Archive for January 2015

Fruitful yield from designer seeds

In the last five decades, mechanisation of oil palm fruit harvesting remained largely unsuccessful. As a result, the industry had been working on the trees - to make them easier to harvest and to have more oil. OOI TEE CHING interviews a tree whisperer and an industry veteran.

Malaysia is the world's second largest palm oil producer after Indonesia and the latest data reveal a worrying trend; since 2010, palm oil output growth is stagnating at 2 per cent.

The Malaysian Palm Oil Board predicts that this year, the country's palm oil output will continue to expand by 2 per cent to 20.1 million tonnes.

Assuming this amount of oil is gathered across 5.5 million hectares, this year's yield will only total 3.7 tonnes per hectare in a year. Many planters say this is due to shortage of harvesters.

While the search for the best mechanisation system continues, Malaysian crop scientists are making some headway in raising tree productivity.

In the past, as oil palm trees grew taller and taller, planters use very long poles to harvest the fruit bunches. This got many crop scientists thinking. Why not breed shorter palms that bear very big fruit bunches?

So in the 1960s, crop scientists introduced the hybrid called the Dura X Pisifera (DXP) as the standard planting material. 

As time goes by, many in the industry affectionately referred the DXP hybrid as "the Dolly Parton type." Like its namesake, these trees are very short and yields voluptuous fruit bunches.

In the 1980s, some tree breeders realised that one of the problems of big bunches is that the inner fruitlets do not have space to develop fully. In smaller bunches, however, the inner fruitlets have a greater chance to develop and ripen more evenly. Therefore, for the same weight, smaller bunches yield more oil.

This is when, Applied Agricultural Resources Sdn Bhd (AAR), an equal joint venture between Boustead Holdings Bhd and Kuala Lumpur Kepong Bhd (KLK), made a conscious decision to breed trees that are of dwarf stature for easy harvesting and high oil yield in the fruit bunches.

AAR is one of the 10 licensed seed producers in the country, contributing to the replanting of unproductive trees so as to raise the national oil palm yield. Indeed, the oil palm sector, as one of the biggest foreign exchange earners for Malaysia, is one that is heavily invested with research money. 

According to MPOB, some 50 million germinated seeds are planted by farmers every year. Most of the replanting of old trees have been carried out in Sabah and Peninsular Malaysia while new plantings are undertaken in Sarawak.

At AAR, plant breeder Wong Choo Kien and his team diligently work on thousands of mother palms to perfect Malaysia's top cash crop with the latest breeding know-how. He always advise planters to buy and plant designer seeds so that they are assured of high oil yielding oil palms.

Just like how mobile phone manufacturers come up with better versions, Wong said every batch of seeds produced by tree breeders is an improved version of the earlier.

He explained that seed selection is crucial in oil palm planting because those who use seeds gathered from existing estates suffer from low yields no matter how many bags of fertiliser are applied to the trees.

The next set of trees are those that could significantly improve the industry further. Not only are these trees easier to harvest, they will also yield 20 per cent more oil from the current batch.

Wong confirmed the AA Hybrida II is slated for introduction to parent companies Boustead Plantations and KLK Group in the middle of this year.

His team is using the semi-clonal strategy to step up seed production while maintaining key qualities like the dwarf stature of the tree and high oil yield in the fruit bunches. "Our semi-clonal seed production technology ensures clients get consistent quality in every seed they buy from AAR," he said.

AAR is selling these designer seeds at RM2.70 each, a premium to the price of the average Dolly Parton variant. 

In delivering the designer seeds, AAR goes the extra mile to ensure seedlings' authenticity by using a new laser tattooing technology and pre-agreed codes with its clients. 

At prime fruit-bearing age, AAR's semi-clonal planting materials, grown under good management and environment, are capable of producing more than 30 tonnes of fresh fruit bunches with over 23 per cent oil extraction rate. 

That works out to be about seven tonnes of oil per hectare in a year, almost two times higher than the country's average yield.

During a tour around the Paloh seed garden in Johor recently, planters witnessed firsthand how AAR scientists match-make oil palm trees, working daily to perfect Malaysia's top cash crop with the latest breeding technology. Seed buyers are coming from as far as Sri Lanka.

Just as Wong ushered the crowd to a mother palm, a research assistant propeled himself up the tree by stepping on a fish-bone ladder resting on its trunk. He hoisted and straddled himself unto one of the palm fronds with a safety harness fastened to another frond.

He proceeded to slip a terylene bag over a flowering bunch, sealed it tightly with a double knot and hand puffed the desired male pollens into the bag. Wong said, "The bag cover prevents weevils from reaching the nice-smelling female flowers and accidentally pollinating it with other male pollens we do not want."

In a separate interview, Boustead Plantations chief operating officer Chow Kok Choy expressed the need to produce more food on the same piece of land in response to a growing world population.

He said, "we can meet the future of the world's cooking oil needs by developing better oil palm seeds and planting methods. These are all linked to sustainable agriculture." 

Chow highlighted the AAR dwarf planting materials meant that more trees can be planted on the same plot of land. It allows for a higher density of 160 trees in one hectare compared with the current standard of 136.

High density planting and usage of semi-clonal materials will enable AAR's parents Boustead and KLK to get better oil yields -- consistently.

