Lecture 8-Sustainability of Palm Oil

8/21/2019 Lecture 8-Sustainability of Palm Oil

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SUSTAINABILITY OF PALM OIL

SALMIAH AHMAD, NIK AZIZAN, ROSIDAHRADZIAN AND M.BASRI WAHID

Malaysian Palm Oil Board

3 NOVEMBER 2009PRINCE HOTEL, KUALA LUMPUR


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Presentation Outline• Snapshot of Oil Palm Industry

• Malaysian Perspective on Sustainability –3P’s

• Sustainable Practices Adoptedby the Malaysian Palm Oil Industry

• Current and New Initiativeswithin the Industry

• Conclusion


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Countries Production Export

2007 2008 2007 2008

Indonesia 17,270 19,200 13,747 14,612

Malaysia 15,823 17,735 12,650 15,413

Thailand 1,020 1,120 289 373

PNG 384 400 368 446

Nigeria 835 830 - -

Colombia 732 778 316 310

Ecuador 396 418 172 171

Total Palm Oil* 38,673 43,097 29,876 33,753

Total Oils/Fats 153,996 160,366 58,123 60,651

Global Production and Export of Palm Oil(000 tonnes)

* Include other producers and exporters

Source: Oil World & MPOB


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Country 2008 2009F

Malaysia* 15,413 15,700

Indonesia* 14,612 15,500

Thailand* 373 190

PNG 446 400

Colombia 310 200

Ecuador 171 166

Total (inc. othercountries)

33,753 34,588

* South East Asia

Source: Oil World Statistics – Update September 18, 2009

45.39 %

44.81 %

0.55 %

90.75 %

Major Exporters of Palm Oil (000 tonnes)


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14.96 15.82

17.73

0.43

2.57

10.84

6.10

13.35

0

5

10

15

20

25

1970 1980 1990 2000 2003 2005 2007 2008

Year

M i l l i o n t o n n e s

Forecast (in million tonnes)• Y2010 19.5• Y2013 20.5• Y2015 21.5

CPO Production for Malaysia(million tonnes)


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Importance of Palm Oil

• Oils/Fats is one of the humanbasic nutrients needs(Carbohydrate, Protein and Fats)

• Palm oil is an important sourceof oils/fats for the world.

•Palm oil is consumed in morethan 150 countries in the world


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Presentation Outline

•Malaysian Perspective on

Sustainability –3P’s


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Malaysian Oil Palm andSustainability…

Striking Balance betweenSocial responsibility,

Environmental health andEconomic profitability

People

Planet Profit

Brundtland’s Commission (1987) “Sustainable

development seeks to meet the needs of the

present generation without compromising the

ability to meet the needs of those of the future”


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People

9

The oil palm industry : a major sourceof employment• Eradicated poverty

• Narrowed income gap

between town&rural folk• Created rural townships -

workers reside & enjoy goodquality of life

• Contributed to social security

& peace and• Reduced migration of labour

force from rural areas


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People

Total Hectarage: 4.48 mil hectares (2008)

FELDA16%

Private Estate60%

RISDA

2%FELCRA4%

State Schemes7%

Smallholders11%

Private Estate FELDA FELCRA RISDA State Schemes Smallholders

MALAYSIASmallholder Farms: ~40% of Oil Palm hectarage


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11

In the 60s, giving land to landless, increasing

income levels, eradicating poverty anddiversification were the main concerns

Year Felda settler’sIncome

National PovertyLine

2006 RM 1,356 ~ US$ 377 RM 526 ~ US$ 146

2007 RM 2,221 ~ US$ 617 RM 817 ~ US$ 227

2008 RM 3,278 ~ US$ 911 RM 856 ~ US$ 238

People

112,000 settlers and 850,000 hectare of oil palm


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People

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Oil Palm Plantations in Malaysia :Source of Employment

Year Area (ha) People Employed(person)

1980 1,203,306 92,352

1990 2,029,464 115,285

2000 3,376,664 251,039

2007 4,304,913 420,000

2008 4,480,000 500,000


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People

13

Generator of better quality of life

Good housing and amenities for oil palm workers/farmers

Source : United Plantations Berhad


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People

14

Nutritional Attributes of Palm Oil• Major saturated fatty acid in palm oil is palmatic acid

which is neutral like oleic acid (mono) with adequatelinoleic acid (poly) in the diet

