The Malaysian Palm Oil Industry in 2020. An Interview with Dr. Kalyana Sundram

Malaysia is the second biggest producer of palm oil globally. With 5.85 million hectares under cultivation, the country has managed to optimize crop efficiency to turn this acreage into providing 8.6% and 8.8% of global oils and fats production and consumption respectively. However, in the export scenario, Malaysia plays a crucial part since its palm oil exports of around 17.5 million MT annually often accounts for about 19.6% of all oils and fats exported. 

In economic terms, data from Statista shows that in 2018, net export revenue from palm oil was estimated to be approximately 68 billion Malaysian ringgit which was estimated to have contributed around 4.2 percent of the total GDP of Malaysia.” 

Additional data on the Malaysian palm oil industry shows that over 500,000 small farmers depend on the industry for a livelihood with direct and indirect Malaysian jobs extending into millions of workers.

These two basic facts explain the importance of the palm oil industry to Malaysia and why the industry works so hard at promoting its products. There have been big changes within the Malaysian industry and the global market for palm oil in recent years so we reached out to Dr Kalyana Sundram, the CEO of the Malaysian Palm Oil Council (MPOC) to see if we could gain some insights into what the Malaysian palm oil industry will be into in 2020.

​Interview with Dr. Kalyana Sundram

Datuk Dr. Kalyana Sundram, CEO Malaysian Palm Oil Council

CSPO Watch: The past two years have been tough on the global vegetable oils market as commodity prices have been low. Production costs of palm oil in Malaysia are known to be higher than that of other palm oil producing countries yet Malaysia has maintained its market share. How do you think that was done?

Dr Sundram: The Malaysian palm oil industry has always acknowledged the fact that our resources are finite. If you look at labor, the Malaysian palm oil industry relies heavily on migrant labor which means we have to pay a premium salary to attract migrant workers. No one is going to give up family life as a migrant worker if their work in Malaysia cannot support their families back home. Overall, the migrant workforce in Malaysian palm oil operations are positive as Malaysia has been recorded as one of the countries with the highest remittances of migrant worker income to their home countries.

Higher wages to palm oil workers does challenge our competitiveness in the global market for vegetable oils. To offset the higher labor costs, the Malaysian palm oil industry has invested heavily into research and development into things like mechanization to increase operational efficiency in the plantations. In addition, industry is actively using oil palms capable of higher oil yields per hectare from the current 4 MT to at least 6 MT per hectare. Overall plantation management practices are being improved continuously while reducing costs where applicable. All these efforts also contribute towards meeting sustainability and certification criteria as the country moves towards mandatory certified sustainable palm oil through the Malaysian Sustainable Palm Oil standards. 

The research investments are a continuing factor in order to keep Malaysian palm oil competitive in the vegetable oils market. This is not an easy task when other palm oil producing countries have a much cheaper labor force or other vegetable oils like soy or rapeseed can use heavy mechanization to plow and harvest their crops. We cannot do that yet with palm oil. The oil palm plantations and even the family held small farms still need workers to tend to each and every tree whether it is for maintenance or harvesting. 

That said, we at the MPOC are proud of the fact that our industry not only provides an affordable cooking oil to nearly 160 countries around the globe but we’re equally proud of the fact that the Malaysian palm oil industry provides good jobs to so many. 

CSPO Watch: Speaking on the Indian market, there have been reports of traditional Indian cooking oils like mustard or peanut oil being blended with palm oil to make them more affordable. Some critics have called out this blended oil as a health risk due to palm oil. What are your thoughts on the debates on healthy vegetable oils? 

Dr Sundram: I would be biased for sure but scientific research has shown beyond a doubt that palm oil, especially red palm oil, is among the Codex approved vegetable oils which support human health. Blending of different oils is in reality a well-accepted and documented practice. In many ways blending different oils helps improve functionality and nutritional efficacy, depending on the components in the blend. For a long time blended oils were not legal in India but recent changes in their Food labeling and legislation allow such practices these days. So this is not an issue. 

Having said that, consumers should be informed that red palm oil is rich in highly bioavailable content of natural carotenoids that convert to vitamin A in our body. It is also uniquely endowed by a high content of vitamin E tocotrienols that is creating significant interest among researchers and consumers for its health benefits. I know there are plenty of “health blogs” especially from Western countries that say palm oil is bad for health but they are actually putting foot into mouth, so to speak, when their next blog talks up the importance of vitamins A and E to human health and display encapsulated supplements of these vitamins to make revenue for their blogs.

CSPO Watch: There has been reports that the levels of 3 MPCDE in palm oil is detrimental to human health. The European Union is looking to reduce that risk by controlling the level of 3 MPCDE in dietary fats and oils. More recently, a report from University of California Riverside issued an alarming report that soybean oils could affect conditions like autism, Alzheimers, anxiety and depression. What are your thoughts on these issues?

Dr Sundram: Personally, the report from the University of California is an eye opener in that it has identified potential health issues with over consumption of high linoleic (polyunsaturated) fatty acids including that in soybean oil. Further studies would be required to see if it actually has the same effects on humans. In terms of human health and how food manufacturers respond to this study, it is too early to tell. The FDA decision on trans fats for example, took multiple studies and many years of intense clinical and dietary trials before it was confirmed that trans fats overall are bad for human health. Even with such convincing evidence legislation, prescribing safe to zero levels of trans fatty acids in our food chain is still not in place globally. 

The European concerns on 3 MPCDE in vegetable oils however, has moved rapidly. These are seen as contaminants in all oils and fats, not just palm oil. The EU through EFSA has moved forward to prescribe levels of these contaminants in all oils and fats. We have taken these very seriously since the industry will not ever compromise on the safety and health of our consumers. All said and done Malaysia through its Ministry of Primary Industries has indicated agreement to adopt the levels prescribed by the EU and will target to progressively further reduce such contaminants to the lowest levels possible where it will be on par with or better than all oils and fats.

