Enhancing Image of Palm Oil Industry for Global Penetration

Dr. Yusof Basiron CEO, Malaysian Palm Oil Council

Presentation

1. World concerns in addressing food security and dwindling land resource

2. Palm oil as an important food source which can address these concerns

3. Smear campaigns against palm oil 4. Enhancing correct & good image of

Malaysian palm oil 5. Conclusions

Rising world population resulting in more mouths to feed

The world population is projected to grow from 6 billion in 1999 to 9 billion by 2043, an increase of 50 percent. Food production must meet this rate of increase.

Addressing food security in the world • Necessity to ensure food security since time immemorial

• Even today more than 1 billion (15%) of world’s population

do not have food to eat on regular basis

• November 2009 :World Summit on Food Security, Rome, to address food security issues

• April 2010 :World Bank launched Global Agriculture & Food Security Program (GAFSP) to improve food security & income in low-income countries

• 2010: UN Millennium Development Goals: To eradicate extreme poverty and hunger

Year World’s population

(bil)

Arable land per capita

(x10-3km2)

Arable land per capita

(ha)

1922 1975 2005 2030 2042

2.0 4.0 6.6 8.0 9.0

7.50 3.75 2.27 1.88 1.67

0.75 0.38 0.23 0.19 0.17

• World’s population increasing • Arable land resource decreasing

Source: Freeworld Academy & University of Michigan

Arable Land Getting Scarce

Palm oil conserves more land for future generations

Oil Crop Production

(Mn T) % of Total

Production

Average Oil Yield

(t/ha/year) Total Area (Mn Ha) % Area

Soybean 41.75 22.54 0.40 103.88 40.26

Sunflower 14.92 8.06 0.58 25.83 10.01

Rapeseed 24.21 13.07 0.73 33.28 12.90

Oil Palm1 66.96 36.15 4.73 14.14 5.48

Total2 160.21 258.03

Soybean Sunflower Rapeseed Oil Palm

0.40 0.58 0.73

4.73

Higher palm oil yields – a solution to

land scarcity

Source: Oil World, Dec 2012

Note: 1 for palm oil and palm kernel oil 2 for 7 major oils (groundnut, coconut, cottonseed and above oils)

Palm oil is much needed as many uses

Upstream Midstream Downstream

Processing Consumer Products

ACTIVITIES

•Seed production • Nursery • Cultivation • Harvesting • Milling

•Trading • Crude palm oil bulking

•Refining • Fractionation • Oleochemical • Esterification • Refined product storage

•Packaging and branding • Food products • Non – food products

PRODUCTS

•DxP seeds • Fresh fruit bunches • Crude palm oil • Palm kernel • Biomass (Empty Fruit Bunches, kernel shell, fronds) • Palm oil mill effluent

• DxP seeds • Fresh fruit bunches • Crude palm oil • Palm kernel • Biomass (Empty Fruit Bunches, kernel shell, fronds) • Palm oil mill effluent

•RBD Palm Oil • Palm Fatty Acid Distillate • RBD Palm Olein • RBD Palm Stearin • RBD PK Olein • RBD PK Stearin • Cocoa Butter Equivalent • Cocoa Butter Substitute • Cocoa Butter Replacers • Fatty acid, alcohols, amines, amides • Glycerines • Palm methyl esters • Tocotrienol

•Cooking oil, frying fats • Margarine • Shortening • Vanaspati • Ice cream, non-dairy creamers • Candles, soap • Emulsifiers • Vitamin E supplements • Confectionery • Bakery fats • Biodiesel • Energy generation • Animal feed • Organic fertiliser biomass

These days, palm oil and derived products are channeled into worldwide industrial and commercial activities to churn out food products as well as non-food applications