“Todate, we have 14,000ha planted with ramets, semi-clonal and high density planting materials. With more optimal fertiliser application, these super-trees can help raise yields at our estates to that above the industry average of 20.62 per cent,” Chow said.

A single time-zone for ASEAN?

Prime Minister Datuk Seri Najib Tun Razak (far right) having a chat with the New Straits Times managing editor (business/lifestyle) Mustapha Kamil Mohd Janor (far left) at the 45th edition of the World Economic Forum (WEF) held annually in Davos, Switzerland. 

The WEF is where key policy makers, international political leaders, captains of industries, carefully chosen intellectuals, society leaders as well journalists converge. 

As the chair of ASEAN, Malaysia took the opportunity to raise ASEAN's profile at the WEF.

Malaysia brought ASEAN issues to the fore on the second day of meetings, including exploring the possibility of a single time zone throughout the region.

Currently, ASEAN's 10 nations' time ranges from +6.30 GMT (Myanmar) to +8.00 GMT (Eastern Indonesia). 

In a panel session on ASEAN, Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar said he communicated Prime Minister Datuk Seri Najib Razak's desire to see closer cooperation among member states as this is an important year of which ASEAN wants to turn itself into a single community.

Wahid was representing Najib who had to leave proceedings at the WEF yesterday to attend the funeral of Saudi Arabian monarch, King Abdullah Abdulaziz in Riyadh, Saudi Arabia.

He said among others ASEAN needs to hasten integration of the regional banking system. Last year, Indonesian central bank Bank Indonesia and Bank Negara Malaysia signed a heads of agreement for establishment of an ASEAN banking framework, which ultimately would enable banks in southeast Asia to venture into new markets within the region.

"This is important as banks has an important role to play in facilitating intra-Asean investments," Wahid said.

The discussions also touched on efforts to ensure whatever economic progress charted by ASEAN would be felt by the people, in line with Najib's people-centered economic agenda, Wahid said.

FCPO market set to be more vibrant

KUALA LUMPUR: Traders in the US can now directly access Bursa Malaysia via the CME GLOBEX® to buy and sell the increasingly influential contract called the crude palm oil futures.

Yesterday, the US Commodity Futures Trading Commission (CFTC) had granted registration as a Foreign Board of Trade (FBOT) to Bursa Malaysia's unit Bursa Malaysia Derivatives.

In a statement yesterday, Bursa Malaysia said the approval was pursuant to Section 4(b)(1) of the Commodity Exchange Act and Part 48 of the CFTC’s regulations. 

 "This timely move paves way for market opening and added vibrancy through enhanced market access and time-to-market. This will further boost trading and liquidity in our market," said Bursa Malaysia chief executive officer Datuk Tajuddin Atan.  

"The benefits of Direct Market Access (DMA) will certainly be an incentive to draw US traders especially since Malaysia is the global marketplace for palm oil derivatives and the global benchmark for palm oil namely the Malaysian-ringgit denominated Crude Palm Oil Futures (FCPO),” he added.

Also present at the Washington D.C. meeting were Bursa Malaysia Derivatives senior executive vice president of business development & marketing K. Sree Kumar and the US Commodity Futures Trading Commission chairman Mr. Timothy G. Massad.

BMD provides, operates and maintains a futures and options exchange and clearing house. 

In 2014, BMD charted an impressive growth with total volume traded growing by 17 per cent to above 50,000 contracts compared to the volume in 2013 of 43,490. 

Tajuddin highlighted that last year, the FCPO hit an all time record of 10.1 million contracts. This was a significant 27 per cent growth from 2013's eight million-odd contracts. 

Following the US authority's approval, BMD may now permit identified members and other participants located in the US to enter trades directly into its electronic order entry and trade matching system on CME GLOBEX® to trade BMD products.

CME Group owns 25 per cent of BMD. CME Group chief executive officer Phupinder Gill noted this strategic partnership has paved the way for the internationalisation of BMD through the migration of its products onto the CME GLOBEX® trading platform. 

Securities Commission chairman Datuk Ranjit Ajit Singh noted this milestone development reinforces the strong regulatory collaboration between Malaysia and the US at both the bilateral and global levels.

What didn't kill you, made you stronger

Since last month, many parts of Malaysia were inundated with unusually massive floods. Many lives were lost. Children were suddenly orphaned. 

The floods had caused much sufferings and damage in the east coast state of Kelantan, Terengganu and Pahang. 

Residents at low-lying areas of northern states of Kedah and Perak were not spared either.

Now that people in Peninsular Malaysia are coming to grips with rebuilding efforts after the floods, Sabah and Sarawak are having to face unusually heavy rains and floods.

In such trying times, let us do whatever we can to try and make things better for our common interests.

Seeking industry feedback

KUALA LUMPUR: Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said his ministry will review the initiatives under the Entry Point Projects (EPPs) introduce new measures to assist the oil palm upstream and downstream sectors. 

"A lab has been scheduled from January 26 to Feb 13, this year, to review the progress and identify new EPPs and it is hoped that some new and bold initiatives will be generated from this lab," he said in his speech, read by the secretary-general Datuk Himmat Singh.

Uggah reiterated the government is committed and will intensify efforts to achieve the RM178 billion Gross National Income Contribution by 2020.

