I apologize up front for posting something of value, not my usual tact on this website. Enjoy.
2007 International Oilseeds Producers Dialog in Kuala Lumpur, Malaysia
As I sit in hour 35 on my missed flight plagued journey home from Kuala Lumpur, Malaysia, with yet no flight from Vancouver to Edmonton, I fail to convince myself of an adequate excuse as to why I couldn’t write a report. The event itself was the 10th annual International Oilseed producers Dialog (IOPD) and was held in Malaysia so the members of the oilseed producing countries could get a better understanding of the challenges and opportunities of palm oil production, not only in Malaysia, but also worldwide. France, Germany, Canada, Great Britain, United States, and Malaysia were there however Brazil, Argentina, Paraguay, Uruguay, and Italy and others who normally attend the dialog did not make this event. While the main purpose of IOPD is to allow the discussion and agreement of policy issues that affect oilseed production, mine, as I am sure my other Canadian colleagues would agree, was to learn about this giant called palm oil. More on that later.
The first discussions were around oil supply/demand/outlook projections. Since most of you know this much better than me, I will forego the details save to sum up and say disappearance and strong demand over supply make for good pricing and an industry that looks forward to the next year for sure. There was agreement that the balance made between production and demand is in the producers hands and to align the two as close as possible makes for the most stable, economically viable, and open to growth than any other scenario. Wonder if it can be done. Estimates based on supply and disappearance give the indication the next 3 years should be good for producers.
World Trade and the WTO. It was interesting to hear the American Soybean Association say the US will drive the Farm Bill, not Doha, not WTO, not other countries. It seems a bit bleak given the timing of the rewrite of the Farm Bill and WTO talks, but things in trade are also quite unpredictable. Wait and see I guess. Countries like the US and EU have the time to wait on these issues unlike Canada who needs market access, reduction of tariffs and parity of tariffs, reduction of domestic subsidies, and export subsidies in order for agricultural products to be competitive world wide.
Sustainability. Usually when I think of this term it is more economic than anything, but it is a big issue for Malaysia, the US, and especially for quite some time now the EU. It involves food safety, environmental issues and sustainable practices. The working together with NGO’s to find that balance between production and what society feels is OK to ‘do with the land’ is sustainability. Looking at the progress of other countries – and especially Malaysia as I reported on last year, Canada is woefully behind on these issues. Not that it is bad; I just wonder how open to NGO confrontation we become by the delay of incorporating sustainability of ag in Canada. Most countries represented feel sustainability is not an option but a requirement. Malaysia is really starting to feel the pressure of enviro NGO’s who are using every trick in the book to show the world Malaysia is destroying the rainforest to grow palm oil. One group in Europe set up a misleading display showing the cruel slaughter and mutilation of orangutans with the slashing and burning of forest to plant palm. Orangutans live in Borneo and Sumatra and are not native to Malaysia. You would be hard pressed to find one let alone be accused of mass slaughter. Rainforest destruction falls along the same path. Forest still covers 64% of Malaysia with trees of rubber, palm, cocoa, and coconut covering about 16.5%. Housing, infrastructure and other agriculture is 19.7%. The discussion around the table was “ Should a country have the right to do with its land what it sees fit?” Tough question since most of the rest of the world cut down their trees for war or for development and agriculture, except in the case of England who cut down their trees to build boats to cut sail to other countries to cut down their forests. So the question for Canada that while we have on farm food safety on the shelf, do we become more proactive and move forward with sustainability or wait till the NGO’s find the time to change that position and we become reactive?
Malaysian sustainability and responsible palm oil production (RSPO) which certainly could encompass another report, it basically covers all the areas of production and good practice, social, economic, environmental, and legal. There are 8 different areas involved:
1. A commitment to transparency
2. Compliance with applicable Laws and regulations
3. Commitment to long-term economic and financial viability
4. Use and quick adoption of best practices by growers and miller.
5. Environmental responsibility and conservation of natural resources and biodiversity
6. Responsible consideration of employees and individuals and communities affected by growers and millers.
7. Responsible development of new plantings.
8. Commitment to continuous improvement in key areas of activities.
Policy. Each country gave its view on policy and government and what is happening in their own country. Canada presented positions on trade, environment, transportation, safety nets – or lack thereof, etc. The size and scope of the tar sands and the upcoming challenges in terms of CO2 emissions, water use and general environmental concerns. Nothing of special note from any country.