•

Fatty acid composition – replacement for trans fattyacid

• Variety of carotenoids (Vit-A)

• Presence of tocotrienols (Vit-E)

Red palm oil is on the trailagainst Vitamin A deficiency inSouth Africa – Red Palm OilMuffin Program


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Planet

The Regulatory FrameworkLand Matters:• National Land Code 1965

• Land Acqu isi t ion Act 1960

Environmental Matters:

• Environm ental LandConservat ion Act 1960 revisedin 1989

• Quali ty Act 1974(Env ironmental Quali ty)(Prescrib ed Premis es) (CrudePalm Oil) Regulat ion 1977

•Enviro nm ental Quali ty (CleanAir) Regulat ion 1978

• Environm ental Qual i ty(Prescrib ed Activi t ies)(Environm ental ImpactAs sessm ent) Order 1987

Wildlife Matters:

• Protect ion of Wild l i fe Act

1972

Labour and Employees Matters:

• Labor Law

• Workers’ Minimum Standard

of Hous ing & Am enit ies A ct 1990

• Occup at ional Safety &Health Act 1977

• Factor ies & Machinery(Noise Expo su re)Regulat ion s 1989

Pesticide Use:

• Pesticides Act 1974(Pesticides Regis trat ion)Rules 1988

• Pest ic ides (Licensing forsale & s torage) Rules 1988

• Pesticides (Label ing)Regulation s 1984

l l d l l l


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0.26

1.02

1.48

1.98

2.54

3.38 3.53.79

4.05 4.17 4.3

4.48

3.88

0

1

2

3

4

5

6

1 9 7 0

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

2 0 0 0

2 0 0 1

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

Year

M i l l i o n H

e c t a r e s

Source: Malaysian Palm Oil Board

Total Agricultural Land: 7.9 mil haOil Palm: 4.48 mil ha ~ 56.7 % Agricultural Land

Total Planted Area of Oil Palm in Malaysia(million hectares)


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Planet

Country % Forest

Area

Total Forest

Area (mil. ha)

Total Land

Area (mil. ha)

France 28.3 15.55 55.01

Sweden 66.9 27.53 41.16

Germany 31.7 11.08 34.9Malaysia 63.6 20.89 32.86

UK 11.8 2.85 24.09

Brazil 57.2 477.7 835.56

Argentina 12.1 33.02 273.67

USA 33.1 303.09 915.89

Denmark 11.6 0.5 4.31

T l Pl d A f Oil P l i M l i


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0

1

2

3

4

5

6

1 9 7 0

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

2 0 0 0

2 0 0 1

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

Year

M i l l i o n H

e c t a r e s

Total Planted Area of Oil Palm in Malaysia(million hectares)

Government stoppednew forest land being

opened up for crops,

including oil palm.

Land use change

Land Development/Settlement and conservation Programs are

delicately balanced

1.98

4.48


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Planet

19

Conversion of lower productivity crops to high yielding

oil palm

YearPalm Oil

(million ha)

Rubber

(million ha)

Cocoa

(million ha)

Coconut

(million ha)

Total

(million ha)

1990 2.029 1.836 0.393 0.314 4.572

2000 3.377 1.431 0.076 0.159 5.043

2002 3.670 1.348 0.051 0.155 5.224

2004 3.880 1.282 0.044 0.147 5.353

2005 4.051 1.250 0.033 0.144 5.478

2006 4.165 1.225 0.033 0.142 5.565

2007 4.305 1.248 0.028 0.117 5.698

2008 4.480 1.247 0.021 0.115 5.863

CPO P d ti f M l i


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14.96 15.82

17.73

0.43

2.57

10.84

6.10

13.35

0

5

10

15

20

25

1970 1980 1990 2000 2003 2005 2007 2008

Year

M

i l l i o n t o n n e s

Forecast (in million tonnes)• Y2010 19.5• Y2013 20.5• Y2015 21.5

CPO Production for Malaysia(million tonnes)


