Global Partnership on Palm Oil Opportunities and

Future Sustainable Development of Palm Oil Producing

Countries

Tan Sri Datuk Dr Yusof Basiron

Executive Director
Council of Palm Oil Producing Countries

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•
Global Partnership
>Global Partnership
>The Opportunities
>Price vs Supply
>To Influence the Market
>The Challenge: Volatility of Supply
>To Boost Supply: Yield Improvement
>To Produce Palm Oil Sustainably
>Palm Oil: the Most Sustainable
>Deforestation-free Palm Oil
>Spatial Analysis: the Evidence
>Sustainability Paradox on Deforestation
>Functions of CPOPC to Benefit Members
>To Strive Against the Climate Change
>To Facilitate Consultation on Supply & Demand
>Conclusion
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 Global Partnership
Palm oil producers united
• The global partnership means
we are seeking maximum
cooperation and unity among
the palm oil producer
countries to realize the
opportunities while
developing sustainably.
• We invite producer countries
to join CPOPC as members.
To mitigate challenges
• There are many challenges
faced by the oil palm industry.
• United under CPOPC, all
producer countries will benefit
from the opportunities we can
bring together.
• No producer countries should be
affected negatively alone by the
challenges.
• As united producer countries,
many of the negative challenges
can be mitigated.
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 The Opportunities
Ever-expanding demand Biodiesel - unlimited demand

• Palm oil is intrinsically very • In the area of renewable biofuel, palm

sustainable and potentially having biodiesel has an unlimited demand
very high demand. depending on the relative prices of
petroleum and food-based palm oil,
PALM OIL WORLD even regardless of the onset of
CONSUMPTION electric cars.
(Mn T). Increased
70 times in five
decades (Jan/Dec Palm oil
1970 until 2018). consumption
almost doubled
in 2010-2018.
Biodiesel led the
increase.
• This presents producing countries In the past 11
with great opportunities to keep on years, biodiesel
producing palm oil to meet the need of production
the ever-expanding demand. almost trebled.
 Price vs Supply
• Palm oil used to be in the first quadrant.
With a lot of promotion and R&D, palm oil
demand was increased, and its market
resides in the second top quadrant, low
supply but high prices.
• When oversupply became the norm, and
bad publicity affected prices, the palm oil
market resides in the third bottom
quadrant.
• We project that deforestation-free palm
oil will become the norm, and oversupply
is managed with stronger biodiesel
program, and the palm oil market by
2025 will shift back to the top, with better
prices and normalized supply and the
market resides in right top quadrant.
 Price vs Supply (Cont.)
• The original dream was for the
palm oil market residing on the
top right quadrant because of
strong demand and large potential
supply, but under the current need
to conserve the forest, oil palm
land will be limited, and future
production will be limited as well.
• Future market scenario for 2050
is likely to have the palm oil
market residing in the top
quadrant indicating high prices
and moderate supply.

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 To Influence the Market
What are we capable of when we collaborate?
• I am pleased that CPOPC is successful to hold the first POSDOC-IMCEOF on 22
October 2019 in Malaysia. The event enabled us to publicize the forecasted
supply and demand messages that successfully sensitized the market. Palm
oil prices have soared since then, and the upward trend is likely to continue as
demand would increase due to greater use of palm oil-based biodiesel.
Lengthy droughts and low fertilizer application will reduce supply further for
2020.
• It is well accepted that the recent prices spike owed to Indonesia's
announcement to launch the 30 percent biodiesel blend (B-30) program in
2020. The program aims to further boost domestic biodiesel consumption
envisaged to absorb over 9 million KL more crude palm oil (CPO). On the other
side, Malaysia is preparing for B-20 next year; when both combined it shall
spark considerable CPO absorption to affect the prices.
• This is to say that, CPOPC can be a body for member countries to jointly
strategize to balance the supply and demand of palm oil to ensure stable and
remunerative prices. 7
 The Challenge: Volatility of Supply
Moratorium Age structure
• While demand keep increasing, • Palm oil yields are on a declining trend,
production is slowing down. mainly, due to lack of replanting.

Growth in
world
production
seen to slow to
2.8 Mn T in
2019, and
global
production is
deficit in 2019.

• Moratorium is in place.
o Difficult to expand supply by
opening up more new land.
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 To Boost Supply: Yields Improvement
In addition to replanting, yields can be improved through adoption of a few approaches

• New planting materials.

Yield increases in the
• Genome selected material can yield past 15 years:
easily 9 or more ton oil/ha/year SOYBEANS
compared to 4 ton/ha/year for current +18%
material RAPESEED

• Smart irrigation. +26%

SUNFLOWERSEED
• Good fertilizer application. +53%

• The yield of soybeans, rapeseed, and sunflower seed has increased up to 53%
through smart irrigation. By so doing, combined with new-high planting
material and good fertilizer application, we can easily increase our yield by at
least 50% more without any increase in land area under oil palm.
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 To Produce Palm Oil Sustainably
is the way to achieve the true benefits from the big demand for palm oil in the future

• CPOPC has commissioned a study for

All 5 countries
ways to achieve the UN Sustainable show a very
Development Goals (SDGs) 2030 in strong
palm oil sector. correlation
between CPO
• The study reveals: palm oil production production and
GDP, which
contributes positively to most of the 17 means that any
objectives of the UN SDGs. scenario to
increase CPO
production will
• This study can confirm that: “No have an
palm oil, No SDGs achievement”. significant impact
to GDP in the 5
countries.

