Malaysian Sustainable Palm Oil
What you should know
The Malaysian Sustainable Palm Oil
For some background on the MSPO, the certification scheme was introduced as a voluntary scheme in 2015 to address the certification shortfalls of international certification schemes including the RSPO and the ISCC. The foundations were actually laid in 2013 when the standards for MSPO were launched. Following that, the Malaysian Palm Oil Certification Council (MPOCC) was incorporated in 2014 as an independent body to oversee certification. Its early success in certification led to a ministerial decision in 2017 to make the MSPO a national mandate for all of Malaysia’s palm oil operations.
A deadline for industry compliance with the MSPO was set for Jan 01, 2020 which was in hindsight, too aggressive. The Malaysian palm oil industry under the supervision of the Malaysian Palm Oil Board (MPOB) runs a tight national program which controls the licensing of all palm oil operations from the biggest of multinational companies down to approved seedlings for smallholders. The government provided funding of 50 million Malaysian Ringgit to assist small and medium farmers to gain certification.
As of August 2020, more than 85% of Malaysia’s 5.9 million hectares (ha) of oil palm plantations and about 90% of 452 palm oil mills had obtained the Malaysian Sustainable Palm Oil (MSPO) certification with 260 of certified mills being certified under the Supply Chain Certification System (SCCS) for traceability.
These figures are all available on the MPOCC website and show that there is some work yet to be done before 100% of Malaysia’s palm oil can be covered under the MSPO certificates. What is noteworthy is the level of transparency that Malaysia has set for MSPO certification. Through its traceability app MSPOtrace which can be downloaded through Android and Apple platforms, the MPOCC has opened up all of Malaysia’s palm oil operations for public scrutiny.
Further efforts towards the management of Malaysia’s palm oil industry with relevance to traceability and accountability will be established by the Malaysian Palm Oil Board through its up and coming Etrace platform.
These extraordinary investments and activities are part and parcel of Malaysia’s determination to show that its palm oil is sustainably produced. Despite these investments, very little is known about the MSPO outside of Malaysia. We took an in-depth look at the MSPO with an interview with MPOB which provided some good insights into the Malaysian Sustainable Palm Oil scheme.
Q & A with Malaysian Palm Oil Board (MPOB)
CSPO Watch: Back in 2017 when the Malaysian government converted the MSPO from a voluntary scheme to a mandatory one, there were complaints from the industry of double certification costs as Malaysian palm oil producers had subscribed to both the RSPO and ISCC. It is understood that the MSPO met those concerns by allowing operations with existing global certificates to skip Part 1 of the certification to save some costs but now the question becomes that of double qualifications. Why didn’t the MSPO only certify only those operations that have not been certified by independent schemes in its mission for 100% certification of Malaysian palm oil?
MPOB: The RSPO and ISCC have a long history in Malaysia. We are proud of Malaysian palm oil producers that have joined these schemes to prove their palm oil is sustainable but the thing is these external schemes are a B2B scheme. That means if a foreign buyer wants to make sure its supply is sustainable, then they will ask their Malaysian supplier to get certified under these independent schemes.
The MSPO on the other hand, is a national scheme which Malaysia will feature when we present Malaysian palm oil to the global market. This is necessary because if you look at the debates on palm oil in Europe right now, what is being proposed are national programs to restrict the flow of unsustainable goods into Europe by commodity.
Malaysian palm oil producers have argued that they have certification under third party schemes but these countries have counter argued that these are not so credible. Critics have long said that these schemes cover only European imports but deforestation will continue in the industry as China and India remain two big buyers of palm oil. These critics have pointed to issues like the Mass Balance model where certified palm oil is mixed with palm oil from unknown sources, they have also pointed out smallholders as a major cause of deforestation but form a very small portion of certified palm oil.
To answer the critics and prove once and for all that Malaysian palm oil is sustainable, we wanted a national scheme that addressed these concerns. Within these the short time when MSPO was declared mandatory, 99.64% or 231,576 organised smallholders with 679,075ha of palm oil plantations have received their MSPO certification.