Food vs. fuel. Here is a topic easy to avoid discussing while discussing. This is what happened, as the group could not stay focussed on the core of the issue. Canada asked if the question comes down to “Does the farmer have the right to produce and sell production to any application they see fit or is agricultural land only for the production of food?” The room was pretty quiet. Several observances since and talking to others go along with that question. We don’t grow food for the poor; we grow food for the rich only. If we purchased products from those poor countries we would do more for hunger than trying to grow more expensive ag products and think we are feeding the world – cause we’re not. The issue is not about food vs. fuel but about food vs. non-food use of crops. It is about pharmacology uses, plastics, isolates, plant reactors for specific purpose, specific proteins, on and on. Not just about fuel. Food is not moral it is simply a product. Governments and the treatment of their people and the decisions on how to deal with hunger are moral issues. Do we become more proactive on this issue or let others run with it creating misconceptions and sound bytes contrary to reality? I think we best become proactive.
Also on fuel was the talk in Germany and the burning of straight ****seed in big trucks. These are a dual tanked dual burning truck as in it starts on normal diesel and then when it is warm along with heaters in the veg oil tank, it switches over and burns veg oil. Works quite well and sure cuts down the cost of biodiesel production. Who knows, some miracle additive from an oil company to deal with viscosity may render all the biodiesel plants useless. New technological challenges spawns new technology every day.
Malaysia and Palm oil. Malaysia is a British colony that achieved full independence exactly 50 years ago. The population of Malaysia is around 28 million and with Kuala Lumpur at about 3.5 million. KL didn’t seem any busier than any other Canadian city, but farm more modern looking and more cosmopolitan than any Canadian city. The Petronas towers only 4 short years ago the tallest buildings in the world along with a lot of new construction give downtown richness in colour and style and is beautiful. The key to survival in this city is stay off the roads and on the sidewalk – or you’re gonna die. They drive like I have never seen in my life before with motorcycles by the hundreds filling the spaces between cars and lane splitting on the narrow streets.
Palm oil is one of the 17 major oils traded in the global edible oils and fats market. A long history as it has been consumed for as long as 5000 years ago in Egypt. Palm is not native to Malaysia but was brought over from West Africa and introduced to the peninsula of Malaysia, then Malaysia, as an ornamental plant by the British in 1870. In 1917 Henri Fauconnier planted the palm to be cultivated for oil at the Tennamaran Estate.
It wasn’t until the 1960’s that the value of palm was realized as the government tried to change poverty through agricultural diversity by planting palm to complement rubber. Also the government resettled landless farmers on farmland mainly to grow palm. These are Federal Land Development Authority (FELDA) and the Federal Land Consolidation and Rehabilitation Authority (FELCRA). Of the 4.2 million hectares of land in palm the Small Land Owners (SLL) account for 853,000 hectares and the land cannot be sold except by expropriation by a city. Of the 300,000 small landowners they generally have less than 40 hectare with the majority around 5 hectare in farm size. Many live on their small farm and grow palm while some join with other SLLs and get the land professionally managed. FELDA and FELCRA have associations to help with lobbying of government and also sit on the Malaysian Palm Council which is much like our Canola Council of Canada.
The government of Malaysia is very stable. During the formation of the colony, workers from Indonesia, India, and Malaysia became the three major groups. After independence, those three same groups have about 90% of the majority in government and work well together and have been in power a long time. Those three groups make up the majority of the population still today. Ag policy and lobbying is quite simple and effective with the Malaysian Palm Oil Council representing SLLs, all the state schemes like FELDA, FELCRA, private estates etc and come to government with one voice united. Farmers pay no levy as both the industry and the farmers know the farmers pay for it anyways as the price is just less. With a very stable government, generally satisfied people, huge #’s of committed landowners makes for also a stable and consistent production of palm. That and the fact it remains between 26 and 34 degrees day and night all year with an average rainfall of 2000 mm (6 ½ feet) and 90% humidity of course.
While soy used to be the production king, of the 150 million metric tonnes (mmt) of oil production palm now has 27% and soy is at 24%. Animal fats are at 11% and ****seed is at 12%. Canola, well it just is really small now isn’t it? Of the 150 mmt of oil produced Canada’s canola share last year was 2.5% roughly. Annual global production growth during 2000 – 2006 period is 4.2% annually. Palm oil showed the highest growth rate at 9.1% per year. Soy and ****seed grew at 5.6% and 2.2% respectively. In 2006 growth of all oils is 6.2%, palm is 9.4% and soy is at 4.7%.
The push for palm, as for all other production it seems, is to produce more on the same land. Of the 231 million hectares used for oil production, palm accounts for only 4.2% (9.86 mHa) of the land yet accounts for 27.5% of the oil production. Soy utilizes 42% of the land or almost 10 times as much (92.63 mHa) and accounts for 23.6% of the oil produced. Of the 37 mmt of palm production, Malaysia has 16.1 mmt, Indonesia has 15.9 mmt, with Thailand, Nigeria, Colombia, and all others produce the remaining 5 mmt.
