TAN SRI DATUK DR. YUSOF BASIRON
CHIEF EXECUTIVE OFFICER

Our ref: 0279-05/08

Date: May 14, 2008

Mr Liam Dann
Business Editor,
The New Zealand Herald                                                                                 
PO Box 32
Auckland                                                                                                                                                  Fax No : 09-373 6423
New Zealand                                                                                                                                            nzherald.co.nz  

Dear Mr Dann,

Response to the article entitled, Call to ban palm kernel imports

I would like to refer to the article entitled Call to ban palm kernel imports which was published on May 5 2008 in your esteemed daily, The New Zealand Herald.  The article, written by Mrs. Angela Gregory, calls for a ban of imports of palm kernel cake (PKC) to New Zealand because it was alleged that the palm oil industry has been contributing to rainforest destruction.

On behalf of the Malaysian oil palm industry, I would like to share with you our views on this matter.

1.         To call for a ban on import of PKC to New Zealand because it has an edge over local produce competing for animal feed is premature and unwise. While sentiments are strong for warranting such calling in view of the current oil palm & deforestation issues, the move will violate WTO principles and worse, would invite a reciprocal reaction from Malaysia; thus jeopardizing the bilateral trade of both countries. It is also wise to note that according to the data of the New Zealand External Trade Statistics, Malaysia exported about NZD 50.99 mil worth of palm oil products to New Zealand during June 2006 - June 2007 while importing about NZD 291.34 mil worth of dairy products in return.  If New Zealand stops importing palm produce from Malaysia then it is logical if Malaysia follows suit and stops supporting New Zealand’s farm produce.

2.         The allegations by the Federated Farmers that deforestation is caused by the palm oil industry in Malaysia are baseless and aimed at confusing New Zealand dairy farm operators. Since 1917, the Malaysian oil palm plantations have been established on legitimate agricultural land recognized by the government. Indeed, after almost 100 years in existence, oil palms only account for 4.3 mil ha or 13.1% of total land area of Malaysia. Unknown to many, Malaysia still has about 18.31 mil ha or 55.7% of its total land area under forests.  How many developed countries in this world have maintained more than 55% of their land area under forests?

Click to view larger image

It is also worth noting that for the past few years, expansion of oil palms in Malaysia has been marginal as the country has almost reached 20% of its land area – the quota which has been allocated for agriculture under the National Agricultural Plan 3 (2000-2010). Thus, expansion of oil palms is only possible through conversion of existing crops like rubber, cocoa and coconut (Table 2).

Table 2: Changes in Land Use of Selected Tree Crops in Malaysia (mil ha)

Note: e= estimates
Source: MPOB, Malaysian Rubber Board, Agriculture Department, Malaysian Cocoa Board

3.         The Malaysian oil palm plantations in general, adopt the three essentials of sustainable development which encompasses economic viability, environmental compatibility and social acceptability.  All these are related to managing resources efficiently in order to strike a balance between economy and ecology within the framework of the agricultural operations.  The social acceptability relates to the social responsibilities towards elevating poverty among the indigenous people and workers who are directly affected and involved in the development of the oil palm plantation.

4.         As one of major producers of palm oil, Malaysia aspires to meet the requirement of consumers and food manufacturers for versatile and affordable edible oil.   The industry’s relentless R&D has allowed one hectare to produce an average of 4-5 tonnes of palm oil per annum with best fields producing as high as 7-8 tonnes.  In comparison, other oil crops can only produce a tenth of the oil amount in a similar planted area.   Relentless improvements for better yields have helped the industry improve its productivity without relying on expansion of oil palm hectarage.  Palm kernel meal, a by product of the palm oil industry is available at competitive prices, and help reduce cost of animal feed.
5.         It is unfair to implicate oil palm plantations with deforestation that results in the loss of orang utans habitats. Malaysian oil palm companies are not involved in whatsoever in logging business. Indeed, the real culprit is illegal logging that causes deforestation and to a lesser extent defragmented forests. These lands are normally left abandoned. Often, oil palm comes in as a rescue to rehabilitate this abandoned land.

As a global player in the oil and fats market, the Malaysian palm oil industry has established practices that comply with the requirements of the food manufacturers and consumers worldwide.  Palm products sourced from Malaysia are guaranteed to come from reliable and responsible plantations, all of which are licensed and registered by law through the Malaysian Palm Oil Board (MPOB), making Malaysian oil palm farms as one of the most highly regulated agricultural businesses in the world.

We would appreciate if you would publish our letter for the benefit of all your readers.

Thank you.

Yours sincerely,

TAN SRI DATUK DR. YUSOF BASIRON

c.c.      H.E. David Kersey
High Commissioner    
New Zealand High Commission                                             (fax no. : 603-2078 0387)