By the time we are done with complete certification of Malaysian palm oil, including all the independent smallholders, we will be able to show with confidence that all the alleged problems with palm oil, is not relevant with Malaysia’s palm oil industry. We need absolute certainty that it is sustainable and we can only do that when we ourselves have walked the plantations and seen operations first hand.
CSPO Watch. Noting that the RSPO or ISCC are B2B certificates but the MSPO certificates can fill that role as well, is there a risk of double counting certified products? Example would be a producer who is double certified and reports exports to both the RSPO or ISCC AND the MSPO.
MPOB: There is no risk of that. It is up to the individual Malaysian producer to use whichever certificate they choose. If the buyer is European, they may choose their RSPO certification or ISCC certification if the end use is for bio-energy. Or they may choose MSPO.
The MSPO is the first of its kind in the global supply of vegetable oils in that every drop of palm oil produced in Malaysia is traceable back to the farm. We hope our buyers recognize the importance of the fact that the MSPO has been able to remove any doubts behind certified palm oil especially in the widely used Mass Balance supply model.
CSPO Watch. A comparison between the MSPO standards and those of the ISCC was conducted in 2018. Since then, the MSPO has achieved two of its shortfalls against the ISCC in that a tracing system and SCCS have been established. This should add points for the Chain of Custody category. In the Sustainability category, the MSPO has adopted a No Peat No Deforestation policy since the comparison with ISCC, this should undoubtedly add more points to MSPO score. Noting that the ISCC is recognized by the EU for deforestation free commodities, are there any plans to have another comparison study done against ISCC standards?
MPOB: We may look at this further down the road. The urgent matters at hand is the certification of independent smallholders in Malaysia so that we may achieve 100% coverage of Malaysian palm oil.
For now, we have closed the two main gaps in Chain of Custody through the SCCS and the government has adopted a No Deforestation policy that has the support of all stakeholders in Malaysia.
The MSPO standards are not fixed in stone, we are willing to work with our buyers to address their concerns so as the European Union addresses the environmental footprint of their imports, we will engage them to see what needs to be done to get MSPO standards up to a point where their concerns maybe allayed. There may be points of contention between what we consider as sustainable and what they think, is sustainable for them as consumers. This is understandable as the views on sustainability may differ between a developed country and one that is developing but we will find common ground to define sustainable palm oil that is mutually accepted.
CSPO Watch. Noting that independent third party certification like the ISCC or RSPO or even Rainforest Alliance are selective in the sense that applicants typically choose their best operations for certification while the MSPO dictates that all palm oil operations are audited under the MSPO, what are the challenges in implementing a nationwide certification scheme?
MPOB: It has definitely not been easy to tackle nationwide certification. We did have a good foundation to work from based on national laws governing all aspects from environmental to human rights.
The biggest challenge has to be the independent smallholders whose first question is if there are premiums for certified palm oil. It is the classic chicken or egg first question. At the MPOB, we are convinced that Malaysia has to take the first step in certifying our palm oil production. We believe the buyers will come once they understand the strength behind the sustainability measures of Malaysian palm oil.
CSPO Watch. GHG calculations on Malaysian biomass from oil palm are being developed with a new standard expected in 2020. This was at the request of stakeholders in the Japanese energy sector who are gearing up to use renewable sources of energy. Can you share some information on how the MSPO will assure the Japanese energy sector that biomass from Malaysian palm oil is sustainable?
MPOB: We have met with the Japanese stakeholders in renewable energy and acknowledged their concerns, substantiated with facts and figures. These are similar to what the EU has been saying so that strengthens our determination to ensure that Malaysian palm oil does not contribute to climate change.
In addition, we are also actively promoting MSPO to the Japanese policymakers and industry players. They have come to acknowledge the principles of MSPO which balance profit, planet and people (3Ps). In other words, MSPO ensures that the livelihoods of the smallholders and environmental protection are taken care of while sustaining the local economic development. At the same time, we strive to avoid implicating the certification costs to the consumers, who already are laden with the high cost of living.