CSPO Watch: Speaking of Europe or specifically European Union plans to remove deforestation from their imports, how is the Malaysian palm oil industry addressing these requirements? We saw in 2019, an EU decision to remove palm oil from subsidies for renewable biofuels. In January of 2020, two reports from the WWF and the US based RAN slammed companies that use palm oil as an ingredient for failing to remove deforestation from their products. What are your thoughts on that?

Dr Sundram: It is not my place to comment on individual companies that made “no-deforestation” pledges because that’s a wider conversation that they need to address besides palm oil. What I can say is that if they are looking for certified sustainable palm oil, they should look at what we produce in Malaysia.

Let me qualify that statement with facts on Malaysian palm oil. The Malaysian pledge at the Rio Earth Summit (1990) to maintain 50% forest coverage in Malaysia is still being honored. This position is supported by our present forest cover that is quoted at around 53% nationwide. In 2019 the Malaysian Cabinet officially adopted a policy that no new deforested land could be licensed for oil palm cultivation with immediate effect. This was also extended to exclude planting on peat and capping of overall land that will be given up to oil palm cultivation. No other nation in my knowledge has been so bold in its policy to address deforestation and climate change concerns.

CSPO Watch: Since you bring up sustainability in palm oil, the dominant narrative on its definition has been centered on orangutans and their habitats. What is Malaysia doing in terms of saving the orangutans?

Dr Sundram: Yes, orangutans are used as the icon to generate anti-palm oil sentiment among consumers. We were in fact bombarded by NGO claims that the entire orangutan population in Sabah and Sarawak (Malaysia) would be decimated by 2015. We took these accusations very seriously and set up a conservation action plan that was properly funded and executed by the state wildlife departments, NGOs and other experts. Orangutan populations have now stabilized in Malaysia and we are committed to ensure their long term survival. Having said that, our focus in conservation is more on wildlife habitats and not just a single species. The introduction of the Malaysian Sustainable Palm Oil certification scheme by the Federal government has given us a tool at the Malaysian Palm Oil Council’s Wildlife Fund to expand our scope to bring positive impact for wildlife in Malaysia.

As an industry with a wide influence on the Malaysian landscape, we have adopted the United Nations designation of 2020 as a crunch year for biodiversity and climate change as the goals for Malaysian palm oil. No one has to take my word for it but the palm oil industry in Malaysia will prove itself to be a champion for biodiversity in Malaysia. We are in the process of initiating a number of conservation and environment friendly programs that should begin to show more positive outcomes. For a start, from 2020 onwards, the industry is paying an additional cess of RM1.0 per MT of palm oil produced for use in various green initiatives including an ambitious reforestation program.  

CSPO Watch: That is a big statement, one that I hope the Malaysian palm oil industry will be able to prove in the months to come. For now, noting the popular narrative that “palm oil” is responsible for driving orangutans to extinction and contributing to climate change emissions, how will you get the MPOC messaging out to the masses on social media?

Dr Sundram: That is a good question. Despite our efforts at the MPOC and the commitments of the Malaysian government that Malaysian palm oil must be actively involved in biodiversity preservation, the dominant relation between palm oil, deforestation and orangutan extinction still exists.

We at the MPOC, would love to invite all the critics to come and see for themselves but that is perhaps a weak argument as we all know, it’s easier for the average person on social media to pick up on a popular topic to get “Likes” than flying to Malaysia to get lost in the jungles where wild orangutans still do swing from the trees as they demand.

This is something that we will make a note of at the MPOC. The fact that tens of millions of dollars have been invested into protecting Malaysian orangutans but yet the message has not been received. It is frustrating to say the least when I read news about vegan chocolate products being palm oil free but no one questions whether the cocoa affected gorillas. We know that it does but these brands prey on a side ingredient for attention while hoping no one asks about the main ingredient.

Even in the case of biodiesel for the EU, we have long argued that the Indirect Land Use Change or ILUC which they used to exclude palm oil from renewable subsidies is not based on science or facts. I was thrilled to see an independent study conducted by Purdue University that clearly established, palm oil should definitely be one of the preferred sources for sustainable renewable energy. We at the MPOC, didn’t have anything to do with this report. It was funded by the US National Biodiesel Board and the U.S. Federal Aviation Administration Office of Environment and Energy through ASCENT, the FAA Center of Excellence for Alternative Jet Fuels and the Environment. 

Will the European Parliament look at this new finding and see how it relates to palm oil based biodiesel use in the EU? Or will they continue to protect their own vegetable oil industries for biofuels by sticking to the falsehood that palm oil for biofuels is not sustainable? Malaysia has gone above and beyond the demands for sustainability in our palm oil.

In all honesty, the introduction of sustainability requirements as enforced by the Malaysian Sustainable Palm Oil certificates has raised the bar on sustainable palm oil substantially. We are up to the challenge. We have to be. As a major producer of palm oil globally, our responsibilities reach beyond protecting the economy of Malaysia and the ecology of Malaysia into our commitment as a country to fight climate change.

However, we have noted that it is not enough that we talk about protecting the livelihoods of smallholders in Malaysia or the many migrant workers from impoverished countries that are finding better livelihoods in Malaysian palm oil or all the actions we will undertake in 2020 to support the United Nation’s call to protect biodiversity. There is an obvious need to show the world at large, all the things we do in Malaysia that makes Malaysian palm oil sustainable, is being done for the global benefit.

End interview with Dr. Sundram. We thank Dr. Sundram for sharing his views with us at CSPO Watch. 
Published January 31, 2020. CSPO Watch

Source : CSPO Watch

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