In terms of production most plantations average 3.5 tonnes per hectare. For comparison canola produces in Canada around 0.6 tonnes per hectare. New varieties are being planted that consistently produce 6 tonnes per hectare and start high yield as early as 3 years. This alone has the potential to almost double production.
About the palm. The lifecycle of a palm tree is 25 years. Once planted you are married to that variety for the next 25 years unlike our annual crops that if don’t work out one year, we simply choose another variety for next year. The tree itself begins either as a pre-germinated and oriented (plant it upside down and it dies) or as a cloned cutting from a nursery. The tree itself grows very fast and after only 3 years with a very wide base (trunk) already begins producing palm. New varieties are even high yield at 3 years. The fruit bunch looks like a big bees nest with fruit the size of an oblong plumb covering the nest. The bunch weighs about 10 to 20 kg with 1000 to 3000 fruits per bunch. They can be round or oval and are usually a reddish yellow colour. There are 24 bunches produced every year by the tree and with each bunch is one leaf or frond. They ripen in turn so about every 2 weeks a bunch is ready to be cut off. The bunch is ready when about 10 fruits fall out of the bunch and it will achieve 20% oil extraction with 3-8% kernel content. Cut it too early and there is reduced oil production. One bunch takes about 6 months to mature from flowering. The kernel is of course inside the fruit meat (mesocarp) and is where the new tree will germinate from if allowed to grow. Different oils come from the mesocarp and from the kernel and are crushed separately. The labour of course comes into play simply by having to visit every tree every 14 days all year every year for 25 years until the tree is too tall to harvest. The worker simply reaches up with what looks like a carpet knife although much bigger, cuts off the one leaf below the bunch and then cuts off the bunch. Leaves are piled between trees and allowed to compost leaving a pathway for the workers to put the bunch in a cart as it goes by. Once the tree is too tall to harvest, the tree is poisoned, knocked down and then allowed to compost while the new tree is growing and the cycle continues. The trees grow at a rate of about 60 cm / year and you can almost hear them grow. Trunk diameter is about 60 cm and the leaves are green. Also there are about 140 to 160 trees planted per hectare. The tree will live for over 100 years but it simply is too tall to harvest so economically the life is 25 years. I’ll talk about fertility in the plantation resort section. One of the few pests is a rat. However rather than chemical control, owls are used to control them. A bird house every few hectare is all that is required.
United plantations Berhad, Jenderada Estates in Teluk Intan. This was a visit to one of the top plantations in Malaysia. This is a private estate managed by a third generation Dane, Carl Bek Nielsen. A progressive plantation of 41,000 hectare with an additional 13,000 hectare opening in Indonesia soon, doing palm and cocoa and one of the very few left doing coconut. They are seed developers, plant cloning labs, pre-germinated seed sellers, and fruit growers. They have their own scientific staff and are publicly traded last year netting around 38 million. They have pushed yield from the traditional 3 to 4 t/ha to almost averaging 6 t/ha on all their land based on variety development, spacing, fertility, cloning etc. They have their own crush facilities as well as processing palm and palm kernel into products and refined oils. They combust a portion of the crushed bunches (mash) in a boiler creating steam for power generation. The exhaust is utilized to dry crushed fruit mash that is turned into organic fertilizer in a huge tumble dryer. Nothing goes to waste. They have 6000 workers and have built housing for them and their families numbering 13,000. A hospital, bakery, food stores, schools, churches and even an old folks home make the plantation almost a city of Indie, Indo, and Malay workers. And work they do. 160 trees per hectare and 41,000 hectare makes for about 6.5 million trees that need a bunch cut off every two weeks. That translates into 156 million bunches cut off annually. About 4% of the trees are being replanted every year and since it takes 3 years to start producing, 12% of the land is in rejuvenation. An amazing thing was to watch a backhoe slice up a tree for compost. Apparently no other machine will work other than a tungsten carbide blade welded to the backhoe bucket and they do about 160 trees per day. That’s why they have 6000 workers I guess. Was a long bus ride from KL, but along the way saw plantations and generally how people lived. Saw the banana trees and noticed the bunches are bagged to keep off diseases and insects until mature. Nothing like a fresh banana (or a half dozen) from the UPB plantation, yum.
