POINTERS: Malaysian Palm Oil Performance and Prospects for 2021

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Questions & Answers (8) :

Peng Kong Law

3 years ago

Since high 3 MCPD problem was pointed out, many possible solutions were proposed. I am sure some are workable to reduce 3MCPD level. My questions:- 1) Are all the mills in the country using one or more of these solutions? 2) Is Malaysian palm oil able to meet the 3 MCPD specifications now?

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : 1) There are several technology providers that offer crude palm oil (CPO) dechlorination through CPO washing. Despite CPO washing should be done at the mills, there are refineries that have installed the facility to remove chloride in their CPO before refining. Some of the mills and refineries in Malaysia have already equipped their premise with CPO washing system. CPO washing is able to reduce chloride content to less than 2 ppm or even lower than 1 ppm. It is well established that chloride in CPO is the precursor for 3-MCPDE formation in processed palm oil (PPO). In that respect, the Malaysian palm oil should adopt any available technologies in the market in ensuring the safety of CPO and hence PPO. 2) The maximum 3-MCPDE level of 2.5 ppm in PPO can be attained when applying CPO washing before undergo refining process. In fact, some of the Malaysian refineries can achieved 1.25 ppm in 3-MCPDE when chloride content is relatively lower (<1 ppm).
3 years ago

WONG YQ

3 years ago

Looking at the effort from MPIC raising the demand of PO in middle east and UAE, probably the dependent export to India will be much lesser?

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : Being the world’s second largest population with 1.38 billion people, India needs between 22 to 23 million tonnes of edible oils every year. Nevertheless, the country’s oils and fats production could only fulfil less than 40% of the local consumption and have to rely a large portion of between 65%-70% of its edible oil needs annually via imports. It is estimated that India will import about 13 million tonnes of edible oils this year. With palm oil accounts for 55-60% of India total edible oil imports, the country is predicted to import almost 8 million tonnes of palm oil this year. Despite the existing challenges in the Indian market, i.e. restriction imposed on imports of processed palm oil, Malaysian palm oil is expected to have a favourable market in India and the country will maintain its position as a major market for Malaysian palm oil. For a record, in 2020 India again maintained its position as the largest Malaysian palm oil export market for the seventh year since 2014, with 2.75 million tonnes or 15.8% of total Malaysian palm oil exports.
3 years ago

JENNY FOO

3 years ago

Under MSPO certification, independent smallholders form 17% of total planted area in country. They are the group with the lowest certification at 32%. I see that they will be stumbling block to get whole of Malaysian palm oil MSPO certified. So if Malaysia promotes MSPO oil as certified sustainable and gets a premium , these smallholders oil will not be certified sustainable and no premium. So what can MPOB do to get these poorer farmers certified and enjoy the premium?

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : Currently, we are facing so many hurdles to get all the Independent Smallholders (ISH) registered and certified with MSPO. Some of the ISH were elderly group and cannot be contacted via phone calls or other messaging apps. Some of the ISH also stay at a rural area and thus, could not be reached via phone call or other messaging apps due to poor phone and internet connectivity. Location of each ISH farm were scattered all over the place, making it difficult for MPOB extension officers to cover the extension visit to all farm. Other challenges related to ISH include matters related to land issues. Based from observation from MPOB, 30% of ISH have land title with the condition of not for agriculture or oil palm. ISH also facing issue on difficulty to maintain their records in terms of FFB sales input and output, recording their spending on fertilizer and others. Some smallholders perceive that with low FFB volume, they are reluctant to purchase fertilizers or herbicide for their farm as it incurs cost to them and this practice could not sustain their GAP, thus making them difficult to be certified with MSPO. However, MPOB is doing its very best to assist and help all ISH to be MSPO certified. Currently, as of 31st March 2021, we still have 32% (80,582 ISH) yet to be registered for MSPO certification. To overcome this issue, we have already issuing warning letter for ISH in Kelantan, Terengganu and Melaka that still not register for MSPO certification with MPOB. Issuance of warning letter for ISH in other states will also be conducted in recent time. For ISH that received warning letter but still not taking any action to register for MSPO with MPOB, compound will be issued to them and later, their MPOB license could be revoked. We really hope that this enforcement approach will make this group of ISH get on board with MSPO certification as soon as possible. Apart from that, we also continue to promote MSPO certification through social media (Facebook, Whatsapp, Telegram, etc.), Moving MSPO Counter, and on-the-ground training conducted by TUNAS officers to ensure all information regarding MSPO certification reach to ISH all over the country.
3 years ago

