MPOB Gears Up To Meet EUDR Requirements
- The Malaysian palm oil industry is gearing up to meet EUDR Requirements for palm oil
- The EUDR entered into force on 29 June 2023 and the new rules will become applicable as of 30 Dec 2024. Exemptions and specific provisions will be applicable for micro and small enterprises (SMEs)
- To ensure compliance, the Malaysian Palm Oil Board has rolled out the Sawit Intelligent Management System (SIMS) which is expected to be enforced in July 2024, a full six months before EUDR requirements kick in.
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Image credit: The Edge Markets
The Sawit Intelligent Management System (SIMS) was officially unveiled by Malaysian Prime Minister, Datuk Seri Anway Ibrahim, at this year’s PIPOC. The system was designed to facilitate transactional data management in a comprehensive information hub that will make it easier for the Malaysian Palm Oil Board (MPOB), a government agency, to manage the Malaysian palm oil industry.
The new website for SIMS describes the system as following:
Sawit Intelligent Management System (SIMS), developed by the Malaysian Palm Oil Board (MPOB), facilitates compliance by licensees in accordance with MPOB regulatory requirements.
It enables comprehensive information management, enhancing industry efficiency and cost savings.
In addition, SIMS organizes data to enable seamless monitoring and tracing throughout the oil palm supply chain.
While the centralization of information will undoubtedly reduce costs of managing an entire industry and make it easier to increase efficiency, the most interesting aspects of SIMS will be how the industry is monitored, with supply chains traced to farm in compliance with national regulations governing the industry. How will SIMS differ from the multiple services of private enterprise groups that monitor the palm oil industry?
Non-profit groups including Global Forest Watch describe palm oil supply chains as, large and complex and achieving traceability to farm level can be a time and resource-intensive undertaking, in offering its work to support the EUDR.
The problem with meeting EUDR compliance by monitoring deforestation with the use of satellites, is that it is a knee-jerk reaction in the sense that violating actions are only detected after they have taken place.
Decades of satellite monitoring of the palm oil industry has shown that even companies with No Deforestation, No Peat, No Exploitation (NDPE) can be found guilty of violating their commitments. These companies and the voluntary certification schemes which certifies them, have an easy out in suspending or cutting off dirty supplies.
The same luxury is not available to the Malaysian Palm Oil Board which is responsible for licensing palm producers from the biggest plantation to the small farmer with two acres. For Malaysia, it is a simple matter of everything or nothing.
MSPO an Absolute Certification
SIMS, as a national commitment to producing palm oil sustainably, cannot afford to be associated with palm oil certification schemes that send out press statements on improving its traceability at the same time as independent journalists accuse scheme members of secretly controlling companies that had cleared large areas of rainforest in Indonesia.
SIMS is at its core, is Malaysia’s official assurance to its buyers in the EU, that its palm oil is a quality that meets EUDR demands and beyond. Which is why the country is fighting for the base position that the EU must rate Malaysian palm oil as “low risk” for deforestation as a starting point to meet EUDR demands.
Further assurance is offered in the Malaysian Sustainable Palm Oil (MSPO) certification scheme, a semi-official program that puts every operator in the Malaysian palm oil supply chain under a rigorous set of standards before certification is approved. With its ground audits through third party assessors including Intertek, Bureau Veritas, SGS and others, Malaysia has invested heavily into proving that its palm oil, is sustainable. For further verification, the MSPO created a traceability module similar to that of voluntary certification programs in MSPO Trace. This should have been more than enough to comply with EUDR demands for traceability to farm, so why SIMS?
In a response to an email enquiry, Dr. Ahmad Parveez Ghulam Kadir Director General Malaysian Palm Oil Board (MPOB) wrote that:
Malaysia's oil palm industry faces various challenges including trade issues, false claims related to forced labour, trade barriers and climate change affecting the image as well as the production and export of oil palm products. Even so, the Ministry is confident that these issues can be dealt with as best as possible.
The Director General attached a document spelling out how SIMS works within a framework of certification and the palm oil industry’s push to elevate its sustainability practices. Key to these are:
Automatic generation and submission of daily records.
iv. Palm oil monitoring system by enhancement of transportation security with GPS
v. All transactions were supported by registration of contract (integration with
other MPOB system: e-Registration)
vi. Location of supply sources such as fresh fruit bunches (FFB) suppliers and crude
palm oil (CPO) producers with the support of coordinate information
(integration with other MPOB system: e-LesenPK and MyLesen)
vii. Status of Malaysian Sustainable Palm Oil (MSPO) certification (integration with
MSPO Trace).
As mundane as these SIMS criteria are for the average reader, they are essential to prove that the MPOB has its thumb on the sustainability of Malaysian palm oil. That Malaysian palm oil is fit for the European Union’s green ambitions.
The introduction of SIMS by Malaysia is a pioneering model of what is needed by producing countries to meet the green demands of the European Union. National programs like SIMS will be needed by consultants like Boston Consulting Group, to ready its clients to comply with EU climate and ESG regulations in the short term. More importantly, the information collected by SIMS will be critical in Malaysia’s on-going efforts to meet the sustainability demands of its buyers.
