2017 marks 100 years of Malaysian palm oil. In 1917 the first commercial oil palm plantation was established at Tennamaram. This year the Malaysian palm oil industry celebrates its centenary.
Datuk Seri Mah Siew Keong, Minister of Plantation Industries and Commodities, knows the history of oil palm in Malaysia well. Palm oil has played an important role in the successful development of his home state of Perak, whether in oil palm plantations or downstream processing.
Malaysian Palm Oil has come so far and is now such a globally successful commodity. Would the planters of 1917 be amazed at the industry today?
I think the original planters would be amazed at Malaysia today, not just the palm oil industry. So much has changed over 100 years. We were not even an independent country in 1917. It is a testament to the brilliance and foresight of the palm oil community that they have remained a constant success and a force for good throughout all the historical, technological and political changes in the past century. It is a truly remarkable achievement.
I am sure the founders of Tennamaram would recognise one thing about today’s modern industry. That is the commodity itself - the fundamentals of oil palm remain the same: a high-yielding, cost-effective, versatile oil that is far superior to any competing oil. In Malaysia we have turbo-charged those fundamentals with world-class R&D; cutting-edge agricultural techniques; and a strong commitment to responsible and socially beneficial planting.
What have been the major historical turning points for the Malaysian industry over the past 100 years?
Obviously the establishment of the first plantation in 1917 was a major landmark. Two other key turning points also spring to mind.
The first is the development of larger-scale integrated processing and exporting in the 1930s. This involved the transport of fruit to standardised processing facilities designed for the export market. So, the final product that went to export markets was of a higher quality than from African processors, which were still operating small-scale plants. This set a benchmark for palm oil quality globally – and helped the young industry in South-East Asia get ahead of the curve.
The second was in the 1970s. At this time the Malaysian government pushed for the development of downstream processing industries and the diversification of our export products. This included the founding of PORIM (Palm Oil Research Institute of Malaysia). This visionary step from the government set the scene for successful collaboration between the private sector and government. It also created the platform from where the palm oil sector could expand: not just exporting a raw commodity, but also leading in higher-value economic activity.
We should not underestimate our own place in history. I believe that future historians will look back on these years as another golden age in palm oil: we have tremendous technological advantages that, if harnessed, can take Malaysian Palm Oil to ever greater heights.
If you had to pick out the greatest achievement of the industry over that time, what would it be?
That it has transformed the lives of millions of Malaysians and brought so many people out of poverty. A prime achievement of the industry is the success of the smallholder programmes.
The Federal Land Development Authority (FELDA) was instituted on the eve of Malaysia’s independence. It began planting oil palm in 1961. In 1968 the first settler oil palm project commenced. This was a watershed moment for FELDA and for Malaysia. The idea of granting freehold land titles to participants – rather than making them contract workers – was brilliant. This idea set in motion a level of economic security and personal pride for generations of Malaysians. Secure land tenure and titling means families are able to use that land as collateral for loans to improve existing land, purchase more land, start businesses, support their children’s education and so much more.
The FELDA programmes pulled more than 100,000 families out of poverty across 30 years. By one estimate this represents more than 1 million Malaysians. Its benefits are still being felt today, especially in the rural areas.
It’s no accident that today, Malaysia’s middle class is significant and our country is considered an upper middle income country. Palm oil played a major part in this.
The success story of Malaysia is linked to the success story of Malaysian palm oil.
Do you think Malaysian palm oil is underappreciated in any way?
Yes. It is often overlooked that Malaysian palm oil has almost singlehandedly changed both global vegetable oil markets and global oleochemical markets.
The work undertaken by Malaysia from the 1970s onwards in terms of product development, branding and promotion, marketing and research set the foundation for a thriving industry.
In the 20 years from 1962, the global market for palm oil increased by almost 500%. This was because we tailored products for specific export markets, and did so efficiently. And in doing so, we were able to catch a larger and growing share of the world’s edible oil market.
When the Malaysian oleochemicals industry was launched in 1979, its impact was also significant. What we sometimes fail to appreciate is that our products were so competitive that they prompted companies in the US and Europe to move away from using feedstocks such as tallow completely and only use palm products. Malaysian palm oil really did change the world.
The downside is that palm oil was then – and still is – considered a threat by many industries in other countries. This has led to some difficult times, with sustained protectionist campaigns against palm oil, especially in Europe. But the centenary year is a time to remember the successes and congratulate everyone in the industry for the continued growth and prosperity.
What more recent developments have made a difference to the industry?
A matter of current pride is that Malaysia is a true leader in terms of sustainability. As I mentioned earlier, the economic inclusivity of the FELDA programs has been a model for sustainable social and economic development. It is so successful that other countries, for example in Africa, now wish to copy the Malaysian model.
Malaysia now is also a genuine leader when it comes to environmental sustainability. Our planting and harvesting techniques under the MyGAP (Malaysian Good Agricultural Practices) scheme, Malaysian Sustainable Palm Oil (MSPO) and the Roundtable on Sustainable Palm Oil (RSPO) have always been the benchmark.
This is something that the private sector generally recognises. Palm oil has come under fire from environmental activists in Europe. This criticism has been unwarranted. But the informed participants in the debate are beginning to recognise that palm oil is not the environmental bogeyman that it has been made out to be. Look at the deforestation caused by beef – it is nearly 10 times higher than that caused by palm oil. But there are no anti-beef campaigns in Europe. I believe this will change, and I believe that our good work in defeating anti-palm oil campaigns in Europe will prevail.
What do you think the future holds for Malaysian palm oil?
There is no doubt that vegetable oil demand is going to increase over the medium and long term. The continued increase in the global population is the main reason for this. Malaysian palm oil companies are well equipped to meet that demand, both in existing and in new markets.
With innovation, our yields will improve: this is a critical challenge of the coming years. Mapping of the oil palm genome was only completed in 2013. Through selective breeding we will be able to develop more robust, higher yielding stocks.
Malaysian companies will continue to invest in new markets. Africa is obviously one place that Malaysian companies have gravitated towards as its population grows and becomes more urbanised. There is a pleasing symmetry that after the oil palm came to Malaysia from Africa, we are now exporting our agricultural know-how back to Africa, to help them.
I also think we will continue to lead the way when it comes to more diversified products. I’m talking specifically about projects such as the SIRIM Bioplastics plant, which produces biodegradable plastics from palm oil by products. These innovative developments are going to become more significant as populations become more concerned with environmental problems such as solid waste and landfill, and are looking for cleaner, greener products and solutions.
However, we must be aware of the ongoing challenges. The opponents of Malaysian palm oil would like this to be our last centenary celebration. Their goal is nothing less than eliminating the palm oil industry. It is only if we defend our brand – if we spend the time and energy that is needed to robustly address those opponents – that Malaysian palm oil will continue to thrive. Innovation is what drives this industry forward – but vigilance and strong campaigning against threats is what keeps the industry alive. Despite those challenges, I am pleased to report that the industry is in excellent health after 100 years.
I strongly believe the next 100 years of Malaysian palm oil will be as innovative, fruitful and productive as the first 100.