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Oil Palm Economic Performance in Malaysia and R&D Progress in 2020

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Oil Palm Economic Performance in Malaysia and R&D Progress in 2020 REVIEW ARTICLE Journal of Oil Palm Research DOI: https://doi.org/10.21894/jopr.2021.0026 OIL PALM ECONOMIC PERFORMANCE IN MALAYSIA AND R&D PROGRESS IN 2020 GHULAM KADIR AHMAD PARVEEZ*; AZMIL HAIZAM AHMAD TARMIZI*; SHAMALA SUNDRAM*; SOH KHEANG LOH*; MEILINA ONG-ABDULLAH*; KOSHEELA DEVI POO PALAM*; KAMALRUDIN MOHAMED SALLEH*; SHEILYZA MOHD ISHAK* and ZAINAB IDRIS* ABSTRACT The year 2020 faced unprecedented challenge for most of the global economic growth due to the outbreak of Coronavirus disease (COVID-19). Despite a downward trend performance of the Malaysian oil palm industry, particularly for the first half of 2020, the impact is less severe due to the encouraging palm oil export revenue through the National Economic Recovery Plan (PENJANA) which nurtures a notable increase in crude palm oil (CPO) price. In honouring the Malaysian pledge on forest conservation, land expansion for the oil palm cultivation remains stagnant over the years. The effort is now shifting towards enhancing the oil palm yield performance through new planting materials and good agricultural practices, coupled with systematic pest and disease management. Sustainability continues to be the key agenda of the oil palm industry, in moving forward to sustain the industry ecosystem. The industry is now open for innovative palm oil processes to comply with the dynamic and stringent food safety and quality standards and trade regulations. Owing to the distinction in food and feed applicability together with health prospects, translating the information into consumer-friendly language is becoming crucial for effective communication. Valorisation via the concept of ‘waste to wealth’ has compelled series of innovations in capitalising oil palm co-products for greener bioenergy and oleochemicals, and source of phytonutrients to generate higher earnings without having to heavily rely on palm oil trade as commodity. Mandatory enactment of the Malaysian Sustainable Palm Oil (MSPO) certification scheme has portrayed a success story of showing the utmost commitment towards sustainability. With persistent dedication, the oil palm industry is envisaged to be self-sustaining, amidst the never-ending challenges surrounding economy, well-being and environment. Keywords: bioenergy, COVID-19, food safety and health, MSPO, oleochemicals, palm oil, sustainability, valorisation. Received: 30 March 2021; Accepted: 21 May 2021; Published online: 11 June 2021. INTRODUCTION global total production (Oil World, 2020). Indeed, Malaysia is more prominent as the major exporter Palm oil sector is one of the crucial revenue earners of palm oil, as reflected by 18.3% of the global oils for Malaysia’s economy after the electrical and and fats (17.37 million tonnes) while contributing electronic, petroleum, and chemicals industries to 34.3% of the total palm oil trade. The prevalence (MATRADE,ARTICLE 2021). The challenges in confronting ofIN COVID-19 pandemic, PRESS however, has shown less the COVID-19 pandemic did not jeopardise its impact to most of the national oil palm industry ranking as the fourth world’s largest producers performance indices particularly after the relaxation of oils and fats in 2020 accounting at 8.1% of the of movement restrictions, resumption of economic sectors in most countries and exemption of CPO * Malaysian Palm Oil Board, export duty under the National Economic Recovery 6 Persiaran Institusi, Bandar Baru Bangi, Plan or PENJANA. It is also worth to note that the 43000 Kajang, Selangor, Malaysia. E-mail: [email protected] aforesaid pandemic led to unexpectedly positive 181 JOURNAL OF OIL PALM RESEARCH 33 (2) (JUNE 2021) effects on the national oil palm industry evidenced PERFORMANCE OF THE MALAYSIAN OIL tremendous increase of 29.2% from the previous PALM INDUSTRY year (RM2079.00 t–1), and this further reflected by the improvement of total export revenue by The year 2020 has been very tough as the COVID-19 8.4%. pandemic disrupted the global political, social, Over the past few years, palm oil research economic and financial structures (Verma et al., is geared towards the sustainable development 2021). In the light of the Malaysian palm oil industry, goals across the oil palm supply chain. Despite all the pandemic has led the industry to experience the efforts made, palm oil cultivation is recently a slowdown in the production, export demand reported to adversely impacting the environment and prices particularly at the beginning of the associated to deforestation, biodiversity and carbon year. Approaching second half of the year, many footprint (Meijaard et al., 2020). Furthermore, the countries have re-opened their economic sectors issues on nutrition and health relating to palm oil are through the relaxation of movement restrictions and imposed to suppress its applicability and potential the Malaysian government has exempted the export use in food