Himmat was speaking at a seminar organised by the Malaysian Palm Oil Board (MPOB) on the industry's economic outlook for 2015, here, yesterday.

Also present was MPOB chairman Datuk Ar Wan Khair-il Anuar Wan Ahmad. He said he is confident that the CPO market will continue to firm up due to shortfall of supply occuring from the flood situation throughout the country at this moment.

Yesterday, the third-month benchmark for crude palm oil contract on Bursa Malaysia Derivatives Exchange slid RM3 to close at RM2,309 a tonne.

Indonesian Palm Oil Association or Gabungan Pengusaha Kelapa Sawit Indonesia (GAPKI) executive director Dr Fadhil Hasan, who spoke at the seminar, noted palm oil prices should fare a little better in the range of US$700 to US$750 CIF Rotterdam as palm oil consuming countries start to re-stock.

On palm oil exports, Fadhil highlighted "black campaigns" against the palm oil industry has manifested into trade barriers and made it very challenging for traders to secure higher prices in the global market.

Industry veterans have voiced out that the negative campaigns on palm oil has one clear objective, which is to kill the growth of oil palm planting and reduce consumption in the global market.

Fadhil concurred that palm oil exporters are denied equal opportunities to trade, adding the black campaigns harm farmers’ livelihoods while traders face oppression and discrimination in market access.

Oil palm planting and palm oil exports provide developing nations a path out of poverty. The growing of oil palms, the world’s most-efficient oil crop, is helping the people of Malaysia and Indonesia to improve their standard of living. 

Indonesia and Malaysia supply affordable and nutritious cooking oil and margarine to billions of people in developing nations like China, India, Pakistan, Bangladesh and Vietnam. 

According to Oil World trade journal, Malaysia and Indonesia are expected to export the bulk of the 62 million tonnes of palm oil traded worldwide this year. 

"Indonesia is expected to produce 32.5 million tonnes of palm oil this year. Together with Malaysia, we'll continue to supply 85 per cent of the world's palm oil," Fadhil said.

In the last five years, Malaysia earned as much as US$20 billion a year from palm oil exports. 

This year, Fadhil said Indonesia is forecast to earn around US$17 billion in palm oil exports, provided palm oil prices trade above US$700 per tonne.

Meanwhile, on the implementation of the Goods and Services Tax (GST), Sime Darby Plantation chief financial officer Renaka Ramachandran said the palm oil sector is expected to remain competitive as no GST is imposed on palm oil exports. 

“Producers can also claim back GST paid on their inputs of production processes of palm oil products,” she said.  

"No Palm Oil" labels misleading

PETALING JAYA: THE defamatory campaign of “No Palm Oil” or “Palm Oil Free” on food labels in Europe is hurting oil palm planters' livelihoods and denying palm oil exporters equal opportunities to trade.

Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Yusof Basiron said the plam oil industry has no problem complying with the European Union Food Information for Consumers Regulation.

In fact, he said the palm oil industry is proud to supply European companies and consumers with nutritious and responsibly produced palm oil.

“The problem lies in the "No Palm Oil" defamatory insinnuation on the front-of-pack food labels," he said.

In an interview with Business Times yesterday, Yusof explained that the spread of negative message on the front-of-pack food labels is misleading the public into believing that saturated fats in palm oil are bad when in reality they are necessary in a balanced diet.

Since 13th December 2014, the European Union Food Information for Consumers Regulation mandated specification of vegetable oils (i.e. palm, rapeseed, sunflower, soya) on the ingredient list.  

However, food firms had also inserted “No Palm Oil” on the labels, which falsely insinuates palm oil is bad and needs to be avoided.

In Europe, these discriminatory labels are being promoted by chocolate maker Galler and supermarket chain Delhaize, Limagrain and Casino.

Palm oil contains a higher percentage of saturated fats compared with soft oils such as olive, soya, rapeseed and sunflower. At the same time, half of palm oil is monounsaturated and polyunsaturated — known to increase good cholesterol and benefit the cardiovascular system.

Since the 1980s until now, Yusof said there had been studies proving the hydrogenation of liquid oil into spreadable margarine is the real trigger in raising risks of cardiovascular diseases.

“The truth is, palm oil does not contain cholesterol, and saturated fats are a necessity in our daily diet. The real villains in cardiovascular diseases and diabetes are the artificial trans fats brought on by hydrogenation of soft oils to make margarine.”

He said there are more than 150 studies proving that tocotrienols, vitamin E variants in palm oil, lower bad cholesterol.

"Food labelling in Europe should be highlighting the facts about palm oil. But what we see is rogue labelling, which are not provided for under the European Union Food Information for Consumers Regulation. 

"These labels do not correctly inform the consumers. In fact, they unfairly defame palm oil and confuse consumers,” Yusof said. 

Following the deadline of 13th December 2014, Yusof said oil palm planters had expected the governments of France and Belgium to stop these misleading and defamatory labels.

"The oil palm is Malaysia’s economic security crop,” Yusof said, in reference to the country’s annual US$20 billion palm oil exports which support some two million jobs and livelihoods along the sprawling value chain.  

"The least the oil palm planters of developing nations can expect from the French and Belgian governments is to stop these misleading front-of-pack labels and responsibly enforce integrity of information to consumers and businesses," he said.