That said, we continue to look for more ways in which we can add our sustainable palm oil agenda. We are confident that we can meet the requirements of the Japanese energy sector for sustainable biomass.
CSPO Watch. Noting that the EU has decided to phase out the use of palm based biodiesel due to questions of its “sustainability” will the standards on biomass for the Japanese market have any bearing on addressing EU concerns of palm based biodiesel?
MPOB: What we expect is that the EU may have slightly different requirements for sustainable biomass or biofuels. We are waiting to see what the requirements are as many different issues are involved. Soy for example, is being questioned as a source for biofuels. In terms of Malaysian palm oil for biofuels or biodiesel, we are actively monitoring the overall position of the EU before taking any firm actions.
Malaysia has voiced its opposition to the EU ruling against palm-based biofuels at the WTO just to let the EU know that we do not agree with how they view the environmental quality of Malaysian palm oil.
CSPO Watch. One of the stated missions of the MSPO is for international acceptance of its certificate. Europe in particular will be a hard sell as even the most established certification bodies have been criticized. What is so different about MSPO certification that would distinguish it over other certification schemes?
MPOB: As I mentioned earlier, the MSPO is a national scheme that is mandated by law. No one gets to choose the best operations for certification. Every farm, no matter how poorly maintained it is, whether it’s owned by multinationals or a small farmer with two acres is audited and improvements must be made to achieve MSPO certification.
The key difference between the MSPO and other palm oil certification schemes is that as a government scheme, the impact is felt nationwide. Where other schemes merely impact the operations of individual plantations or mills, the MSPO creates a much larger impact not just on the palm oil industry in Malaysia. We have the benefit of collaborating with different government departments and industries. If you look at the collaboration between the MSPO and the Malaysian Timber Certification Scheme, this is two of the main agricultural industries getting together to prove that Malaysian palm oil and timber are sustainably produced.
The enforcement of MSPO standards as a national scheme is without equal as the Department of the Environment (DOE) is involved. A simple example of this is the immediate license suspension of a mill by the MPOB when the DOE called it out for water pollution. No third party certification scheme would have the same level of clout that the MSPO does in enforcing its standards. There has been talk of jurisdictional certification or landscape approaches in producing sustainable palm oil and commodities. We have gone beyond that discussion in Malaysia. We have put those into practise.
CSPO Watch. The question that netizens are most interested in is on saving tropical forests and orangutans. Based on your experience as an industry veteran, will the MSPO have a wider impact on conservation than third party certification schemes?
MPOB: That is most definitely the case. Malaysia has more than its fair share of palm oil that is certified by third parties for decades already but it has never been possible to persuade the whole industry to pay into certification. With the MSPO becoming mandatory, there is no longer the excuse that they sell to China or India where their buyers do not ask for certification. Everyone must participate. A simple case would be riparian reserves where companies used to push the edge. Since the MSPO became mandatory, we have seen multiple companies rushing to back off riparian reserves. It's not only that, we have seen reports where companies are actually working with conservation entities to create wide reserves for wildlife.
Beyond that, both the Sarawak and Sabah state governments have stated that any palm oil expansion will only be on degraded lands. At the Federal level, the Malaysian government has said it will ban the conversion of Permanent Forest Reserves to palm oil estates. These pledges for conservation are only possible when the mission to make Malaysian palm oil is a national priority and policy.
CSPO Watch. Is there any way this can be proven to the general public?
MPOB: The Federal Ministry has committed to the publication of maps of all oil palm planted areas in Malaysia to enhance transparency of Malaysian palm oil. The transparency started with the MSPOtrace app and since then, the marketing department at the MPOC has signed with a blockchain provider to further enhance transparency. At the MPOB, we are working on our e-trace platform which will allow us to monitor what’s happening on the ground and take rapid response as needed.
This heavy use of technology will allow us to keep close tabs on the industry and provide access to anyone who wants a closer look at Malaysian palm oil operations.