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Planet

21

PRODUCTIVITY IMPROVEMENT

Year

Palm Oil

(million

ha)

CPOProduction

(milliontonnes)

YIELD/HA

1990 2.029 6.10 3.002008 4.480 17.73 3.95


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PRODUCTIVITY PALM VS OTHER OILS

0.38 0.48

0.68

4

0

0.5

1

1.5

2

2.5

3

3.5

4

Soybean Sunflower Rapeseed Palm Oil

Oil Tonne/Hectare/Year

Source: Soybean, sunflower and rapeseed from Oil World

Palm oil from MPOB


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Planet

23

Oil PalmThe most productive oil crop

CPO Yield( tonnes/hectare/year)

Biological Potential of Oil Palm 18

National Average for Malaysia 4

Best Managed Oil Palm Plantation 8New Varieties of Oil Palm 10


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Planet

24

0

5

10

15

20

25

30

1 3 5 7 9 1 1 1 3 1 5 1 7 1 9 2 1 2 3 2 5 2 7 2 9 3 1 3 3 3 5 3 7 3 9

Tonne fresh bunches/Ha/Yr

Age (year after planting) of palms

Non-productive PeriodPalm too tall – difficult toharvestOld palms replant

Oil palm plantation –perennial crop – 25 years

of productive cycle

New variety : greater yield

slower growth

MALAYSIAN PRODUCTION OF PALM


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25

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

1

9 7 5

1

9 7 6

1

9 7 7

1

9 7 8

1

9 7 9

1

9 8 0

1

9 8 1

1

9 8 2

1

9 8 3

1

9 8 4

1

9 8 5

1

9 8 6

1

9 8 7

1

9 8 8

1

9 8 9

1

9 9 0

1

9 9 1

1

9 9 2

1

9 9 3

1

9 9 4

1

9 9 5

1

9 9 6

1

9 9 7

1

9 9 8

1

9 9 9

2

0 0 0

2

0 0 1

2

0 0 2

2

0 0 3

2

0 0 4

2

0 0 5

2

0 0 6

2

0 0 7

2

0 0 8

Crude Palm Oil Crude Palm Kernel Oil

MALAYSIAN PRODUCTION OF PALM

OIL & PALM KERNEL OIL (in tonnes)


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26

DIFFERENT SECTORS OF PALM OIL PROCESSING

CPO AND CPKO

TRANSESTERIFICATION REFINING

CRUDE ME REFINED, BLEACHED &

DEODORIZED PO OR PKO

DISTILLATION FRACTIONATION

CRUDE

VITAMIN

DISTILLED

ME

RBD POLEIN &

RBD PKO

STEARIN

RBD P STEARIN &

RBD PKO OLEIN

FOOD USES TRANSESTERIFICATION

DISTILLATION

FATTY CIDS

FATTY ALCOHOLS

GLYCERIN

CRUDE &

DISTILLED

ME

PFAD

PKFAD


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SOME ADVANTAGES OF PLANT

DERIVED PRODUCTS

Plant derived products –

linear structure – easily

biodegradable

Acceptable to all religions

Good cost performanceratio (less sensitive to

water hardness)

0

10

20

30

40

50

60

70

80

90

4 9 12 16 20 24 28

LAS MES

0

10

20

30

40

50

60

70

80

90

C12 C14 C16 C18 LAS AS

54ppm 270ppm

0

10

20

30

40

50

60

70

80

90



Good biodegradation characteristics

Performances vary dependingon chain lengths More tolerance to water hardness

LCA OF PALM PRODUCTS PRODUCTION


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LCA OF PALM PRODUCTS PRODUCTION

Upstream

Midstream

Downstream

Palm Seedling

Oil Palm (immature)

Oil Palm (mature)

Palm Fruit Bunches

Crude Palm Oil Kernel

Refined Oil

Processed

Food

(CookingOil etc.)

Processed

Non food

(Biodiesel,

Alp ha SME etc.)