Source: MPOC Publications & USDA Database

1. Source of food (global food security): 80%

2. Oleochemicals: 15%

3. Biofuel : 2%

4. Renewable energy source: Potential Remains Largely Untapped through Palm Biomass

Palm Oil 30%

Soyabean Oil 23%

Rapeseed Oil 13%

Sunflower Oil 7%

Others 27%

2013

IMPORTANCE OF PALM OIL FOR FOOD SECURITY

CONSUMPTION: PALM OIL VS OTHER OILS

Malaysian Palm Oil – Export By Region 2001 - 2013

Source : MPOB & MPOC

0 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(Mill

ion

MT)

Africa Americas Asia Pacific

Europe Middle East Sub-Continent

Other Countries

Taiwan

South Africa

South Korea

Turkey

Japan

Nigeria

Bangladesh

Mexico

Egypt

Iran

Pakistan

North Africa

EU 28

China

India

(15,000) (10,000) (5,000) - 5,000 10,000 15,000 20,000 25,000 30,000

Net Importers ('000 MT)

Net Exporters ('000 MT)

Indonesia

Malaysia

Argentina

Canada

Ukraine

Brazil

Russia

Philippines

› Net exporters of oils and fats – Asia Pacific (palm oil) & Americas (soybean)

› The rest of the countries are net importers

FAO estimates that by 2050, rising population and incomes will require 70 percent increase in global food production

NET IMPORTING & EXPORTING COUNTRIES

FOR OILS AND FATS (2013)

Source : Oil World

Palm oil industry is a sustainable business that can uplift livelihood of poor people

• BRUNTLAND REPORT • Sustainable development is development that

meets the needs of the present without compromising

the ability of future generations to meet their own needs (Taking care of PLANET)

• the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given (Uplifting livelihood of PEOPLE)

• The PEOPLE factor often forgotten

• Doing this in process of making it a viable business by making PROFIT

• Malaysian palm oil sustainably produced (3Ps)

Oil palm farmer’s income above poverty level

Felda settler’s

income

National poverty

level

RM 1,356

RM 529

FELDA

THE TRANSFORMATION

13

EARLY FELDA SETTLEMENT

FELDA

FEDERAL LAND DEVELOPMENT AUTHORITY ( FELDA)

FELDA TRANSFORMATION

Palm oil is produced sustainably (we CARE FOR THE PLANET

3 Ps – PEOPLE,PLANET,PROFIT)

HEALTH (PALM OIL AS FOOD SOURCE) •Saturated fats issue

ENVIRONMENT & SUSTAINABILITY (PALM OIL FOR FOOD) •Deforestation •Carbon stock loss •Orang utan extinction

(PALM OIL FOR BIOFUEL) •Deforestation •Carbon stock loss •Orang utan extinction •High GHG emissions

In 1986, the American Soybean Association (ASA) launched a series of attacks against palm oil and other tropical oils that became known as the "tropical grease campaign."

The ASA persuaded lawmakers to introduce legislation against cholesterol-rising saturated fats. This effort was abetted by a self-styled consumer crusader, Phil Sokolof,

ASA charged that tropical oils destroyed life or impaired health. The campaigns by ASA convinced many consumers that tropical oils were unhealthy and consumers should be warned on product labels

Unsaturated

Saturated

Palm oil has a balanced saturated/unsaturated fats profile

Current Facts on Trans Fatty Acids (TFA)

• TFA increases risk of cardiovascular disease.

• WHO/FAO (2003-2009) Recommendation– TFA should be limited to < 1% of total daily energy in human diet.

