AS we know, palm oil has brought a great deal of wealth to the country and its people for quite some time now.
It is a much sought after global source for vegetable oil and has remained the top choice in the food industry and in the production of other products used worldwide including ghee, soap, pharmaceuticals and cosmetics.
Impressive efforts will be put in by the government and the palm oil industry in the coming months to ensure that the commodity continues to be the people’s first choice. To get there, our palm oil woes need to be addressed urgently.
At a recent government sponsored event, a forum on global Issues, the attendees had the opportunity to hear and ask questions on several aspects affecting the palm oil industry in the country and abroad.
Two panel members were from the Malaysian Palm Oil Board and Malaysian Palm Oil Council. Between them, the negative
narrative on palm oil experienced by the country now was highlighted.
The participants had their concerns answered. These will be discussed below under the three Ps — production, pricing and politics.
PRODUCTION
The industry is made up of smallholders and companies. The process from production to milling and marketing is being handled and managed by the government, including product research and development and marketing.
Two issues can be stated here, of which the first is how palm oil can meet world standards to attain quality and sustainability.
Secondly, what more can be done to reach out to international markets to garner world support for standards developed by Malaysian palm oil research and development agencies.
A certification process and standards have been introduced, which are the Malaysian Sustainable Palm Oil and Roundtable for Sustainable Palm Oil. The rate of compliance by producers has been rather slow, however, especially among the smallholders.
PRICING
The issue of pricing continues to plague the industry, as we depend largely on countries which have large populations such as China and India, the two largest buyers of our palm oil.
Anything that can lead to a lower demand from these two countries, whether due to internal or other political and economic factors, will certainly affect palm oil prices.
The demand for palm oil will depend on the performance of other vegetable oils in the world. Thus far, the production has always exceeded world demand. A more imaginative marketing may improve pricing to a certain extent.
Government programmes to maintain quality and the price, through the industry’s compliance on sustainability and certification process, will certainly improve the situation. Price control and marketing consistency can only be derived from the yield year on year.
In the future, the government may need to consider following the footsteps of the Organisation of Petroleum Exporting Countries (Opec) by establishing a similar organisation to comprise mainly the palm oil producers, millers and consumers.
POLITICS
Palm oil is competing worldwide with other vegetable oils such as rapeseed, sunflower, soya bean and corn, to name a few.
The competitors, usually from outside the country, feeling threatened, will resort to political means through product-smear campaigns. These include import boycotts and even product mislabelling such as “No Malaysian Palm Oil Used” launched by the countries concerned for their products imported into Malaysia.
More needs to be done to ensure palm oil remains nature’s gift to Malaysia and the world.
DR AZHARI KARIM
Former Malaysian ambassador