Medium term collaborations between EU member states and Malaysia under programs like National Initiatives for Sustainable Climate Smart Oil Palm Smallholders (NI-SCOPS) program in Malaysia can ease the tensions in the EU-Malaysia relationship.
The critical importance of SIMS, will be as a long term solution to solve the problems between producing countries and the EU, which is facing a disrupted supply for common imported commodities due to EUDR.
Published November 2023, CSPO Watch
The new website for SIMS describes the system as following:
Sawit Intelligent Management System (SIMS), developed by the Malaysian Palm Oil Board (MPOB), facilitates compliance by licensees in accordance with MPOB regulatory requirements.
It enables comprehensive information management, enhancing industry efficiency and cost savings.
In addition, SIMS organizes data to enable seamless monitoring and tracing throughout the oil palm supply chain.
While the centralization of information will undoubtedly reduce costs of managing an entire industry and make it easier to increase efficiency, the most interesting aspects of SIMS will be how the industry is monitored, with supply chains traced to farm in compliance with national regulations governing the industry. How will SIMS differ from the multiple services of private enterprise groups that monitor the palm oil industry?
Non-profit groups including Global Forest Watch describe palm oil supply chains as, large and complex and achieving traceability to farm level can be a time and resource-intensive undertaking, in offering its work to support the EUDR.
The problem with meeting EUDR compliance by monitoring deforestation with the use of satellites, is that it is a knee-jerk reaction in the sense that violating actions are only detected after they have taken place.
Decades of satellite monitoring of the palm oil industry has shown that even companies with No Deforestation, No Peat, No Exploitation (NDPE) can be found guilty of violating their commitments. These companies and the voluntary certification schemes which certifies them, have an easy out in suspending or cutting off dirty supplies.
The same luxury is not available to the Malaysian Palm Oil Board which is responsible for licensing palm producers from the biggest plantation to the small farmer with two acres. For Malaysia, it is a simple matter of everything or nothing.
MSPO an Absolute Certification
SIMS, as a national commitment to producing palm oil sustainably, cannot afford to be associated with palm oil certification schemes that send out press statements on improving its traceability at the same time as independent journalists accuse scheme members of secretly controlling companies that had cleared large areas of rainforest in Indonesia.
SIMS is at its core, is Malaysia’s official assurance to its buyers in the EU, that its palm oil is a quality that meets EUDR demands and beyond. Which is why the country is fighting for the base position that the EU must rate Malaysian palm oil as “low risk” for deforestation as a starting point to meet EUDR demands.
Further assurance is offered in the Malaysian Sustainable Palm Oil (MSPO) certification scheme, a semi-official program that puts every operator in the Malaysian palm oil supply chain under a rigorous set of standards before certification is approved. With its ground audits through third party assessors including Intertek, Bureau Veritas, SGS and others, Malaysia has invested heavily into proving that its palm oil, is sustainable. For further verification, the MSPO created a traceability module similar to that of voluntary certification programs in MSPO Trace. This should have been more than enough to comply with EUDR demands for traceability to farm, so why SIMS?
In a response to an email enquiry, Dr. Ahmad Parveez Ghulam Kadir Director General Malaysian Palm Oil Board (MPOB) wrote that:
Malaysia's oil palm industry faces various challenges including trade issues, false claims related to forced labour, trade barriers and climate change affecting the image as well as the production and export of oil palm products. Even so, the Ministry is confident that these issues can be dealt with as best as possible.
The Director General attached a document spelling out how SIMS works within a framework of certification and the palm oil industry’s push to elevate its sustainability practices. Key to these are:
Automatic generation and submission of daily records.
iv. Palm oil monitoring system by enhancement of transportation security with GPS
v. All transactions were supported by registration of contract (integration with
other MPOB system: e-Registration)
vi. Location of supply sources such as fresh fruit bunches (FFB) suppliers and crude
palm oil (CPO) producers with the support of coordinate information
(integration with other MPOB system: e-LesenPK and MyLesen)
vii. Status of Malaysian Sustainable Palm Oil (MSPO) certification (integration with
MSPO Trace).
As mundane as these SIMS criteria are for the average reader, they are essential to prove that the MPOB has its thumb on the sustainability of Malaysian palm oil. That Malaysian palm oil is fit for the European Union’s green ambitions.
The introduction of SIMS by Malaysia is a pioneering model of what is needed by producing countries to meet the green demands of the European Union. National programs like SIMS will be needed by consultants like Boston Consulting Group, to ready its clients to comply with EU climate and ESG regulations in the short term. More importantly, the information collected by SIMS will be critical in Malaysia’s on-going efforts to meet the sustainability demands of its buyers.
Medium term collaborations between EU member states and Malaysia under programs like National Initiatives for Sustainable Climate Smart Oil Palm Smallholders (NI-SCOPS) program in Malaysia can ease the tensions in the EU-Malaysia relationship.
The critical importance of SIMS, will be as a long term solution to solve the problems between producing countries and the EU, which is facing a disrupted supply for common imported commodities due to EUDR.
Published November 2023, CSPO Watch
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