of Palm Oil Producing Countries (CPOPC) by the end of this month.
In a joint statement issued out of Jakarta recently, both Indonesia and Malaysia governments announced this new body will strengthen regional efforts at stabilising the price of palm oil and promote benefits of palm oil industry and its derivatives.
The Malaysian delegation was led by Plantation Industry and Commodities Minister Datuk Amar Douglas Uggah Embas and Deputy Minister in the Prime Minister's Department Datuk Razali Ibrahim. 
This bilateral meeting was also joined by Indonesia Palm Oil Association, BPDP Sawit (Indonesia Palm Oil Fund), the Malaysian Palm Oil Association, Sarawak Oil Palm Plantation Owner Associations; Malaysian Palm Oil Board; and the Malaysian Palm Oil Council
Both countries reiterated that palm oil is a strategic commodity and that the oil palm is a miracle crop.
The palm oil value chain is important for both countries in terms of employment, foreign exchange earnings and socio-economic interests of smallholders in bridging rural and urban development gap.
In playing a more meaningful role in the international trade arena, both governments have agreed to  harmonise standards of the Malaysian Sustainable Palm Oil and the Indonesian Sustainable Palm Oil.

The Malaysian Palm Oil Board (MPOB) will implement a RM100 million replanting incentive scheme beginning October 1 until December 31, this year.
Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the scheme targeted the replanting of 83,000ha of unproductive and old palms.
Approval for the scheme would be based on first-come-first-serve basis, with an incentive allocation of RM1,500 per hectare for an approved area of 33,000ha under Phase One.
Meanwhile, an incentive of RM1,000 per hectare would be allocated for an approved area of 50,000ha under Phase Two.
Uggah said the implementation of the incentive scheme would contribute to a reduction of crude palm oil (CPO) production by 250,000 tonnes. Hopefully, this will reduce national palm oil stocks and help stabilise palm oil prices.
Applicants for the incentive scheme are encouraged to submit their applications online via from October 1.

Palm Oil Rising on Ringgit Weakness, Mistry Says

MUMBAI: (Bloomberg) -- Palm oil may extend its bull market climb should the Malaysian currency retreat further against the dollar, according to Dorab Mistry, director at Godrej Industries Ltd.

Palm oil touched RM2,460 per tonne tonne earlier this week, the highest since June 2014. As the ringgit dropped against the greenback, this made the world’s most popular edible oil cheaper for international buyers. 

The commodity bounced into a bull market last week amid concerns over the impact of haze on the world’s biggest producing region and a strengthening El Nino.

Benchmark crude palm oil futures will probably trade at the upper end of a RM2,100-RM2,400 a tonne range if the Malaysian currency weakens to RM4.50 to one US dollar, Mistry told the Globoil conference in Mumbai on Wednesday. 

Prices could then touch RM2,500 ringgit a tonne, he said. The ringgit is currently trading at about RM4.44 to the dollar after weakening to RM4.48 on Tuesday, the weakest since 1998.

“It is possible for CPO to go to RM2,500 per tonne just for a short time,” according to Mistry, who has traded cooking oils for more than three decades. 

His CPO price forecast assumes Brent crude will trade between US$45 and US$60 a barrel. Still, “such a level is not sustainable unless mineral oil prices rise significantly,” he said.

Production may decline in the first and second quarters of 2016 as the moisture deficit from El Nino and a low yielding period from January starts to affect crops, Mistry said. His estimate of global palm output to rise by 2.5 million tonnes between October and September 2016 takes into account damage that may be caused by El Nino.

The plunge in the ringgit, Asia’s worst-performing currency this year, combined with growing concerns over El Nino’s impact on production in Malaysia and Indonesia, helped pull palm oil out of the bear market it entered just last month, when the tropical oil hit a 6-1/2 year low of RM1,863.

Vegetable oil prices may struggle to rally if crude oil prices stay weak, Mistry said. Cheap crude makes edible oils, including palm oil, a less attractive option for biofuel feedstock. Palm oil was trading at a premium of US$80 a tonne to gas oil on Wednesday versus an average of US$32 over the past year, Bloomberg data show.