CSPO Watch. Looking back at the previous decision by the EU that only additional quantities i.e. extra volumes produced on same planted areas would qualify for EU subsidies under RED ll, if you could revisit this point with the EU, what would your arguments for continued EU subsidies for palm-based biofuels be?
MPOB: The argument, and this is one that the Malaysian palm oil industry has said many times, is that the basis of the concerns of the EU in Indirect Land Use Change (ILUC) is not applicable to Malaysia. This is flawed science being touted as fact. Malaysia has the capacity to produce much more palm oil without expanding the land footprint of our industry.
If you look at the low level of productivity from smallholders as an example, the average sits at 1.5 tons per hectare compared to the industry average of 3 tons or more. These are the same smallholders that comprise 40% of Malaysia’s palm oil production.
On top of increased volume from smallholders, if you have read the Reuters report on lost crops due to labor shortage, there is an additional 25% that could be added to Malaysia’s production of palm oil. A rough estimate on lost harvests alone, would put it around 4-5 million tonnes of palm oil, all of which can be put into the global supply without cutting down a single tree.
It’s all there. We can account for higher production volumes without increasing a single inch oil palm areas in Malaysia. All that is needed is for buyers to say that they are interested and willing to pay a fair price for quality palm oil from Malaysia. One of the core principles we adhere to in producing palm oil sustainably is that we should not create a product for which there is no demand. This is a lesson learned from other industries that keep their factories running at full speed to maintain optimum efficiency and costs but end up discounting their product. In Malaysia, with our palm oil industry, we care more about quality than quantity.
This is the message we are bringing to our customers, whether it be Japan or Europe. Climate change and the preservation of biodiversity are global issues that need global stakeholders. In our vision for the sustainable development of Malaysia, let us do what we do best, produce palm oil sustainably. In return, Malaysia with your support will be able to both protect the environment here and support what you produce best in your countries. This should be a common path for all of us towards a global future that is sustainable.
End Q&A with MPOB
Published August 2020, CSPO Watch
certification scheme or MSPO as it is popularly known as, has made some remarkable progress in the certification of Malaysia’s palm oil production.For some background on the MSPO, the certification scheme was introduced as a voluntary scheme in 2015 to address the certification shortfalls of international certification schemes including the RSPO and the ISCC. The foundations were actually laid in 2013 when the standards for MSPO were launched. Following that, the Malaysian Palm Oil Certification Council (MPOCC) was incorporated in 2014 as an independent body to oversee certification. Its early success in certification led to a ministerial decision in 2017 to make the MSPO a national mandate for all of Malaysia’s palm oil operations.
A deadline for industry compliance with the MSPO was set for Jan 01, 2020 which was in hindsight, too aggressive. The Malaysian palm oil industry under the supervision of the Malaysian Palm Oil Board (MPOB) runs a tight national program which controls the licensing of all palm oil operations from the biggest of multinational companies down to approved seedlings for smallholders. The government provided funding of 50 million Malaysian Ringgit to assist small and medium farmers to gain certification.
As of August 2020, more than 85% of Malaysia’s 5.9 million hectares (ha) of oil palm plantations and about 90% of 452 palm oil mills had obtained the Malaysian Sustainable Palm Oil (MSPO) certification with 260 of certified mills being certified under the Supply Chain Certification System (SCCS) for traceability.
These figures are all available on the MPOCC website and show that there is some work yet to be done before 100% of Malaysia’s palm oil can be covered under the MSPO certificates. What is noteworthy is the level of transparency that Malaysia has set for MSPO certification. Through its traceability app MSPOtrace which can be downloaded through Android and Apple platforms, the MPOCC has opened up all of Malaysia’s palm oil operations for public scrutiny.
Further efforts towards the management of Malaysia’s palm oil industry with relevance to traceability and accountability will be established by the Malaysian Palm Oil Board through its up and coming Etrace platform.