applications. Food safety concerns with duty of crude palm oil (CPO), crude palm kernel regard to 3-monochloropropane-1,2-diol esters oil (CPKO) and refined, bleached and deodourised (3-MCPDE) and glycidyl esters (GE) have reached (RBD) palm kernel oil (PKO) from 1 July 2020 until 31 their pinnacles when the European Commission December 2020 under the PENJANA. This positive (EC) implemented the maximum limits of these environment has led to the recovery of export contaminants in edible oils and fats on 1 January demand of palm oil and other oil palm products 2021 for 3-MCPDE (Commission Regulation (EU) despite the tight supply of CPO. In the end, the 2020/1322, 2020) in addition to 19 March 2018 for palm oil stock level in the country has subsequently GE (Commission Regulation (EU) 2018/290, 2018). reduced, hence improving its price. Overall, the Notwithstanding this, the world’s reliance to palm year 2020 had witnessed the declining of Malaysian oil is undeniable witnessing its significant global oil palm planted area, CPO production as well as export in 2020 surpassing, 50% in comparison palm oil exports, imports and stocks decline but to other leading vegetable oils (Oil World, 2020). an unexpected improvement in the CPO price and In order to remain sustainable and competitive export revenue of palm oil products in comparison globally, it is imperative to combat the aggravating to the previous year. environmental issues and move forward so that palm oil meets the quality and safety standards, Planted Area hence gaining international recognition. Such effort can be seen from the commitment of the Malaysian Oil palm planted area in 2020 had reached 5.87 Government to fully implement sustainable palm oil million hectares, which denoted a marginal drop of cultivation and processing practices across the whole 0.6% (5.90 million hectares) recorded in the previous value and supply chains through the Malaysian year. This is mainly attributed by the reduction of Sustainable Palm Oil (MSPO) certification scheme the planted area in the Peninsular Malaysia by 1.1% effectively from 1 January 2020. This initiative or 13 280 ha (Table 1). The restriction of the oil palm would enlighten the image of the national’s palm expansion and the delay in the oil palm replanting oil in the arena of sustainability and to cater the are primarily associated with the imposition of demand of certified palm oil from the global movement control order (MCO) that contributes to markets. In order to safeguard the palm oil trade the downturn in planted area. Sarawak remains the and authenticate the viability of palm oil industry, largest oil palm planted state owing 1.58 million more proactive research and development (R&D) is hectares or 27.0% of the total Malaysian oil palm needed to address outstanding issues particularly planted area, and subsequently Sabah and Pahang those requiring immediate action. with 1.54 million hectares and 0.78 million hectares, This article reviews the oil palm industry respectively. performance for the year 2020 as well as the key The oil palm matured area reported for 2020 is findings from some of the published scholars 5.23 million hectares which accounts for 89.2% of locally and internationally in the respective year. the total oil palm planted area (Table 2). Sarawak has The discussion will emphasise on the current a total of 1.43 million hectares of matured oil palm researchARTICLE advancement and innovation across the treesIN constituted byPRESS 90.3% of total oil palm planted oil palm supply chain covering the upstream, area in the respective state. With regard to ownership, midstream and downstream sectors so that the oil oil palm plantation consists of approximately 4.24 palm industry remains competitive and resilient. million hectares which accounts for 72.2% of the total Finally, this review will highlight the strategies planted area (Table 3). On the other hand, organised and directions to strive for the betterment of the and independent smallholders only hold 11.5% and oil palm industry performance in the coming 16.3% of the total share of the oil palm planted area, years. respectively. In comparison from the previous year, 182 OIL PALM ECONOMIC PERFORMANCE IN MALAYSIA AND R&D PROGRESS IN 2020 the total planted areas from both organised and of 14.84 million tonnes. The refining capacity independent smallholders have dropped for which showed a reduction of 8.50% from 72.12% to 66.02% the latter encountered 0.4% loss due to the shrinkage in comparison to the previous year due to lower in the planted area. CPO production but higher CPO exportation. There are a total of 42 Malaysian palm kernel Status of Mills and Plants crushers in operation in 2020 with a total processing capacity of 7.17 million tonnes. About 61.90% or 26 A total of 457 oil palm mills in Malaysia are in palm kernel crushers are located in the Peninsular operation in 2020 with a total processing capacity Malaysia with a total processing capacity of 4.40 of 116.81 million tonnes of fresh fruit bunches (FFB) million tonnes.
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