LAW CHOON SHENG

3 years ago

It is encouraging to see the very good progress in getting Malaysian oil palm industry MSPO certified. How is the reception of the buyers to our local certification? I think the market is still trading in RSPO oil as sustainable. When can the stage be reached when buyers will say sustainable palm oil can be either MSPO or RSPO? Will this stage be far away or near? Thanks. Law CS

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : It is indeed encouraging to see the industry players from the palm oil supply chain took part and support the initiative of the Malaysian government to move forward for a sustainable production of palm oil through the implementation of Malaysian Sustainable Palm Oil (MSPO) certification. Over the years, there is an increased concern from buyers of palm oil for oil palm to be cultivated in a sustainable manner. The government has been aggressively promoting the certification of palm oil to the industry players since the initiation of the MSPO certification standard. There have been several collaborations and rising demand from other importing countries for continuous commitment on production of sustainable palm oil. Among them are: 1) MoU between Malaysia and India to promote sustainable palm oil production and trade through harmonization between the two national standards. 2) China, the main importer of Malaysia's palm oil, agreed to encourage its enterprises to increase the import of sustainably-produced Malaysian palm oil and other related products in accordance with the market rule. Both countries also agreed to promote palm oil products that adhere to the Malaysian Sustainable Palm Oil (MSPO) certification scheme and the Green Food label. MSPO also received recognition from China Greenfood Development Centre, which is an agency under the Chinese government, through a memorandum of understanding. 3) In Japan, the MSPO certification scheme has been adopted as a tool for the Tokyo Olympics and Paralympic Games Sustainable Sourcing Code for palm oil. Japan will source edible and non-edible food products with the MSPO and other international certifications for use during both events. It is a positive outlook that the MSPO scheme received recognition from the Tokyo 2020 Olympic and Paralympic Games Organising Committee as one of its sourcing codes of sustainable palm oil procurement for the games. However, the Tokyo Olympic game was eventually postpone to 2021. 4) Another collaboration is partnership and cooperation between Malaysia and the Netherlands to strengthen the sustainable initiatives particularly for the oil palm industry and mitigation of climate change. MoU was signed with a Netherlands-based organisation which promotes sustainable trade and another one with an international network organisation which promotes capacity building – Solidaridad Network Asia Ltd titled National Initiative for Sustainable and Climate Smart Oil Palm Smallholders (NI-SCOPS). IDH The Sustainable Trade Initiative and Solidaridad are implementing partners for the Netherlands in the NI-SCOPS programme. In 2020, China was Malaysia's largest export market for palm oil with exports amounting to around 2.73 million metric tons. This was followed by India and the Netherlands. Europe is the third largest global import market for palm oil and within Europe the Netherlands is the biggest importer. As such, Europe can be an important ‘game changer’ when it comes to a sustainable palm oil supply chain. The government’s efforts have shown that Malaysia is moving closer towards achieving the United Nations' Sustainable Development Goals 2030 that promotes sustainable, inclusive and equitable economic growth. As for the sustainability certification, RSPO standard is a voluntarily and B2B basis and MSPO is a mandatory national standard and G2G initiative. Both certifications are in reference to sustainable palm oil and buyers are able to obtain a sustainable source from either preference. Since Malaysia is committed towards achieving 100% certified MSPO palm oil production, in the future, buyers will have higher confidence level that their purchase is coming from a sustainable source.
3 years ago

HCLeow

3 years ago

Dear Sir, What was the total areas replanted in 2020? What do you reckon as the factors that lead to the declining yield and OER in Sabah? If we use the total CPO production and oil yield per ha to derive the harvested areas are far higher than the mature areas reported by MPOB. Appreciate if you could guide us how to reconcile these data? Thank you. Thank you.