“If crude oil prices stay in the range of US$35 to US$50 per barrel, then the loss of biodiesel demand will be very difficult to make up and will cast a long shadow over vegetable oil prices," Mistry said. He reduced his estimates for biodiesel demand to a best-case position of a gain of 1 million tons, from 1.5 million tonnes forecast last month.

It’s too early to gauge how successful Indonesia will be collecting palm oil export levies to fund its biodiesel program, Mistry said.
“Indonesia does not have a good reliable track record of implementing new policy initiatives,” he said, adding that the 15 per cent mandatory blending rate appears to be “too high and against the advice of every motor manufacturer.”

Global edible oil supply is forecast to rise by 4.6 million tonnes in 2015-16, while demand may increase by 4.5 million tonnes - a balance which Mistry warns could change very quickly if there’s a “production problem in some part of the world or Indonesia suddenly performs to expectation on biodiesel.”

Imports by India, the world’s biggest edible oil buyer, will rise to 15.1 million tonnes in the October to September 2016 marketing year from 14.1 million tonnes this year, with shipments of palm seen rising to 9.6 million tonnes from 8.7 million tonnes, and soybean oil to 3.6 million tonnes from 3 million tonnes.

El Nino, which bakes parts of Southeast Asia but brings rain to South America where soy is grown, may pave the way for more plantings and bumper crops between March to May next year, Mistry said. Bigger supplies of soybeans for crushing into soy oil may lower prices of the rival edible oil.

“I regard soya oil as the most competitive and ‘must own’ oil today,” Mistry said, adding that India’s appetite for soy oil will grow stronger. “Soya oil will this year win market share from all other oils.” 

He sees soybean prices remaining below $9 a bushel, and Chicago Board of Trade soy oil futures range bound between 26-28 cents a pound. Prices may climb to 32 cents if the U.S. Environmental Protection Agency raises biodiesel mandates, he said.

Planters under fire over haze

Are peat fires uncontrollable? Experts tell OOI TEE CHING that smouldering fires can be prevented from spreading underground if the peat soil is compacted and kept moisturised in trenches filled with water.

For the past month, there has been a steady stream of news on millions of people in Southeast Asia suffering from the haze in Indonesia due to the peat fires there. 

There have also been criticisms of Indonesia's governance despite tireless efforts by its authorities to dispatch water bombing planes and cloud seeding to beat the peat fires. The ongoing El Nino phenomenon is exacerbating the problem, creating scorching conditions that fan the smouldering flames.

More than 5,000 personnel, including the military and police, have been working round the clock to get residents access to medical help. Aircrafts continue to water bomb hot spots and "cloud seed" the skies to induce rain.

Air quality index readings have been as high as 1,992 in Palangkaraya, Central Kalimantan -- anything over 200 is unhealthy -- while numbers are fluctuating between unhealthy and very unhealthy in Singapore and Malaysia, depending on wind conditions.

Indonesian President Joko Widodo declared a state of emergency in Riau province, one of the worst affected areas. Yesterday, he went down to the ground with emergency workers deployed to help fight the fires in Banjarbaru, South Kalimantan, before heading to Sumatra, where he also inspected ground conditions and fire-fighting efforts in Jambi. 

The Indonesian Palm Oil Association or Gabungan Pengusaha Kelapa Sawit Indonesia (Gapki), too, had been responding positively as its member companies are mobilising fire-fighting units to help put out the flames.

But like the years before, such positive efforts often go unnoticed because the truth is not sexy when pit against damning allegations. Inevitably, those who are more skilful at spreading rumours and attracting media attention continue to influence public perception.

"Members of Gapki have been conscientiously implementing good agricultural practices. We are committed to a zero burning policy. This means no slash-and-burn to clear up land for new plantings or re-plantings," Gapki chairman Joko Supriyono reportedly told Antara News earlier this week.

Indeed, people living in the estate are also suffering and in need of medical  attention from the ongoing haze. Slash and burn assumptions thrown at estate owners do not make sense. 

"Why would companies, that have invested trillions of rupiahs, want to risk having their permits revoked just because they want to save the cost of land clearing?" Gapki's Joko questioned.