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 Palm Oil: the Most Sustainable
The only vegetable oil that can meet growing global demand while
conserving land banks due to its exceptionally high productivity

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 Palm Oil: the Most Sustainable (Cont.)
Preserve more forest Built on already forested land

• The high yield of oil palm makes it land

efficient, affording more forest to be In Indonesia and
preserved. Malaysia,
deforestation
• After over 100 years of oil palm peaked several
cultivation, Malaysia only planted 5.8 decades ago,
million Ha of oil palm, or 17% of the before the
demand for palm
country land area, and 0.1% of global oil began to
agricultural land area. increase. Oil palm
plantations were
• The conversion of other types of land built on already
use, such as rubber, was more degraded forest
of intensive
pervasive. logging.
• Oil palm cannot be accused for
deforestation
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 Deforestation Free Palm Oil
Moratorium The truth about global deforestation drivers

• Both Malaysia and Indonesia have Cattle ranch

limited the expansion of oil palm expansion is the
major driver of
cultivation involving deforestation of global
new land. As a results: deforestation,
consuming far
1. Palm oil to be produced in the future is more land than
deforestation free palm oil. oil palm
cultivation.
2. Both countries continue to conserve >50%
of their country’s land area as permanent
forests. On the whole, global tree cover loss
is caused by commodity-driven
• Past development of agricultural land deforestation, shifting agriculture,
in which oil palm is planted is not forestry, wildfire and urbanization.
considered deforestation. Oil palm cultivation is just small part
of them.
Development is required by all
countries.
 Spatial Analysis : the Evidence

Green area represents the

Ecological Restoration
Area in some districts in
West Kalimantan,
Indonesia. Spatial Analysis
shows that none of oil palm
plantation areas located in
the green areas.
Two lower pictures also
point out that oil palm
plantation are located in
the Other Land Use Areas
(APL) which is not forest.

An intensive deforestation occurred in Trang Province, Thailand, during

2013-2016. Spatial analysis shows oil palm areas are concentrated in
the western part of the province, while deforestation mostly took place
in the eastern and central. Oil palm plantations was not the driver of
land-use change in Trang province, Southern Thailand.
 Spatial Analysis : the Evidence (Cont.)
In North
Sumatera Maps of four districts of North
province, oil Sumatera proved that most of oil palm
palm plantation plantation areas are located in the
areas are also Other Land-Use Areas (APL), and not
located in the in Limited Production Forest area
Other Land-use (HPT) or Protected Forest Areas.
Areas (APL).

• Spatial analysis confirms that, in

Kalimantan and Sumatera, oil palm
plantation is not the main driver of
deforestation since most of oil palm
plantations are located in the Other Land-
Use Areas (APL).
Sustainability Paradox on Deforestation

Livestock ,
71.27%

Oil Palm,
0.31%
Total Agricultural Area : 5 Billion Hectares
Oilseeds, 5.25%
Other Crops,
23.17%
Global Agricultural area is 5.0 billion ha
Livestock industry uses the most land and is the main driver for global
deforestation: no sustainability requirements imposed except on palm oil
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 Functions of CPOPC to Benefit Members
1. To provide consultation among
Member Countries through, e.g.,
POSDOC-IMCEOF, MM POPC, SOM, and
MM. Discussions includes supply &
demand balancing strategy
necessary, and biodiesel strategy.
2. Improving Smallholders welfare.
Improve their income through better
prices and productivity.
3. Sustainable production is the way
forward. Compliance must be assured
by all producers.
4. Develop downstream industries
based on palm oil local availability.
5. Remove trade barriers, e.g., the EU
ban of palm biodiesel via its RED II
Delegated Act must be opposed together
by all palm oil producer countries.
as
6. Research & development: More R& D
and collaboration by member countries
will strengthen the palm oil industry
through technological improvements.
7. Other activities in the interest of the
development of the industry.
These functions are designed to benefit
the member countries of CPOPC. The
more the members the stronger the
bargaining power of the producer
countries and the more will the industry
provide benefits to the member
countries.
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 To Strive Against the Climate Change
• 1 tonne diesel emits 3.15 tonnes of CO2, which is avoided by using 1 tonne of renewable fuel.
CO2 removal • 1 ha of forest net removal of CO2 is 5 tonnes/yr , same as 1 ha of oil palm (forest) plantation
t/ha/y

EU, which has very little forest left, should

fight for its own reforestation which removes
more CO2 than soya or rapeseed biofuel and
not oppose deforestation by oil palm, which is
a needed agricultural development.

There is no imported deforestation with

imported palm biofuel, as the oil palm is like
a forest in terms of CO2 removal
 To Facilitate Consultation on Supply & Demand

Price was RM 2,236

when the seminar
took place, then
soared to RM 2,580 on
The CPOPC conference (POSDOC-IMCEOF) on 22 October 2019 11 November 2019.
has managed to fully inform the market on supply & demand
balance potential. As a results, it supported the price recovery
and rally. 19
 Conclusion
1. Oil palm is the most sustainable crop
for CPOPC member countries to
cultivate; for their socio-economic
development as envisaged in the 17
objectives of the SDG 2030.
2. Oil palm offers producer countries the
opportunity to develop their countries
sustainably as oil palm itself is naturally
and relatively a more sustainable crop to
cultivate compared to soya or other
agricultural commodities produced in
other countries.
3. Palm oil supply and demand balance
is important to prevent palm oil price
from being unsustainably low.
4. Palm oil industry can help to stabilize
prices by rationalizing supply., i.e. by
creating increased demand in the local
markets of producer countries.
5.Biodiesel facilities are well
established in other vegs oil producer
countries such as US, Brazil, Argentina,
and EU. Biodiesel demand has helped
them in balancing supply and demand of
oils and fats market, thus stabilizing
commodity prices.
6. Other ways to help balance the supply
and demand for palm oil should continue
to be explored.
Thank You

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