Yusof noted the 2015 rollout of the Malaysian Sustainable Palm Oil (MSPO) standard reassures the public-at-large that Malaysian palm oil is being produced on the balanced needs of People, Planet and Profits. 

The MSPO, which is driven by the government of Malaysia, gives testament that the industry provide decent jobs and income growth to oil palm planters, including for 300,000 small farmers, while maintaining commitments to environmental protection and sustainable returns to investors.

Yusof said MPOC will press on to raise public awareness in Europe on the facts of palm oil nutrition and oil palm cultivation.

Sarawak CPO output to grow 5%

MIRI: SARAWAK expects five per cent output growth to 3.6 million tonnes of crude palm oil (CPO) this year, as more oil palms mature and bear more fruits.

Sarawak Oil Palm Plantation Owners' Association (Soppoa) chairman Paul Wong said members should be able to harvest and squeeze out five per cent more than last year's 3.44 million tonnes. 

Currently, more than 1.2 million hectares are planted with oil palms, spreading from Tanjong Datu to Limbang.

"This covers practically the length and breathe of Sarawak, of which about 10 per cent of the planted area is owned by 17,578 smallholder families," Wong told Business Times in a telephone interview yesterday.

The palm oil industry is one of the most stringently governed industries in Malaysia. It comes under the purview of the Malaysian Palm Oil Board (MPOB) from planting, harvesting and export of palm oil. 

In addition to this, planters there adhere to land codes and laws administered by Sarawak's Ministry of Land Development. 

Palm oil produced in Sarawak is traceable from the mills to the fresh fruit suppliers as majority of these are from estates of the mills’ companies which adopt Good Agricultural Practices (GAP) in their operations. 

Smallholders who sell fresh fruits bunches to the mills, also adopt GAP as part of their responsibilities to ensure that the entire supply chain is traceable.

From 2000 to 2015, SOPPOA estimates investments in estates, mills, refineries and other related activities to surpass RM25 billion.

“Many assume that the palm oil industry is just confined to farmers. But it is more than that,” Wong said. Bankers, insurance companies, freight forwarders, cargo surveyors, scientists and engineers are also part of the palm oil supply chain, he said.

Malaysia's sprawling palm oil industry is also employing more talents, Wong added.

The sector entails production of margarine, cooking oil, oleochemicals, transport and storage of palm oil at the ports, palm oil futures trading at brokerages, design and building of refineries and biodiesel plants, animal feeds, vitamin E extraction and even the development of nutrient-enriched cosmetics.

On CPO, in the last six months, the weakening Ringgit over the US Dollar has helped stimulate demand and firm up prices. More so, supply cuts from low-lying estates in Kelantan, Terengganu and Pahang that had been inundated by floods has fuelled bullish sentiment in palm oil prices. 

The third month benchmark CPO futures on the Malaysian Derivatives Exchange continued its uptrend for the fifth week. Yesterday, it closed at RM2,344 a tonne.

"The higher the price climbs, the higher our palm oil exports. Hopefully, this year we can do better than last year's average of RM2,350 per tonne," Wong said.

Floods keep CPO prices buoyant

KUALA LUMPUR: Palm oil prices continue to stay bouyant as the latest data from the industry regulator showed fruit harvesting activities came to a standstill in areas inundated by the floods.

The Malaysian Palm Oil Board (MPOB) noted crude palm oil (CPO) output in Kelantan, Terengganu and Pahang fell 28 per cent in December 2014 to 201,736 tonnes from a year earlier.

Supply cuts has fuelled bullish sentiment in palm oil prices. CPO futures on the Malaysian Derivatives Exchange yesterday continued its uptrend in the fifth week, closing at RM2,353 a tonne.

Analysts anticpate CPO prices to go beyond RM2,400 per tonne in the next few weeks as the production in the east coast of the Peninsula is expected to contine being affected by the floods.

For the past six weeks, the heavier-than-usual monsoon flood in the east coast of Peninsula Malaysia had killed 28 people and displaced more than 200,000. It had also damaged many houses, roads and bridges.

RHB Research maintained a neutral outlook on the plantation sector as it cited heavy flooding is the main culprit of the sharp production decline in December 2014.

"Inventory level will likely continue to fall in the next four months as the seasonal downcycle progresses. Although near-term upside for palm oil price appears to be on the cards, we assume prices to average at RM2,500 per tonne," it told investors yesterday.

MIDF Research highlighted the higher-than-normal rainfall towards the end of 2014 over Peninsular Malaysia in particular, has had adverse effects on the oil extraction rate (OER). In December, the OER in Peninsular Malaysia dropped 20.14 per cent from 20.46 per cent. 

As heavy rainfalls are expected to continue in January 2015, the research house does not expect this month's CPO production to recover significantly.

It also said the weakening Ringgit over the US Dollar will also help to stimulate demand and firm up CPO prices. MIDF reiterated its neutral stance on the sector and forecast CPO price to average at RM2,650 per tonne.

PublicInvest Research noted that in December 2014, stock-to-usage ratio slid from 10.9 per cent to 9.8 per cent as CPO production tumbled, while exports improved slightly.

