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Jakarta Post

Big boost for small palm oil planters in Malaysia

  • Hanim Adnan

    The Jakarta Post

Petaling Jaya   /   Mon, July 6, 2015   /  03:58 pm
Big boost for small palm oil planters in Malaysia

Fresh opportunities: A worker harvests oil palm fruit at a state-operated plantation in Bekri, Lampung, in this photo file taken on Dec. 9, 2008. Consumer goods giant Procter & Gamble recently announced plans to enter the Indonesian oleochemical industry with an investment of at least US$100 million. (JP/R. Berto Wedhatama)

Over 400,000 oil palm smallholders in Malaysia will finally get to see their estates certified as producers of sustainable palm oil under the Malaysian Sustainable Palm Oil (MSPO) certification standard initiated by the Government.

With an initial fund of 50 million ringgit (US$13.2 million) allocated for this purpose, many independent smallholders are more receptive towards getting the MSPO certification, compared with the stringent rules and costly auditing process imposed on them when trying to acquire Roundtable on Sustainable Palm Oil (RSPO) certification, which is the world'€™s first palm oil certification standard.

'€œFor independent smallholders with oil palm land size of 40 hectares and below, it is just too expensive to fork out the certification fee of 10,000 ringgit to get the RSPO agents to audit their land.

'€œThe stringent rules have also put off their interest to be RSPO-certified,'€ says National Association of Smallholders (NASH) president Aliasak Ambia.

Unlike the organised smallholders under the Felda settlers scheme whose cost for RSPO certification is mostly supported by Felda, independent smallholders in the country lack the financial back-up to undergo RSPO auditing, he says.

'€œWhat more with the stringent RSPO auditing which often questions local smallholders on their crop yield, and, agricultural and management practice which has resulted in many smallholders in Indonesia, Thailand and Malaysia rejecting the RSPO sustainability movement,'€ says Aliasak.

However, independent smallholders in Malaysia are becoming more aware of the importance of getting their plantations and palm oil products to be certified sustainable in line with the increasing demand from the major markets, particularly in the European Union and the United States.

Indonesia, the world'€™s largest palm oil producer, has also launched its own national standard '€“ Indonesian Sustainable Palm Oil (ISPO) '€“ which is made compulsory to all oil palm growers in the republic back in 2011.

Hence, there are now three sustainable palm oil standards in the world: the international-based RSPO, ISPO and MSPO which the world markets could rely on for sourcing sustainably-produced palm oil.

Promotion drive

Aliasak tells StarBiz that it is paramount that the government actively promote the MSPO for it to become a truly recognised palm oil sustainable standard in the world.

'€œRSPO certification maybe dictated by the Western market players'€™ grouping, so it is most important for MSPO to be driven by oil palm growers.

'€œIt is also important to highlight that Malaysian palm oil is of superior quality and sustainably-produced from plantation to the table of the consumers,'€ says Aliasak.

If Malaysia can successfully position its crude palm oil (CPO) futures as the world'€™s price benchmark for CPO, he believes that '€œwe can also do the same for our MSPO standard even though it will not be an easy feat.'€

On the local front, an MSPO committee has recently been formed under the Plantation Industries and Commodities Ministry to look into certification matters.

Alisak also hopes that MSPO certification for independent smallholders could be expedited within the next couple of months.

'€œI believe once the grant has been disbursed accordingly, the auditing process can be carried out almost immediately.

'€œBefore the end of this year, at least a group of four to five independent smallholders will be able to qualify for MSPO certification.'€

Aliasak who oversees NASH, which represents over 400,000 smallholders in Malaysia, hopes to carry out several MSPO roadshows nationwide to alert smallholders on the latest development.

'€œNASH has done a similar move under the RSPO banner previously but it has proven unpopular because of the costly procedure.

'€œBut I am positive this time round, with the grant allocated by the government, smallholders will support this new initiative,'€ he says.

For now, NASH is waiting for the green light from the MSPO committee as well as the national palm oil custodian, the Malaysian Palm Oil Board, which is the driver of the MSPO certification, he adds.

To make MSPO certification works, Aliasak says it will be good to use smallholders'€™ cooperatives for this initiative.

'€œThere are 64 smallholders cooperatives nationwide. We plan to tap into their resources and pool the smallholders into groupings to make it easier for the auditing for MSPO certification to be carried out.'€

Certified players

On the other hand, major estates in Malaysia dominated by big plantation companies such as Sime Darby, IOI Corp, Kuala Lumpur Kepong and United Plantations mostly have attained RSPO certification.

These private plantation companies see it best to attain the internationally recognised RSPO certification to gain better access to the EU and the US markets which in recent years have been demanding for sustainably-produced palm oil products.

Malaysia also has been recognised by the RSPO as one of the biggest producers of certified sustainable palm oil, producing 42 per cent of the world'€™s supply and accounting for 43 per cent of CSPO growers worldwide.

(3.79 ringgit = US$1) (hhr)


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