These extraordinary investments and activities are part and parcel of Malaysia’s determination to show that its palm oil is sustainably produced. Despite these investments, very little is known about the MSPO outside of Malaysia. We took an in-depth look at the MSPO with an interview with MPOB which provided some good insights into the Malaysian Sustainable Palm Oil scheme.
Q & A with Malaysian Palm Oil Board (MPOB)
CSPO Watch: Back in 2017 when the Malaysian government converted the MSPO from a voluntary scheme to a mandatory one, there were complaints from the industry of double certification costs as Malaysian palm oil producers had subscribed to both the RSPO and ISCC. It is understood that the MSPO met those concerns by allowing operations with existing global certificates to skip Part 1 of the certification to save some costs but now the question becomes that of double qualifications. Why didn’t the MSPO only certify only those operations that have not been certified by independent schemes in its mission for 100% certification of Malaysian palm oil?
MPOB: The RSPO and ISCC have a long history in Malaysia. We are proud of Malaysian palm oil producers that have joined these schemes to prove their palm oil is sustainable but the thing is these external schemes are a B2B scheme. That means if a foreign buyer wants to make sure its supply is sustainable, then they will ask their Malaysian supplier to get certified under these independent schemes.
The MSPO on the other hand, is a national scheme which Malaysia will feature when we present Malaysian palm oil to the global market. This is necessary because if you look at the debates on palm oil in Europe right now, what is being proposed are national programs to restrict the flow of unsustainable goods into Europe by commodity.
Malaysian palm oil producers have argued that they have certification under third party schemes but these countries have counter argued that these are not so credible. Critics have long said that these schemes cover only European imports but deforestation will continue in the industry as China and India remain two big buyers of palm oil. These critics have pointed to issues like the Mass Balance model where certified palm oil is mixed with palm oil from unknown sources, they have also pointed out smallholders as a major cause of deforestation but form a very small portion of certified palm oil.
To answer the critics and prove once and for all that Malaysian palm oil is sustainable, we wanted a national scheme that addressed these concerns. Within these the short time when MSPO was declared mandatory, 99.64% or 231,576 organised smallholders with 679,075ha of palm oil plantations have received their MSPO certification.
By the time we are done with complete certification of Malaysian palm oil, including all the independent smallholders, we will be able to show with confidence that all the alleged problems with palm oil, is not relevant with Malaysia’s palm oil industry. We need absolute certainty that it is sustainable and we can only do that when we ourselves have walked the plantations and seen operations first hand.
CSPO Watch. Noting that the RSPO or ISCC are B2B certificates but the MSPO certificates can fill that role as well, is there a risk of double counting certified products? Example would be a producer who is double certified and reports exports to both the RSPO or ISCC AND the MSPO.
MPOB: There is no risk of that. It is up to the individual Malaysian producer to use whichever certificate they choose. If the buyer is European, they may choose their RSPO certification or ISCC certification if the end use is for bio-energy. Or they may choose MSPO.
The MSPO is the first of its kind in the global supply of vegetable oils in that every drop of palm oil produced in Malaysia is traceable back to the farm. We hope our buyers recognize the importance of the fact that the MSPO has been able to remove any doubts behind certified palm oil especially in the widely used Mass Balance supply model.
CSPO Watch. A comparison between the MSPO standards and those of the ISCC was conducted in 2018. Since then, the MSPO has achieved two of its shortfalls against the ISCC in that a tracing system and SCCS have been established. This should add points for the Chain of Custody category. In the Sustainability category, the MSPO has adopted a No Peat No Deforestation policy since the comparison with ISCC, this should undoubtedly add more points to MSPO score. Noting that the ISCC is recognized by the EU for deforestation free commodities, are there any plans to have another comparison study done against ISCC standards?
MPOB: We may look at this further down the road. The urgent matters at hand is the certification of independent smallholders in Malaysia so that we may achieve 100% coverage of Malaysian palm oil.
For now, we have closed the two main gaps in Chain of Custody through the SCCS and the government has adopted a No Deforestation policy that has the support of all stakeholders in Malaysia.