It said December 2014 palm oil exports was 0.4 per cent more than in November as weaker demand from China was cushioned by stronger exports to EU, India, Pakistan and the US.

Stocks-to-usage ratio reflects the excess of supply against demand. It is calculated by dividing the ending stocks by the demand. A fall in stock-to-use ratio means higher chances of price rise in the weeks ahead.

The research house said damaged roads and bridges, which have hampered transportation and harvesting activities, will take a few months to be repaired. 

"CPO output in the east coast would continue to be affected in the coming months. As such, we expect CPO prices to slowly tip over RM2,400 per tonne in the next couple of week."

HLIB Research believes this month's stockpile will fall further on seasonal output downtrend. Like other research houses, HLIB maintained a neutral call on the oil palm sector. 

China helps Malaysia out of deep water

KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak is hopeful livelihoods and business in Malaysia's flood-damaged areas will be restored in less than two years .

"It won't take as long as two years.... And for those who own land, we can start building permanent homes for them immediately," he told reporters after receiving initial disaster relief supplies from China at Wisma Perwira today.

"I would like to express my deepest appreciation and gratitude to the Chinese government and its president Xi Jin Ping, for their considerate and kind gesture in providing us with assistance. 

"The contribution is a clear manifestation of the warm ties that we have fostered," Najib said

China, topping the list of overseas donors, is sending some US$10 million in relief aid such as makeshift tents, water pumps and purifiers as well as power generators. 

Chinese ambassador to Malaysia Dr.Huang Hui Kang said the Chinese people sympathise with those affected by the flood. 

"We are families, we are brothers, we help each other. We cannot just leave Malaysians to deal with this alone," he said.

The tents come in 12 and 36 sq metres. They can easily accommodate one small family, providing them with temporary shelter while waiting for their permanent homes to be built. 

But first the tents need to be fitted with proper lighting and flooring. These will be utilised by those who lost their houses, including those in Manek Urai, PLKN camps and Wataniah camps in Kelantan.

China will also provide pre-fabricated homes to hundreds of flood victims, the supplies for which will be delivered on multiple flights to Kuala Lumpur's city airport at Subang.

The US has offered medical support while Singapore has also sent water purification tanks to ensure clean water supplies in the badly-hit state of Kelantan.

Tough times don't last but tough people do

Sime Darby Foundation (YSD) has contributed over RM1.2 million to assist flood victims in Kelantan, Pahang and Terengganu.

Of this amount, RM700,000 was channelled to the Malaysian Medical Relief Society (MERCY Malaysia) Humanitarian Relief Fund. 

Sime Darby group corporate responsibility and Sime Darby Plantation (SDP) have also set aside a further RM500,000 for relief efforts in the form of essential supplies to affected communities in its estates.

YSD chairman Tun Musa Hitam said he hoped the contribution would help flood victims get through the rough days ahead as they rebuild their lives.

"YSD is also working with MERCY Malaysia to reconstruct homes that were demolished by flood waters in three villages in Kuala Krai.

"In addition, we will provide school uniforms, school shoes, socks, backpacks, pencil cases and stationeries to 300 children there," he added.

The floods, the worst to hit the nation in the last four decades, also affected SDP estates in Sungai Mai, Sungai Tekal, Kerdau, Jentar and Mentakab in Pahang.

Natural disasters which are perennial like floods are terrifying for those who are affected, especially the feeling of being helpless and having no control over what happens. 

Sime Darby employees are also affected by the floods. 

It is at times like these that the entire nation comes together to alleviate the sufferings of those afflicted.

“I've been following this closely. Our hearts and thoughts are with those who have lost much," said Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh.

"We hope that the assistance given by Sime Darby, in some way, will help to tide them over while they are trying to get some normalcy back into their lives,” he added.

Another plantation company Kuala Lumpur Kepong Bhd pledged more than RM1 million in cash aid to its employees and the local community living in Kelantan who are suffering from the worst floods in decades.

“Having witnessed first-hand, the scale of the destruction wrought by the floods in Kelantan, I am saddened to see the plight of our people," said KLK chief executive officer Tan Sri Lee Oi Hian. 

"I am, however, extremely thankful that all of KLK’s employees and their families totalling 4,000, have survived the floods. I hope that this assistance will help tide our people over until things normalise," he said.

"KLK will continue to take care of our employees as we always have and provide other forms of assistance to these victims until they are back on their feet,” he added.

This RM1 million cash aid is being distributed to approximately 520 households in Kelantan. 

Earlier, the group had provided food supplies, generators to produce electricity, clean drinking water and clothing to the flood victims. 

Arrangements are also being made to provide school starter kits to 700 school-going children in the affected areas. 

In addition, many of the Group’s employees had volunteered their time to help pack the supplies, and had also donated more than five tonnes of clothes and other essential items.

When the monsoon rain intensified in the middle of December 2014, KLK’s estate managers in Kelantan got ready emergency supplies for the annual floods. However, nothing could have prepared them for the magnitude of the flooding this time around. 

Despite a prompt crisis response, the Group’s estates and infrastructure have sustained severe damage amounting to initial estimate of RM5 million. KLK continues to pay wages to its 1,700 employees despite work having come to a stand-still during the floods.