In an interview with Business Times in Kuala Lumpur, Incorporated Society of Planters chairman Daud Amatzin concurred that misunderstandings and wrongful blaming continue to recur because the communication of facts and figures on the differences between a well-managed peatland and one that is not, is still very much lacking. 

When asked to comment on the spate of media reports on peat fires in Sumatera and Kalimantan, Daud replied "there has to be more public awareness on this topic because decision makers need to be able to differentiate facts from mistaken assumptions about peat soil and peat fire."

"Oil palm planters who carry out proper peatland development and water management at their estates should be given a pat on the back for preventing the spread of peat fire. Instead, what we see is a stab in the back of planters. Such false allegations are sinful," Daud said. 

"Do you know that professional planters practising modern agriculture invest a lot of money in heavy machinery to clear the land, compact the peat soil and dig up a maze of trenches? 

"This is to compress the peat soil and keep it moist so that the oil palms can grow properly and yield to their potential. Incidentally, this process makes the soil less flammable and retards fire from spreading underground," he said.

Most of the oil palm estates in Riau are matured and bearing fruits. "So, why would planters want to set fire and destroy their oil palms?" asked Daud, adding the maze of trenches filled with water at peat area, which are transportation routes in the estates is doubling up as fire barriers, too.

When asked to comment on satellite pictures showing many hotspots across Sumatera and Kalimantan as indicative of fiery blaze within plantation concessions, Daud replied, "we must take note that in Indonesia, 20 per cent of the land bank is under the plasma scheme, of which smallholders occupy scattered enclaves within the estates." 

He noted that one must not discount the possibility that fire-causing haze could have been started by the local communities for shifting cultivation of cash crops in these enclaves.

Peatland is highly flammable in drought season, if not properly managed. Many cash-crop farmers, who cannot afford heavy machinery for land clearing, may have been unknowingly torching up peatland and set off fires which smoulder underground for weeks and months.

Daud explained that fires spread underground very easily when peat soil is dry and spongy in the forest and shifting cultivation area. On the other hand, peat that had been compressed by heavy machinery and moisturised in water-filled trenches actually prevent spread of smouldering underground fire.

"When peat fires occur, it does not recognise geographical boundaries. The fact that environmental activists and politicians are quick to blame planters without any evidence of where and how the fire originated shows these allegations are not factual," Daud said.

"As investigations on peat fires ensue, I would like to think the Indonesian authorities will uphold logical reasoning and evidence that can be verified. I would like to think justice based on integrity shall prevail over wrongful blame that could be heavily laden with ulterior motives," he added.

Underground water viable solution

PETALING JAYA: Indonesia could map out underground water sources below peat areas and before the drought season, they can pump up water via tube wells to moisten the soil and prevent the spread of fire. 

This is a more sustained solution than the current reactive measures of water-bombing and cloud seeding for rain, said a veteran soil scientist who has close to 50 years of experience in surveying peat areas in Malaysia and Indonesia. 

“When there is accidental peat fire, firefighters can quickly pump up underground water from aquifers and channel it via trenches to the affected area,” said Param Agricultural Soil Surveys (M) Sdn Bhd managing director Dr S. Paramananthan. 

“During the drought season, the unmanaged spongy peat becomes combustible and flammable. Fighting fire is challenging because it spreads and smoulders underground.” 

He likens the profile of unmanaged peat to the cross-section of a sponge cake. In contrast, at oil palm estates, the top layer of peat soil is dense because it would have been compressed by heavy machinery. 

“When there is soil compaction by heavy machinery, the top soil layer becomes dense. This causes water from the bottom of the peat to seep up and moisten the top soil. By doing so, oil palm planters make peat soil at their estates less flammable,” Param said.  

“I know of a few proactive plantation companies which have drilled tube wells and tapped into aquifers below. Before the drought season, they would pump up water from below to moisten the top layer of the peat soil.” 

Param noted that underground water from the tube wells tapping into aquifers deep below can be channelled to irrigate crops during drought season.  

He cautioned that if underground water was to be used as a drinking source by village folks, it would need to be treated to international drinking water standards as stipulated by Indonesian health authorities.