AS Malaysia marks its centennial year of commercial oil palm cultivation, Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said his focus, as flag bearer of the industry, is to raise productivity at the estates.
“Oil palm cultivation is coming to 100 years. Since 1917, oil palm has done much to bring hundreds of thousands farmers out of poverty,” he said.
A hundred years ago, Henri Fauconnier established Malaysia’s first commercial oil palm planting at Tennamaram Estate in Selangor, in a bid to replace an unsuccessful coffee estate.
Since then, Mah said, oil palm cultivation has helped eradicate the poverty rate from 50 per cent of population when Malaysia achieved Independence in 1957 to less than five per cent today.
“This is proof oil palm planting is bridging the urban-rural earning gap and has helped distribute wealth throughout the population,” he said.
Some 40 per cent of Malaysia’s oil palm acreage belong to small farmers. In total, Mah said more than one million people are dependent upon small-scale farming.
In raising productivity, he urged more smallholders to replant old trees.
“Under the 2017 Budget, we have RM30 million for smallholders to replant. It works out to be RM7,500 per hectare.”
The government is also offering rebates of up to 20 per cent to purchase harvesting tools to help oil palm planters raise productivity at the estates. Unfortunately, the uptake is low.
Mah admitted the existing motorised sickles have weaknesses as they could not reach taller palms.
“There’s room for improvement in mechanising the harvesting process. We’ve established a RM30 million grant to stimulate more intensive research into this direction,” he said.
Mah urged higher learning institutions and private corporations to pool their resources to find better ways to evacuate oil palm fruits from the trees to the mill.
Next month, the government will host a meeting with planters, millers, refiners and traders to gain buy-in from these stakeholders on the best way to implement the Malaysian Sustainable Palm Oil (MSPO) certification.
The MSPO is a reflection of a unified code of laws concerning best practices throughout the supply chain, from oil palm planting to palm oil processing.
This government-driven certification is especially crucial for some 550,000 smallholders nationwide.
“It is not going to be easy and is quite expensive. I think we should consider grouping the smallholders together for the certification,” he said.
Mah wants the MSPO to be a basis for branding the palm oil as a high value necessity for mankind.
“We want the MSPO certification to show that the planting and production of palm oil balances the needs of people, profit and planet. We would like our customers to get to know and eventually value highly the palm oil as we do.”
Moving up the value chain to milling, Mah aspires millers to achieve an oil extraction rate (OER) of 23 per cent by 2020. Currently, the industry’s OER is averaging at only 20 per cent.
While millers work harder to be more efficient, seed producers are also doing their part to help raise oil yield by painstakingly embarking on tree breeding programmes.
Over the last five decades, tree breeders have been producing designer seeds that would yield very oily palm fruits for planters.
At the prime fruit-bearing age, these newer breed of trees are capable of producing more than 30 tonnes of fresh fruit bunches with more than 23 per cent oil extraction rate. That works out to be about seven tonnes of oil per hectare in a year.
“Seed producing companies embarking on tree breeding programmes invest a lot of money and, I believe, the process is time consuming. While there are challenges, we see big potential for superior planting materials emerging from trial plots,” he said.
In the last 30 years, Mah noted, the oil palm industry had expanded downstream and stakeholders are no longer confined to planters. Bankers, insurance companies, freight forwarders, cargo surveyors, scientists and engineers are now part and parcel of the palm oil supply chain.
Mah, who hails from Teluk Intan and is the Member of Parliament for the constituency said the southern part of Perak is a hub for more than 10,000 smallholders tending to their oil palms.
“Throughout these decades, I’ve witnessed smallholders in Teluk Intan benefiting from cultivating this crop. Of course, there were ups and downs. I remember in my younger days, the oil palm fruits were selling at as low as RM90 per tonne.
“When prices are low, the whole town seemed to have slowed down but as the prices go up, the economic activity start to pick up. Restaurants receive more customers and there is also more inbound tourism.
“Today, there are 14 palm oil mills in Teluk Intan. There is also a refinery that processes specialty fats that are then made into chocolate that melts in your mouth but not in your hands,” Mah smiled.
Apart from specialty fats, the versatile palm oil supply chain entails production of margarine, cooking oil and oleochemicals.
More talents are being employed to work the transport and storage of palm oil at the ports, palm oil futures trading at brokerages, design and construction of refineries and biodiesel plants, animal feeds, vitamin E extraction and even the development of nutrient-enriched cosmetics.
The spillover of the palm oil industry to investors can also seen in the stock market. Permodalan Nasional Bhd (PNB), the country’s biggest fund manager, and the Employees Provident Fund (EPF) derive big chunks of their dividends by investing in plantation counters on Bursa Malaysia.
Plantation companies listed on the stock exchange such as IOI Corp Bhd, Sime Darby Bhd, Kuala Lumpur Kepong Bhd, Genting Plantations Bhd, Felda Global Ventures Holding Bhd, Hap Seng Plantations Bhd and Sarawak Oil Palms Bhd are significant dividend channels for investors and key palm oil exporters.
“When PNB and the EPF invest in the plantation counters, the average Malaysian’s savings or pension is influenced by the performance of palm oil industry. When palm oil futures rise on the Bursa Malaysia Derivatives, this inevitably leads to higher profits for plantation firms on the stock exchange and higher dividend payouts to investors,” said Mah.
“I am hopeful that the palm oil industry will continue to grow in the decades ahead, empower smallholders and serve more stakeholders. I’m optimistic it will eventually lead the economy under Prime Minister Datuk Seri Najib Razak’s visionary 30-year transformation plan from 2020 to 2050,” he added.