IN March 2007, European Union leaders decided to increase to 20 per cent by 2020 the share of renewable energies in the EU's energy consumption. With this target, the EU hopes to drastically reduce their greenhouse gas emissions and their reliance on imported petroleum oils.

Environmental groups fear that such a policy will lead to a rise in the price of food and the destruction of rainforests due to oil seed crop expansion.

The new renewable directive being drafted stipulates that bio-fuels used in the EU will have to provide a real saving in greenhouse gas emissions of at least 35 per cent compared with fossil fuels. Although palm oil has a clear advantage - 60 per cent less carbon dioxide emissions than fossil fuels - this has not been taken into consideration.

Instead, fictitious emission figures are assigned for palm oil to position it as worse than locally produced rapeseed oil and imported soybean oil.

The directive also outlines several other criteria to ensure bio-fuels are environmentally sustainable, including a production restriction on land of high biodiversity and with high carbon stocks, and requisite use of best agriculture practices.
Bio-fuels that do not meet the above criteria will not be eligible for subsidies nor count as renewable energy and, therefore, will not contribute to the binding targets set out for member states.

Another option under discussion is to exclude imports from countries that have not ratified a range of international agreements on labour and environmental standards, including the Kyoto Protocol.

This would make palm oil ineligible for bio-fuel subsidies in the EU, as palm oil-producing countries may not want to ratify all international agreements on labour and environmental standards.

Put simply, the proposed new directive would indirectly restrict the importation and use of palm bio-diesel in the EU, restricting exports of bio-diesel from Malaysia, despite Malaysian palm oil's competitive advantage over other bio-fuel produced in the EU.

This would constitute an unfair business practice and a non-tariff trade barrier, in violation of World Trade Organisation principles.

The EU should be reminded of the non-discriminatory clause of Article 1 of General Agreement on Tariffs and Trade (GATT), which states that a member cannot treat a product of another country more favourably than the products of other WTO members, as well as Article 111, requiring equal treatment for foreign and domestic goods and services.

Indeed, after almost 100 years, oil palms only account for 4.3 million hectares or 13.1 per cent of the total land area of Malaysia. The country still has about 18.31 million hectares or 55.7 per cent of its total land area under forest.

The EU claim that palm oil bio-fuel may lead to massive deforestation is simply unjustified. All Malaysia is doing is asserting its sovereign right to produce food and raw material on its legitimate agricultural land.

According to data from the Malaysian Palm Oil Board (MPOB), about 128,193 tonnes (about 0.81 per cent) of the 15.88 million tonnes of palm oil produced in 2007 was used for bio-fuel production in 2007. Of that amount, 95,013 tonnes was exported.

This trifling amount surely cannot be blamed for the world food crisis.

On the contrary, the EU diverted more than three million tonnes or 60 per cent of its rapeseed oil production to bio-diesel production, and the US has similarly diverted large quantities of corn and soybean oil for bio-fuel feedstock, leading to shortages in food oils and animal feed. It is more logical to blame them for increases in food prices rather than palm oil.

Today, 800 million people go hungry. More than two billion people are at risk from deficiencies resulting from the lack of Vitamin A, among other micro-nutrients.

The UN's Food and Agriculture Organisation projects world population to grow to 9.2 billion by 2050. Food production will need to rise to meet this increased demand even as the availability of suitable agricultural land will inevitably decrease because of competing needs.

The high yield of oil palm provides the strongest new opportunity to supply the world with raw materials for food, oleochemicals and fuel through continued responsible production.

Unfortunately, the least efficient oils - soy and rapeseed, with yields just one-tenth that of oil palm - are being promoted.

Palm oil occupies a special position as an agricultural crop in many parts of the developing world where poverty and deprivation are a terrible reality. In Malaysia, investment in agriculture, particularly in oil palm, has proven to be most effective in helping poor farmers become more productive and improve their standard of living.

The World Bank recognises that agricultural growth has successfully reduced rural poverty in East Asia. The challenge is to expand this sector responsibly. Palm oil has shown the way by transforming communities and providing a pathway out of poverty for millions of rural poor.

Ironically, when higher commodity prices should encourage more exports, new environmental and social standards are being imposed by developed countries. These are nothing more than disguised trade barriers and protectionist measures to safeguard the interests of EU farmers.

Logic calls for the promotion of a food crop that makes economic and responsible use of agricultural land, requires the least artificial input, and provides an ever-expanding range of benefits to humankind.

Instead, NGOs are insisting on an end to the extension of oil palm cultivation. Their extreme views and demands brook no viable alternatives and no compromise. It appears the EU environmental NGOs will not stop demonising palm oil to prevent it from reaching consumers. If their arguments prevail and trade barriers are erected, the world would be a poorer place.

Tan Sri Dr Yusof Basiron is chief executive officer of the Malaysian Palm Oil Council.