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : The Malaysia’s oil palm replanted areas in 2020 registered at 160,073 hectares, an increase of 32.4% or 39,211 hectares from 120,862 hectares recorded in 2019. The average fresh fruit bunch (FFB) yield of oil palm estates in Sabah for the year 2020 was lower by 4.6% to 16.84 tonnes per hectare as compared to 17.66 tonnes per hectare achieved in 2019. The decline was due to the lower FFB production by 7.9% as compared to 2019, partly attributed to the drier weather and lower rainfall volume in the third quarter of 2019 which caused the floral and bunch failure, coupled with lower fertilizer application during low CPO price especially in 2019 had affected the yield performance in 2020. In addition, excessive rainfalls and flash flood in October to December 2020 had affected the harvesting and transportation of FFB and contributed further to the declining of FFB yield in 2020. With regard to OER, Sabah's 2020 OER performance was recorded at 20.74 percent, which was 1.1% lower as compared to 20.97 percent recorded in 2019. The lower OER performance in 2020 was mainly due to low quality FFB received and processed by oil palm millers arising from unfavourable weather condition (excessive rainfall) in several areas in Sabah. Even though principally, information on CPO production and oil yield can be used to derive the harvested areas, this estimated derived harvested area tends to be overestimated due to the following issues: 1) The CPO production published by MPOB is the overall CPO produced in Malaysia including from FFB supplied by independent smallholders. 2) However, the oil yield is to represent the estate sector only and not the whole industry as it does not include the oil yield of the independent smallholders. Thus, the two information cannot be used to derive the total oil palm matured area in Malaysia as per reported by MPOB.
3 years ago

Clarence Tee

3 years ago

Why is that the biodiesel mandate for the industrial sector is maintained at 7% since July 2019 although mandate for transport has risen? What are the limitations of imposing higher mandate for the industrial sector?

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : The biodiesel mandate for industrial sector has been maintained at 7% since July 2019. This is mainly due to the price of palm oil which dictates the price of biodiesel used for blending has been hovering at very high price above RM3500 per tonne since 2020. Thus in order to reduce the burden and makes the industrial sector remains competitive, the mandate for industrial sector has been kept at 7%. The government will increase the biodiesel blending ratio for industrial sector at a more appropriate time.
3 years ago

Shaheen

3 years ago

What constituted is a drop in planted acreage in 2020. Can you provide the detail. You inform that oil extraction rate fell from 20.21% in 2019 to 19.92% in 2020? What happens to the quality of the FFB produced. Is it because of SOP which result in fruitlets collected inefficiently or not enough labour to collect it efficiently?

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez : In 2020, the expansion of new oil palm area especially due to the conversion from other crops was at a slower rate as compared to that of the conversion of oil palm area into other developments. Thus, it led to the drop of oil palm planted area in Malaysia. In 2020, the average of Malaysia’s OER declined by 0.29 percent (1.4%) to 19.92 percent from 20.21 percent recorded in 2019. Based on the information received from the oil palm millers via their monthly statement forms, generally the lower OER performance was mainly attributed to the lower quality FFB processed by oil palm mills, which may due to the shortage of labour in the oil palm plantation sector especially harvesters and loose-fruit collectors. Apart from that, effects of excessive rainfall especially during the monsoon season and the low percentage of loose-fruits delivered to the mills were also the reasons for the fall of OER in 2020. With regard to the loose-fruit collection and sent to the mills, it was found that the percentage of loose-fruit received by mills was at 17.2%, which was approximately the same percentage in 2019. This shows that the SOP enforced does not significantly affect activities in the oil palm plantations, including loose-fruits collection.
3 years ago

Mohd Izuddin Selamat

3 years ago

Salam Dr. With the current high price of feedstock, what will be the future for implementation of B20 and above in Malaysia? Despite current similar situation in Indonesia, we see that Indonesia is committed to fully exploit the palm oil for biodiesel for local consumption.Next is about HVO - hydrotreated veg oil. It seems that Indonesia has been more advance when compared to Malaysia in adapting the technology and producing HVO. Any update on HVO plant in Malaysia? Seeking your kind opinion on the above Dr.

POINTERS SECRETARIAT:
Posted on behalf of Dr Ahmad Parveez bin Ghulam Kadir: Thank you for the question raised on biodiesel and HVO. Malaysian government is committed to implement B20 programme as announced by the Ministry of Plantation Industries and Commodities. The implementation of B30 programme has also been planned as reflected in the National Automotive Policy (NAP) under MITI. Research related to B30 to evaluate its effects on vehicles have been initiated with six local universities as well as Japanese Automobile Manufacturers Association (JAMA). In terms of HVO, MPOB has initiated the discussion with some petroleum companies and currently the feasibility study to produce HVO is being conducted. The government will announce the plan at an appropriate time.
3 years ago