• In most EU countries and North America- 2% TFA limit

in dietary oils/fats • Palm oil is TFA free

SMEAR CAMPAIGNS AGAINST PALM OIL (Health: Nutella Tax )

• Palm oil blamed to cause obesity

• Nutella Tax proposal in France in November 2012

• MPOC challenged the proposal

• Victory for MPOC

SMEAR CAMPAIGNS AGAINST PALM OIL (Environment: Deforestation )

• Greenpeace: palm oil is driver of deforestation

• Zoos Victoria “Don’t palm us off” campaign

2. Malaysia has conserved high % of

permanent forest compared to developed countries

0

10

20

30

40

50

60

70%

Average 23% Average 51%

2. Malaysian deforestation rate is lower (FAO)

Trends in extent of deforestation in selected countries (1990-2010)

Country Forest area

(‘000 ha)

Annual Change Rate

(%)*

2000 2005 2010 2000-2005 2005-2010

Australia 154,920 153,920 149,300 -0.13 -0.61

Indonesia 99,409 97,857 94,432 -0.31 -0.71

Argentina 31,861 30,599 29,400 -0.81 -0.80

Malaysia 21,591 20,890 20,456 -0.66 -0.42

Note: * Negative percentage means deforestation Source: FAO Global Forest Resources Assessment (2010)

•Malaysia is committed to 1992 Rio Summit pledge to maintain at least 50% of total land area under forest cover

DISTRIBUTION OF AGRICULTURAL AREA

Livestock , 71.27%

Other Crops, 23.17%

Oilseeds, 5.25%

Oil Palm, 0.31%

Source : FAOSTATS

Total Agricultural Area : 5 Billion Hectares

Annihilation of wild -life including orang utan

• NGOs campaign against land clearing for oil palm cultivation blaming it as cause of biodiversity loss.

• NGOs financed by governments who want to limit development in developing countries

MALAYSIAN PALM OIL INDUSTRY: THE ONLY ONE VEGETABLE OIL

PRODUCER WITH A DEDICATED WILDLIFE CONSERVATION FUND

• Launched in 2006

• RM 20 million revolving fund

• Conservational efforts for wildlife

• Sabah Wildlife Rescue Centre

POPULATION OF > 11,000 ORANGUTAN LIVING IN SABAH

Malaysia does not use forested land indiscriminately. In State of Sarawak, survey carried out in 2012 /13 found Ulu Menyang to have high orangutan population. Government has declared this area to be kept as high conservation value forest for orang utan .

82 100*

167

147*

35.6 26.9

40.5 49

147

217

0

50

100

150

200

250

300

350

Forest

Palm Plantation

Palm Plantation

Forest

Total Co2 Removal by LULUCF 249.8

Total Co2 Emission 223.1

Total Co2 Emission 292.9

Total Co2 Removal by LULUCF

247

Emission by LULUCF + Agriculture (Rice) Sectors

Emission by Others

Emission by Energy Sector

Malaysian palm oil’s contribution to National GHG Inventory

Land Use, Land Use Change and Forestry (LULUCF) is made up of Forestry and (Oil Palm) Plantation Sector

•Trend Estimate Source: Malaysia’s 2nd National communication to UNFCCCC

CO2

MT

2000 2007

OTHER CHALLENGES TO PALM OIL INDUSTRY

Government Policies Not Favouring Palm Oil

Certain countries have protectionist measures imposed to protect their oilseeds against competition from imported palm oil

Lobbies by local associations to impose higher duty

Active lobbying by NGOs to curtail palm oil use

Proposed labeling laws against palm oil Continuous ban on crude palm oil or other

palm products

Threshold value for EPA (US):50%

Eud: EU Directive EU: van Zutphen’s study US1: GREET Model using allocation method US2: GREET Model using displacement method

PALM OIL BIOFUEL: Unjust discrimination in EU and USA

Conclusions

• Palm oil is versatile raw material for food and non-food usage

• Malaysian palm oil is sustainably produced

• Palm oil plays key role to address food and fuel security

• Yet it is often attacked unfairly by NGOs

• Some Governments also place unfair trade barriers on palm oil

Conclusions(continued)

• This presentation has presented facts that debunk the wrong allegations against palm oil

• NGOs are warned not to overplay wrong accusations

• Wrong image can lead to serious curtailment of future palm oil production

• Leading to possible derailment of food and fuel security for the world

• MPOC continues to provide right image to enhance palm oil trade to ensure food security

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