The MSPO standards are not fixed in stone, we are willing to work with our buyers to address their concerns so as the European Union addresses the environmental footprint of their imports, we will engage them to see what needs to be done to get MSPO standards up to a point where their concerns maybe allayed. There may be points of contention between what we consider as sustainable and what they think, is sustainable for them as consumers. This is understandable as the views on sustainability may differ between a developed country and one that is developing but we will find common ground to define sustainable palm oil that is mutually accepted.
CSPO Watch. Noting that independent third party certification like the ISCC or RSPO or even Rainforest Alliance are selective in the sense that applicants typically choose their best operations for certification while the MSPO dictates that all palm oil operations are audited under the MSPO, what are the challenges in implementing a nationwide certification scheme?
MPOB: It has definitely not been easy to tackle nationwide certification. We did have a good foundation to work from based on national laws governing all aspects from environmental to human rights.
The biggest challenge has to be the independent smallholders whose first question is if there are premiums for certified palm oil. It is the classic chicken or egg first question. At the MPOB, we are convinced that Malaysia has to take the first step in certifying our palm oil production. We believe the buyers will come once they understand the strength behind the sustainability measures of Malaysian palm oil.
CSPO Watch. GHG calculations on Malaysian biomass from oil palm are being developed with a new standard expected in 2020. This was at the request of stakeholders in the Japanese energy sector who are gearing up to use renewable sources of energy. Can you share some information on how the MSPO will assure the Japanese energy sector that biomass from Malaysian palm oil is sustainable?
MPOB: We have met with the Japanese stakeholders in renewable energy and acknowledged their concerns, substantiated with facts and figures. These are similar to what the EU has been saying so that strengthens our determination to ensure that Malaysian palm oil does not contribute to climate change.
In addition, we are also actively promoting MSPO to the Japanese policymakers and industry players. They have come to acknowledge the principles of MSPO which balance profit, planet and people (3Ps). In other words, MSPO ensures that the livelihoods of the smallholders and environmental protection are taken care of while sustaining the local economic development. At the same time, we strive to avoid implicating the certification costs to the consumers, who already are laden with the high cost of living.
That said, we continue to look for more ways in which we can add our sustainable palm oil agenda. We are confident that we can meet the requirements of the Japanese energy sector for sustainable biomass.
CSPO Watch. Noting that the EU has decided to phase out the use of palm based biodiesel due to questions of its “sustainability” will the standards on biomass for the Japanese market have any bearing on addressing EU concerns of palm based biodiesel?
MPOB: What we expect is that the EU may have slightly different requirements for sustainable biomass or biofuels. We are waiting to see what the requirements are as many different issues are involved. Soy for example, is being questioned as a source for biofuels. In terms of Malaysian palm oil for biofuels or biodiesel, we are actively monitoring the overall position of the EU before taking any firm actions.
Malaysia has voiced its opposition to the EU ruling against palm-based biofuels at the WTO just to let the EU know that we do not agree with how they view the environmental quality of Malaysian palm oil.
CSPO Watch. One of the stated missions of the MSPO is for international acceptance of its certificate. Europe in particular will be a hard sell as even the most established certification bodies have been criticized. What is so different about MSPO certification that would distinguish it over other certification schemes?
MPOB: As I mentioned earlier, the MSPO is a national scheme that is mandated by law. No one gets to choose the best operations for certification. Every farm, no matter how poorly maintained it is, whether it’s owned by multinationals or a small farmer with two acres is audited and improvements must be made to achieve MSPO certification.
The key difference between the MSPO and other palm oil certification schemes is that as a government scheme, the impact is felt nationwide. Where other schemes merely impact the operations of individual plantations or mills, the MSPO creates a much larger impact not just on the palm oil industry in Malaysia. We have the benefit of collaborating with different government departments and industries. If you look at the collaboration between the MSPO and the Malaysian Timber Certification Scheme, this is two of the main agricultural industries getting together to prove that Malaysian palm oil and timber are sustainably produced.
