Palm oil is the most versatile oil. It can be used in a wide variety of foodstuffs as well as in non-food products such as oleochemicals (e.g. soap, cosmetics and paint). Currently, about 90% of Malaysian palm oil is used for these traditional applications, with less than 1% destined for biodiesel production. With the EU expected to import more biofuel in future, Malaysia has allocated about 6 million tonnes of its palm oil to cater for this demand.
There are 4.3 million hectares of oil palm in Malaysia. This relatively small area representing about 1.84% of world’s total oilseed area produces about 42% of the world’s palm oil and 10% of the world’s oils and fats. Malaysia is the second largest palm oil producer and is the world’s largest exporter.
Palm oil currently contributes about 5-6% of Malaysian GDP and provides employment for 1.4 million workers (direct employment of 570,000).
It triggers downstream activities and brings in revenue for national development and stability, with foreign exchange earnings amounting to an average of €7.5 billion annually over the past 3 years.
30-35% of Malaysian palm oil is produced by smallholders. Oil palm cultivation has become a means to overcome rural poverty. The establishment of land schemes, for example by the Federal Land Development Authority (FELDA – www.felda.com.my) and the Federal Land Consolidation and Rehabilitation Authority (FELCRA), has resettled landless farmers who mainly grow oil palm.
Today, FELDA manages about 853,000 hectares of plantations, providing employment for over 112,635 farmers. The land schemes are provided with basic amenities such as piped water, electricity, communications, roads, schools and healthcare, and offer further employment opportunities in these economic activities.
The Malaysian palm oil industry’s sustainability policies and practices
In August 2008, Malaysia’s United Plantations Bhd, one of the world’s leading palm oil producers, became the first company ever to receive RSPO certification on sustainable palm oil.
The Malaysian Palm Oil Association, which represents more than 100 Malaysian plantation crop companies, is a founding member of the Roundtable on Sustainable Palm Oil (RSPO), and supports initiatives for sustainable production and use of palm oil.
The industry is now working to enable smallholders to comply with RSPO standards.
Over the past 50 years, oil palm expansion in Malaysia has only taken place on land previously used to cultivate rubber, cocoa and coconut, and on land zoned for agriculture.
Malaysia’s National Agricultural Plan 3 (NAP 3) caps the proportion of land that can be used for agricultural purposes at 20% of the total land area of 32.86 million hectares. This limit has not yet been reached. Oil palm planting has slowed down in recent years due to limited availability of suitable land. Thus, increasing demand for palm oil will be met by increasing yields through improved planting materials and plantation management, not by converting more land for agricultural use.
Currently, Malaysia has about 18.55 million hectares of forest, compared to 4.3 million hectares of land under oil palm. Oil palm covers 65% of agricultural land.
The Malaysian palm oil industry has launched a revolving USD 5.5 million Palm Oil Conservation & Wildlife Fund (POCWF). This is aimed at encouraging both local and international interested parties to undertake studies on the conservation and preservation of biodiversity and wildlife in Malaysia.
CO2 footprint of Malaysian palm oil
Palm oil is a highly energy efficient crop compared to other biomass such as soybean or rapeseed (see chart).
Based on current typical industry practices for palm oil production in Malaysia, using palm oil for biofuel applications renders an average net CO2 reduction of approximately 60%. In other words, the CO2 emissions incurred in the palm oil supply chain are only around 40% of the CO2 emissions generated by fossil fuels.
Depending on production techniques, palm oil can reach even higher GHG savings of between 80 and 90%, comparable with second generation biofuels. With further improvements in yield and waste management, and by taking into account carbon sequestration by the oil palm, this figure can be expected to go beyond 90% in the future.
Also Read : Fact Sheets on Malaysian Palm Oil
As one of the world’s largest producers and exporters of palm oil and its products, the Malaysian oil palm industry is the pride of the country. Over the past 50 years, the industry has grown by leaps and bounds to feed millions of people worldwide, provide political and economic stability to the nation and enhance social development ... read more
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