In Perak, KLK has been working with the State Welfare Department and relief centres to supply humanitarian aid in the form of food and hygiene kits, as well as cleaning equipment. 

KLK’s corporate responsibility activities are still on-going to provide further assistance in the cleaning-up process of the flood aftermath.

“I am very grateful for the solidarity of our employees in the other regions who swung into action to mobilise aid. We will take away the lessons learnt from this flood and re-assess our current disaster response system to further improve on the early warning preparations,” Lee said.

Meanwhile at Pahang, Felda Global Ventures Holdings Berhad (FGV) announced that it is distributing RM810,000 in donations to its employees and families in the states affected by the floods.

FGV group president and chief executive officer Dato’ Mohd Emir Mavani Abdullah as well as senior managers visited FGV employees and their families affected by the floods in Kampung Badok, Pahang. 

Contributions totalling RM24,900 were extended to assist the 24 flood victims. 

Emir estimated that over 6,200 FGV employees and surrounding residents have been affected by this disaster. 

FGV had mobilised its support personnel and assets to provide on-site help to all affected communities and to ease their burden.”

“The distribution of the donations has been conducted gradually, especially in areas badly hit by the floods," he said. "In the first phase, assistance was provided in the form of food supplies and daily necessities. In the second phase, FGV distributed cash assistance to the victims,” he added.

Overall, just 6.34% of FGV’s total planted area has been affected by the floods. This is comprising 4% in Pahang, 2% in Kelantan, 0.22% Terengganu and 0.12% in Negeri Sembilan.

Former FGV ceo Tan Sri Sabri Ahmad passed away

KUALA LUMPUR (Bernama): Former Felda Global Ventures Holdings (FGV) Group President and Chief Executive Officer (CEO) Tan Sri Sabri Ahmad, 68, passed away from lung cancer at 5.30am here today.

Sabri was also former CEO of Golden Hope Plantations Bhd and former Chairman of the Malaysian Palm Oil Board.

He first joined the civil service in 1970 to serve the Ministry of Agriculture, then moved on to the private sector in 1985 under Harrisons Malaysia Plantations Bhd.

His 28-year involvement in the industry include that at Golden Hope as well as at Mentakab Rubber Co Malaya Bhd, Negara Properties (M) Bhd, MSM Malaysia Holdings Bhd and Australian Agricultural Co Ltd.

When Sabri was at Golden Hope, the company had the distinction of country’s largest plantation landbank and the best oil extraction rate. 

In 2007, he gave solid support to the government's aspiration of having Permodalan Nasional Bhd's units Golden Hope, Kumpulan Guthrie and Sime Darby merged into one entity.

When Sabri was appointed by the government to lead FGV, he achieved substantial milestones in bridging the gap between the corporate world and politicians. 

This is a unique challenge because FGV is different from other plantation companies. FGV's stakeholders have a lot more social considerations and the group's political influence cuts across a votebank of 54 constituencies. 

Sabri's optimistic attitude and leadership skills was instrumental in FGV's listing on the stock market in 2012. At that time, FGV was the world’s second-largest initial public offering (IPO) after Facebook.

A respected plantation expert and friendly corporate leader Sabri is remembered for his distinguished service and contribution to the nation.

He was awarded the Darjah Dato’ Paduka Tuanku Ja’afar (DPTJ) which carries the title “Dato’” from the Negri Sembilan State Government in 2004, the Darjah Panglima Setia Mahkota (PSM) which carries the title “Tan Sri” from the Federal Government in 2013, and the Palm Oil Industry Leadership Award (PILA) 2014 in October last year.

At 3pm, Sabri was buried at the Bukit Kiara Muslim cemetery.

CPO shines in record year

KUALA LUMPUR: Bursa Malaysia's derivative trades hit all time high in 2014 with total volume averaged 50,654 contracts per day, an increase of 17 per cent from 2013 volume of 43,315 contracts. 

When contacted by Business Times yesterday, Bursa Malaysia Derivatives Bhd chief executive officer Chong Kim Seng noted the market's star performer crude palm oil futures (FCPO) surged beyond 10 million contracts, up 28 per cent from 2013.

He said vegetable oil traders worldwide continue to look to Bursa Malaysia as the global price benchmark reference for palm oil prices. 

"In the last six years, the palm oil trading volume on the futures market had more than doubled. Back in 2009, it was only four million contracts. 

"2014 is an exceptional year for FCPO. We surpassed the 10 million contract mark. That also translated to an all-time high average daily volume of 41,285 contracts, 28 per cent more than 2013’s volume of 32,251 contracts," he added.

Malaysia produces some 20 million tonnes of palm oil a year, of which about 19 million tonnes are shipped out of the country in the form of cooking oil, margarine, oleochemicals, animal feed and biofuel.

Bursa Malaysia's palm oil futures market value adds to this as Chong noted that this year the exchange is expected to repeat or better 2014's performance of settling more than 10 million contracts of FCPO.

Each FCPO contract is 25 tonnes. So, at more than 10 million contracts, that worked out to 253 million tonnes of palm oil settling at the futures market.

"If Malaysia only has the physical market, we would only be trading around 20 million tonnes of palm oil. But with Bursa Malaysia's palm oil futures market settling contracts amounting to 253 million tonnes, we have traded up more than 12 times that of the physical market," he added.

