Carbon emission and climate change issues – the thrust of the recently-concluded Copenhagen Summit – are probably the toughest challenges to beset Malaysia’s palm oil sector. The progress of the industry since it first started commercial operations in the late 1960s was never smooth with challenges that can be summarised into 4Cs – commercial, cholesterol, conservation and carbon emission – each challenge having adverse market and trade implications on crude palm oil (CPO).
The commercial challenge in the 1970s resulted in a US$20 discount per tonne in CPO price to soybean price. The cholesterol challenge in the mid-1980s by the American Soybean Association (ASA) widened the discount to US$100 per tonne and to US$200 per tonne during the conservation challenge in 2006. The latest challenge on palm oil carbon emission, which is calculated higher than other vegetable oilseeds, may further broaden the discount to over US$300 versus rival soybean. Datuk Mamat Salleh of the Malaysian Palm Oil Association commented: “With carbon emissions contributing to global warming, everyone in the world is feeling the heat. “The carbon issue is serious and more challenging, and is being taken up by many sectors such as the Roundtable on Sustainable Palm Oil (RSPO), the EU, the US and the Intergovernmental Panel on Climate Change/United Nations Framework Convention on Climate Change and, of course, the NGOs which are having a field day on this issue.” The cholesterol campaign against palm oil initiated in the US was to protect the soybean market while the carbon issue was started by the EU for its rapeseed oil. Many claimed that these countries took turns to pose the technical challenge on palm oil and benefited commercially in price premium. “As for the developed countries, they squandered carbon in the past and not sequestering carbon now and will squabble over carbon reduction targets in future after the United Nations Climate Change meeting (COP 15) in Copenhagen,” said Mamat. Climate change has its culprits and scapegoats but, ironically, the culprits will carry on “business as usual” for their wasteful living, industries, energy and automobiles while the oil palm and forestry sector of the developing nations will remain the scapegoat. Having said that, COP 15 had its plus point where Malaysian and Indonesian planters stood united to reject the proposal to curb planting under the Reducing Emissions from Deforestation and Forest Degradation in Developing Countries scheme. However, the small victory may be temporary given that there is no legal binding mandate. Hopefully by 2010, there will be more concrete commitment as Malaysia can be classified as a net carbon sink country given its oil palm and other plantation tree crops such as rubber, cocoa and coconut, in addition to its 56% permanent forest cover. (Carbon sink helps remove CO² from the atmosphere. It is also known as carbon sequestration.) Malaysia can effectively contribute to global CO² reduction when many other countries at the Copenhagen meeting are still making the first move to reduce emissions particularly those that are huge CO² emitters. For Malaysia as a net carbon sink country to voluntarily slash its carbon emission at COP 15 by up to 40% by 2020 compared with its 2005 level truly reflects its carbon reduction commitment. Mamat, a veteran in the cholesterol fight, recalled nostalgically that the said challenge on palm oil took about 20 years (1986-2006) for Malaysia to counter. “Who knows, the tough carbon challenge can even go on for the next 40 years until 2050 when the world temperature may or may not increase by 2 degrees Celcius.” Looking back, the commercial challenge was confronted when palm oil was considered an industrial and not a food product – some even classified it as not fit for human consumption. It was overcome by extensive promotions on its food use with lots of techno-economic advantages. Palm oil then faced the cholesterol challenge by ASA, whereby it was alleged to raise the cholesterol level and contributed to heart disease. Nutritional researches however discovered that palm oil actually raised the good cholesterol level. As a strategic approach, research was also done on trans fatty acids. When soft oils (soya and rapeseed) are hydrogenated to harden for margarine or shortenings, it created the “artificial” trans fatty acid which is worse than natural saturated fats in palm oil. In fact, the US now bans the use of trans fatty acid and many users in the market are going for “trans-free” products. For the conservation challenge, CPO production was subjected to sustainability and biodiversity issues whereby the NGOs used orang utans as the icon. Malaysia responded by setting up the RSPO that defined the principles and criteria for sustainable palm oil which led to the production of over one million tonnes of certified sustainable palm oil for the world market. Since it is going to be a long-term fight (carbon and climate change), Malaysia needs to have lots of stamina and an integrated long-term approach. The NGOs are being used to push the carbon issue and Malaysia should apply the same strategy using friendly NGOs and research findings to counter it. The offensive should be made on the carbon issue itself. Less-developed countries like Malaysia should also be given carbon subsidy to use the legitimate percentage of their only available resource – forest lands – for agriculture while the provision of environmental service to the world should “not” be free; it should be paid equivalent to the income forgone for not cultivating oil palm. The present carbon challenge fight must be conducted as an oil war where the tactical “fats fight” are open on several fronts such as legislative, administrative, legal, nutritional and scientific researches, technical and trade missions, and visits to consumers and manufacturers’ facilities since the stake to the palm oil industry is high. Source: The Star by Hanim Adnan