Land Preparation

Palm based products

Palm Kernel Oil

ExportExport Processed

Non foodProcessed

Food

BiomassIn Estates

Agro-based Products

Compost (as soil

Conditioner/fertiliser)

Mulch (Estates)

Biomass

Palm Kernel Cake

Animal Feed

Renewable Energy

Abundance of Oil Palm Biomass


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PALM KERNEL CAKE

SHELL, 5.5%

FIBRE, 13.5%

POME

EMPTY FRUIT BUNCH, 22%FRESH FRUIT BUNCH

OIL PALM FRONDS

OIL PALM TRUNK

10% oil

90% biomass

Abundance of Oil Palm Biomass

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http://www.foodprocessing-technology.com/projects/chumporn/index.html


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Planet

30

Increase Plantation Hectarage in a Responsible Manner

It is grown on legitimate

agricultural land

Permanent forests, covering55.6% of Malaysia’s land is devoted

to wildlife habitat and biodiversity

conservation

Malaysia practices responsible

agricultural and land management

Minimizes waste and pollutant

generation


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Planet

Source: van Zutphen 2008

Malaysian Palm Oil WildlifeConservation Fund

(MPOWCF) US$ 5.6 millionmanaged by MPOC

Activities1. Jungle patrol to protect wildlife

surrounding oil palm plantations2. Survey of orang utan population in

Sabah3. Establish Orang Utan Island infant

care centre4. Improving riparian reserves

Preserving Biodiversity


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Profit

Importance of oil palm to Malaysia

CountryGNI perCapita

USA $ 44,970UK $ 40,180

Belgium $ 38,600

World $ 7,439Malaysia $ 5,490

Indonesia $ 1,420

Source: World Development BankIndicator 2007.$: USDGNI: Gross National Income

• Palm oil contributesabout 5-6 % ofMalaysian GDP

• Provides employmentto 0.5 million workersin the industry and thoserelated to it


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EXPORT EARNINGS FROM

MALAYSIAN PALM OIL

14.9 14.2

19.6

26.230.4 28.6 31.8

45

62

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006 2007 2008

RM BILLION

Source:MPOB


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MALAYSIAN EXTERNAL TRADE

(2006 & 2008)

E&E, 47.70%

PET&PET PROD,

12.60%

TIM&TIM PROD,

4%

PALM&PALM

PROD, 5.40%

OTHERS, 30.20%

2006

EXT.TRADE = RM 589 BILLION

2008

EXT.TRADE = RM 663.5 BILLION

E&E, 38.50%

PET&PET PROD,

17.00%

TIM&TIM PROD,

3.40%

PALM&PALM

PROD, 9.80%

OTHERS, 31.30%


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Profit

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YearPalm oil

export value(RM billion)

Export value of allcommodities(RM billion)

Percentage of palmcontribution in theoverall export value

1980 2.89 48.80 6.1 %1990 5.50 20.70 26.6 %

2000 14.94 42.72 35.0 %

2007 44.71 88.70 50.4 %

2008 64.80 112.43 57.6 %

Importance of oil palm to Malaysia

Re-distribution of wealth among the rural population

contributed to peace and stability in the country


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Profit

Among other functions, licenses all critical activities

of the Malaysian Palm Oil Sector and enforces its orderly conduct


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Total of Licensees = 151,743

• Nursery - 564

• Estate - 4,260

• Smallholders - 142,540

• Dealer of FFB - 1,972

• Palm Oil Mill - 416

• Palm Kernel Crusher - 59

• Palm Oil Refinery - 57

• Palm Oleochemicals - 54

• Dealer of Palm Oil - 1,053

• Dealer of PFA - 18

• Exporter - 72

• Importer - 77

• Chemist - 27

• Surveyor - 61

• Bulking Installation - 36

• Others - 495

STATUS OF LICENSEES MARCH 2009

37

P i O li


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•Sustainable PracticesAdopted by theMalaysian Palm OilIndustry


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Sustainable Practices Adopted by the Industry

39

Good Agricultural Practices – Estates &Smallholders:

– Good water management

– Maintain riparian reserves– Maintain soil fertility

– Integrated pest management (IPM)