Chong noted the increased volatility in the crude oil and oilseed markets globally had and will continue to catalyse the volume surge in FCPO.

Indeed, the palm oil industry has seen much volatility last year. From a high of RM2,800 per tonne in March 2014, palm oil prices tumbled to a low of around RM1,950 per tonne, five months later.

Since September 2014, prices have somewhat stabilised and had started to climb. Yesterday, the third month benchmark palm oil futures on Bursa Malaysia closed RM20 higher at RM2,284 per tonne. 

As futures prices climbed, palm oil prices in the physical market rose too. In explaining the tight correlation between the two markets, Chong said "there's continuous interplay of price movements between the two markets." 

"Because of this, the futures market allows for price risk encountered in the physical market to be transferred to other parties more willing to assume the price risks," he said.

Chong urges more businesses in this region, that are exposed to the volatility of palm oil prices, to hedge their position with Bursa Malaysia. “Risks cannot be eliminated but traders can manage it by leveraging on our options and futures,” he said.

In taking the cue from price rises in the futures market, plantation counters on the equity market like IOI Corp Bhd, Sime Darby Bhd, Kuala Lumpur Kepong Bhd, Genting Plantations Bhd and Sarawak Oil Palms Bhd had seen their share prices, in the last couple of weeks, appreciate by beween 5 and 10 per cent.

When asked to comment on palm oil price uptrend in the futures market, MIDF Research analyst Nadia Kamil said the ongoing floods that may have inundated some oil palm estates in the east coast of Peninsular Malaysia is a blessing in disguise. 

"The expectation of lower palm oil output resulting from flood has helped push prices higher. Going forward, prices in 2015 could consolidate at a higher price range of between RM2,400 and RM2,800 per tonne," she said.

Malaysia needs consistent downstreaming policy

In the last couple of years, Malaysia's palm oil exports had been, at best, lacklustre. Refiners tell OOI TEE CHING that Malaysia needs to be consistent in its downstreaming policy and be more responsive to overseas tariff changes.

In 2014, India emerged as Malaysia's biggest buyer when it ordered 2.87 million tonnes of palm oil in the first 11 months. This worked out to be 35 per cent more than 2.12 million tonnes posted in the same period in 2013. This is good news. But recently, the situation has made a U-turn.

On the 24th December 2014, India raised the import duty on crude palm oil (CPO) from 2.5 per cent to 7.5 per cent. It had also increased the duty on refined palm oil to 15 per cent from 10 per cent.

In an interview with Business Times, Palm Oil Refiners Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad noted India's decision was not surprising. 

It was meant to protect the interest of its oilseed farmers and edible oils refiners. 

"It also signals to Malaysia that they are not interested to buy that much CPO. It warrants that Malaysia should stop declaring duty-free CPO exports and let market forces dictate its own course," he said.

Jaaffar was referring to Plantation Industries and Commodities Minister Douglas Uggah Embas' declaration of duty-free CPO exports from September 2014 to February 2015. Such a declaration is actually redundant. 

At worst, it even confuses downstream investors as to the Malaysian government's commitment to value adding the palm oil industry.

Since September 2014, CPO prices averaged below the tax threshold of RM2,250 per tonne. Malaysia should have just let the tax structure run its course, just like what Indonesia is doing. As long as CPO is trading below RM2,250 and US$750 a tonne, respectively, there is no duty on CPO exports from Malaysia and Indonesia.

The strategy of declaring duty-free CPO exports to bring down national stockpile level in the hope of pushing up CPO prices is not so effective like before because Malaysia is no longer the world's biggest palm oil producer.

"We need to be more discerning about this 'silver bullet' because the current global economic situation is very different from 10 years ago," he said. "Adhoc declaration of duty-free CPO exports can backfire and trigger needless price war with Indonesia. CPO price war is hurtful for all oil palm planters, whether they are in Malaysia and Indonesia," he said. 

Many people think refiners and planters are at loggerheads, engaged in a zero-sum game. This is a wrong assumption because refiners are purely concerned about the price gap, and not how low the CPO price will go.

“It is a misconception that in times of falling CPO prices, refiners are happy at the expense of planters. As refiners, we are margin players. It doesn’t matter if CPO prices are high or low," he said.

“In fact, everybody from upstream to downstream of the palm oil value chain win when CPO prices are high. That is the role of the refiners in supporting CPO price as we buy and process every drop of CPO in the country,” he added.

In the last two years, Pakistan's purchase of palm oil from Malaysia fell significantly. Pakistan consumes about 3.2 million tons of edible oils annually and meets more than half of its demand through imports. 

Jaaffar explained that since 2013, Pakistan's free trade pact with Indonesia drew parity to palm oil shipment from Malaysia. This means Pakistan's purchase from Indonesia and Malaysia enjoy a 15 per cent rebate on import duties of 8,000 rupees a tonne on CPO, 10,800 rupees on RBD (refined, bleached and deodorised) palm oil, 9,050 rupees on palm stearin and 9,050 rupees on RBD palm olein.

"Pakistan is a price sensitive market. Since Indonesia is able to sell RBD palm oil more competitively than RBD palm olein, Pakistan had bought more RBD palm oil at the expense of Malaysian RBD palm olein," he said.