The enforcement of MSPO standards as a national scheme is without equal as the Department of the Environment (DOE) is involved. A simple example of this is the immediate license suspension of a mill by the MPOB when the DOE called it out for water pollution. No third party certification scheme would have the same level of clout that the MSPO does in enforcing its standards. There has been talk of jurisdictional certification or landscape approaches in producing sustainable palm oil and commodities. We have gone beyond that discussion in Malaysia. We have put those into practise.
CSPO Watch. The question that netizens are most interested in is on saving tropical forests and orangutans. Based on your experience as an industry veteran, will the MSPO have a wider impact on conservation than third party certification schemes?
MPOB: That is most definitely the case. Malaysia has more than its fair share of palm oil that is certified by third parties for decades already but it has never been possible to persuade the whole industry to pay into certification. With the MSPO becoming mandatory, there is no longer the excuse that they sell to China or India where their buyers do not ask for certification. Everyone must participate. A simple case would be riparian reserves where companies used to push the edge. Since the MSPO became mandatory, we have seen multiple companies rushing to back off riparian reserves. It's not only that, we have seen reports where companies are actually working with conservation entities to create wide reserves for wildlife.
Beyond that, both the Sarawak and Sabah state governments have stated that any palm oil expansion will only be on degraded lands. At the Federal level, the Malaysian government has said it will ban the conversion of Permanent Forest Reserves to palm oil estates. These pledges for conservation are only possible when the mission to make Malaysian palm oil is a national priority and policy.
CSPO Watch. Is there any way this can be proven to the general public?
MPOB: The Federal Ministry has committed to the publication of maps of all oil palm planted areas in Malaysia to enhance transparency of Malaysian palm oil. The transparency started with the MSPOtrace app and since then, the marketing department at the MPOC has signed with a blockchain provider to further enhance transparency. At the MPOB, we are working on our e-trace platform which will allow us to monitor what’s happening on the ground and take rapid response as needed.
This heavy use of technology will allow us to keep close tabs on the industry and provide access to anyone who wants a closer look at Malaysian palm oil operations.
CSPO Watch. Looking back at the previous decision by the EU that only additional quantities i.e. extra volumes produced on same planted areas would qualify for EU subsidies under RED ll, if you could revisit this point with the EU, what would your arguments for continued EU subsidies for palm-based biofuels be?
MPOB: The argument, and this is one that the Malaysian palm oil industry has said many times, is that the basis of the concerns of the EU in Indirect Land Use Change (ILUC) is not applicable to Malaysia. This is flawed science being touted as fact. Malaysia has the capacity to produce much more palm oil without expanding the land footprint of our industry.
If you look at the low level of productivity from smallholders as an example, the average sits at 1.5 tons per hectare compared to the industry average of 3 tons or more. These are the same smallholders that comprise 40% of Malaysia’s palm oil production.
On top of increased volume from smallholders, if you have read the Reuters report on lost crops due to labor shortage, there is an additional 25% that could be added to Malaysia’s production of palm oil. A rough estimate on lost harvests alone, would put it around 4-5 million tonnes of palm oil, all of which can be put into the global supply without cutting down a single tree.
It’s all there. We can account for higher production volumes without increasing a single inch oil palm areas in Malaysia. All that is needed is for buyers to say that they are interested and willing to pay a fair price for quality palm oil from Malaysia. One of the core principles we adhere to in producing palm oil sustainably is that we should not create a product for which there is no demand. This is a lesson learned from other industries that keep their factories running at full speed to maintain optimum efficiency and costs but end up discounting their product. In Malaysia, with our palm oil industry, we care more about quality than quantity.
This is the message we are bringing to our customers, whether it be Japan or Europe. Climate change and the preservation of biodiversity are global issues that need global stakeholders. In our vision for the sustainable development of Malaysia, let us do what we do best, produce palm oil sustainably. In return, Malaysia with your support will be able to both protect the environment here and support what you produce best in your countries. This should be a common path for all of us towards a global future that is sustainable.
End Q&A with MPOB
Published August 2020, CSPO Watch