–

Waste Management


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40

• Integrated Pest Management• decreased reliance on harmful chemical

pesticides

•

Increasing use of Biological Control –microbial pathogen

• Barn owl to control rats

• Beneficial plants e.g. Cassia cobanensis tocontrol parasitoids

• Satellite monitoring of diseases


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Conserve natural

resources, reduce wasteand plant cover crops


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ZERO BURNING POLICYOpen Burning is NOT Tolerated during Oil Palm Replanting in

Malaysia

http://pictopia.com/perl/gal?process=gallery&gallery_id=S479652&provider_id=25&ptp_photo_id=wpost:xt-mt-25-200461http://pictopia.com/perl/gal?process=gallery&gallery_id=S479652&provider_id=25&ptp_photo_id=wpost:xt-mt-25-200461http://pictopia.com/perl/gal?process=gallery&gallery_id=S479652&provider_id=25&ptp_photo_id=wpost:xt-mt-25-200461


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43

Reducing greenhouse gases by convertingEFB and POME into compost


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ConvertingPOME (wastewater) into

Biogas

Mitigating CH4 emissions by ~ 80 %

Biogas Plant

UnitedPlantations, Keck Seng, Kim

Long, SimeDarby etc

P t ti O tli


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•Current and New

Initiatives withinthe Industry

N I i i i Wi hi h I d


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New Initiatives Within the Industry

UnitedPlantations

First company to be awarded RSPO Certification(2008)

Second company to be awarded RSPO CertificationContribute 6% of the global output for palm oil

Our industries’ commitments toward

continuous improvement

4 Other Malaysian companies being certifiedand two from Indonesia (PT Musim Mas & PTPP London Sumatra Tbk) & one from PNG

RSPO Certified PO(million tonnes/year)Targeted: 1.5Achieved to date: 1

N I i i i Wi hi h I d

http://www.simedarby.com/default.aspxhttp://www.rspo.org/default.aspx


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• Launched in August 2007 by MinisterPlantation Industries and Commodities

• Five Codes of Practices (CoPs):– Good Agricultural Practice for Oil Palm Estates & Smallholdings– Good Milling Practice for Palm Oil Mills– Good Crushing Practice for Palm Kernel Crushers– Good Refining Practice for Palm Oil Refineries– Good Practice for the Handling, Transport and Storage of

Products from the Oil Palm

• Preparation of the Sustainability Manual for the oil palmindustry

Codes of Practices &

Sustainability Manual

N I iti ti Withi th I d t


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• LCA Study throughout the oil palm supplychain

• Establishment of Tropical Peat Institute. 3areas of research are:

– Inventory of peatland cultivation in Malaysia

– Review on working program of GHG fluxstudies

– Best management practice (BMP) of oil palmon peatland

• Collaboration with the Ministry ofHousing, Environment and Spatial Planningand University of Wageningen in theNetherlands on the tropical peatland project

• Collaborative projects on biodiversity with theNetherlands

• Collaborative projects on carbon emissionstudies

C t I iti ti Withi th I d t


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Current Initiatives Within the Industry

HIGH YIELDING MATERIALS


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50



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•Conclusion

C l i


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Conclusions

Palm Oil Sector in Malaysia• Most important agriculture sector

– Vital to the Well Being of Rural Population

• Major Export Revenue Earner– Its viability is vital

• Export oriented sector– Domestic consumption


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Conclusions

Response to Consumers’ NeedsYear Issue/Need What Have WeDone?

Discovery

1980s Anti-TropicalOil Sentiment

Nutritionalstudies

Neutrality of palm oilCarotene

TocotrienolSN2

1990s ISO 9001 Implement Quality Improvement

Mid 1990s ISO 14000 Implement GAP

21st

Century Sustainability Implement CH4 captureBiomassProductivityCOP

Concl sions


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Conclusions

54

Sustainable agricultureis not justenvironmentally soundland managementpractices, but anintegration of the three

main goals of socialresponsibility, environmental health &economic profitability.

Malaysia is on tracktowards fulfilling the

sustainable businesstriple bottom line of PEOPLE, PLANET &

PROFITS

In pursuing theobjectives ofsustainability, Malaysiawelcomes a fair andbalanced view on issuesrelated to sustainabilityof palm oil.


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Thank You

for your kindattentionwww.mpob.gov.my

Documents

Lecture 8-Sustainability of Palm Oil