China, like Pakistan, had also slashed its palm oil purchase from Malaysia. In the first 11 months of 2014, China had only bought 2.58 million tonnes. This is a 23 per cent shortfall from 3.34 million tonnes in the same 11 months of 2013.

In the last five years, Jaaffar noted China's palm oil demand had been artificially pushed as 'financial products' rather than 'commodity products'. Since banks in China give peculiar treatment to palm oil, viewing it as 'institutional instruments', palm cooking oil and margarine demand will continue to be augmented by fiscal policy changes there.  

Nevertheless, Jaaffar said the current shortfall in China's palm oil purchase is also exacerbated by subdued consumer spending. "China is Malaysia's best cooking oil market. In view of cautious consumer spending, we need to be more focused in market segmentation to raise popularity and branding of our oil," he said.

Three weeks ago, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Prime Minister Datuk Seri Najib Razak is forming the National Export Council (NEC) to explore new ways to improve the country’s export chain, logistics and output. 

Poram lauds the NEC formation and urges this high-powered decision-making body to make an iron-clad commitment to palm oil downstream players that 'a level playing field with rivals' is consistently maintained for the sake of Malaysia's export competitiveness.

"The current 'flip-flop policy change' in exempting CPO export duties for six months from September 2014 to February 2015 is confusing foreign and local downstream investors who have already sink in billion of dollars in investments. The erosion of investor confidence is not healthy for our economy," Jaaffar said.

He also proposed that the NEC adopts advocacy and political tools in tackling the global smear campaign on palm oil so as to boost the country’s exports. "The right (and also difficult) thing to do is to tackle barriers (be it tariff or non-tariff) to palm oil trade at its roots," he said.

“This strategy is healthier for all stakeholders along the palm oil value chain; whether you're a planter, a cooking oil trader or a biodiesel manufacturer. We must remember, the oil palm is Malaysia’s economic security crop,” Jaaffar said, in reference to the country’s annual US$20 billion palm oil exports which support some two million jobs and livelihoods along the sprawling value chain.  

Since 1st January 2015, Malaysia assumed chairmanship of Asean. The 10-member Asean, formed in 1967, comprises Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei. Cambodia, Laos, Myanmar and Vietnam. 

It is also this year, the Asean Economic Community (AEC) vision is being rolled out. With 600 million people or almost 9.0 per cent of the world population and an economic size of US$1.8 trillion, the AEC is Asia's third largest economy.

The AEC is created for people, goods and money to move around with little or no economic barriers.

Jaaffar said it would be timely for Malaysia, Indonesia and Thailand to collectively have palm oil listed as 'environmental goods and services' under the Asean Trade in Goods Agreement.

"The broad objective of this suggestion is to get environmental branding for palm oil and eventual adoption at Regional Comprehensive Economic Partnerships (RCEPs), Asia Pacific Economic Cooperation (APEC), Trans-Pacific Partnership Agreement (TPPA) and other free trade pacts," Jaaffar said.

The lure of potato chips

It was during break-time at a palm oil industry meet, a few months back, when I spotted this CEO of a plantation company, standing next to a snack table. 

He was eyeing this big bowl of potato chips.

His hand was reaching out for the snack bowl.

"Hey! You said you're cutting down on oily, sugary and salty food. You don't even want to eat mooncakes," I snapped at him.

His hand hesitated. But when he looked up and realised it was me, he smiled. 

He proceeded to cram more potato chips into his mouth. Crunch! Crunch! Crunch!

Two seconds later, another CEO of a plantation company, quickly stepped over and "came to his rescue."

This CEO, who happens to be his good friend, quipped, "potato chips are fried in palm oil. There's no trans fat, it's a healthy snack." In making good on what he said, he also reached into the bowl of potato chips.

I blinked and stared at these two CEOs smiling at each other while munching on their potato chips. Crunch! Crunch! Crunch!

"See ... it's so crispy. Try some," the normally poker-faced CEO grinned. Crunch! Crunch! Crunch!

Admittedly, these two smiley-faced CEOs are very convincing. 

The delectable crunch is so irresistible. Before I knew it, my hand reached into the bowl of potato chips, too.

POW!! The taste of salt flakes, faint hint of fresh pepper and the crisp fried potato sensations exploded in my mouth. 

Looks like the lure of the potato chips can really make people smile.

So, how do you get crispy potato chips? The two CEOs recommend deepfrying the potatoes in palm cooking oil.

Oils and fats have the ability to create unique textures — crispy or creamy — that appeal to our taste buds.

So, what is crispiness? When potatoes are dropped into a wok of frying oil — which is far hotter than water's boiling point of 100°C — rapidly expanding steam creates crispy bubbles that gives the potato chip its satisfying crunch.

As the potato chip snap between our teeth, the crunchiness signals freshness on our tongue. The fat in the potato chip catalyse the release of volatile compounds in our mouth and, ultimately, the flavourful perception in our brain.

So, the next time you're thinking of reaching out for "light colour or purer-looking" cooking oil to deepfry ... stop!

Remember the words of these two CEOs, "It's best to deepfry with palm cooking oil. Unlike softoils that oxidise very easily, palm oil is heat stable and is packed with nutrients like the supervitamin E called tocotrienols." 

Crunch! Crunch! Crunch!