Plantation Resort. Tekam Plantation Resort, Tun Razak Agricultural Research Center, Sungai Tekam, Pahang Darul Makmur. This facility was a self sustained 13,000 hectare research/production/experimental/scientific/ and a resort with land owned by FELDA. It is a seed germinating and plant developing research farm taking attributes from trees all over the world and creating new species of palm, fruits, cocoa, rubber, and many other products. It also was a resort that helps generate some income and provide an education haven for growers who want to learn more about the crop they are growing. Very inexpensive, quiet, peaceful, endless supply of fresh fruits and the best coffee you will ever drink all picked fresh every day. It had chalet cabins – no air conditioning however. For the palm and seed development, there are very few issues with the palm tree itself. Basal rot where the bottom of the tree pinches off is about the only concern, but not a real big issue. Factors to improve yield are the same as for any crop. Species that have sites for 20 bunches instead of 14 improve yield and leaf size or leaf area index increase provides a bigger engine to produce fruit. Shorter tree height reduces harvest cost and can prolong the economic life of the tree. They have a 30 30 plan which is to increase yield and oil content by 30% and have achieved over 26% oil content in the new varieties. Yield has almost doubled so they have been quite successful in that regard. It takes at least 10 years to determine if a new species is stable and is actually a better tree than previous so it is very long term trial work. Of all the trees there are actually very few species resulting in quite a limited gene pool. This makes it challenging to make improvement without biotechnology. They have taken the position not to go the GM route but to potentially use instruments of GM instead to produce conventional varieties.
Located at Enstek, Negeri Sembilan a new facility operational already since Sep 2006 that is a biotech facility to assist in research. Activities include the production of clones, R&D cloning efficiency and cost of production in suspension culture and molecular markers for abnormality and amenability. They support activities of cloning the Dura and Pisifera (main two species) with marker assisted selection and DNA fingerprinting. Reverse engineering thru GMO is another possibility although I couldn’t quite get a straight answer for sure.
They also have the world’s biggest flowerpot. A palm sits in a large cement tub of 10 meter diameter where they can measure and control water infiltration and fertility. The palm is twice as big and productive as those around it. Fertilizer requirements of the trees are quite high. 4 kg per tree and 160 trees per hectare is 640-kg/hectare fertilizer used. They use Mono Ammonium Phosphate (MAP) and since they use huge amounts of potash, they know exactly where Canada is, namely Sask. Sulphate form sulphur is required as the ground lacks the bugs for elemental sulphur. They tried introducing the bugs for elemental but the natural bacteria just eats them for lunch. This frustrates them tremendously because they knew exactly of the huge piles of sulphur at the tar sands to which the response was if only they could they would, but can’t. They also will be coming under pressure to reduce nitrates, phosphates and sulphates in the water so there may be a limitation in the future in terms of production. We in Canada may face those same issues sooner than we think. Plants that fix nitrogen planted between the trees has been futile also as the palm blocks out the sun below and it dies. To have vines reach up for the sun blocks the light to the palm and reduces production. For now fertilizer – lots of it, until they can’t.
The other major activity of the plantation is seed germination. A lengthy process with lots of special knowledge, manual labour, separation, identification, inspection and packaging. They retail around 50 cents each and are cost recovery. The plantation also does new fruit species and trees research. We went out into the fruit plantation research farm, stood under fruit trees and ‘sampled’. An amazing experience eating cocoa, coconut, oranges, apples, (not exactly like an apple but the only way I can describe so you will understand, they looked more like the shape of a big strawberry, had the pulp of an apple, taste like a sweet crab apple), g****fruits the size of a squarish football with 4 compartments and seed like pockets of juice and pulp, jack fruit, dragon fruit with skin that looks like a dragon, papaya, mango. G****fruits that looked like oranges and oranges that looked like g****fruits. All ripe, fresh from the tree, and as Dave Parsons would say, “To die for”…
The cost of pesticides to some fruit trees and especially the cocoa and coconut are forcing farmers to go with palm. Simple economics.
Indonesia and palm production. Just this year Indonesia is becoming #1 in palm production. Around 8 million hectares was slashed and burned years ago and simply is in grass right now. Given the strong prices in oil, no reason why this won’t be planted also. If old varieties of trees are planted that still amounts to 24 mmt of oil. To produce that oil with canola it would take pretty much all the arable land in western Canada above what we already produce. Since it is unlikely expansion will come from slack operators and more like UPB, 4-5 tonnes per hectare on new plantings with high yielding varieties is not unreasonable. While both Indo and Malay have limited acres they are very good acres. Indo has no palm council riding rather on the shirttails of Malaysia letting them do the work. From a government, sustainability, council and association basis, Indo and Malay are very different countries.
We went to the Taman Negara national park to learn about the rainforest and experience it. While it would take a report even longer than this one to explain our adventures there, suffice it to say, visit one some day. They are a wonder of resource as long as they are not cut down. We even had time to spend with an aboriginal tribe learning how to make a blow gun, darts, how to extract poison for the dart from the antiaris toxicaria tree, make plastic resin and glue, and sand down the dart pieces and counterbalance with a leaf called “sandpaper leaf”. Let the leaf dry and it works just like 400 grit sandpaper. We learned how to make a fire with rattan and I think matu tree, some scrapings from palm and bamboo. It took me a little less than 3 minutes to make a fire using this material. We went rapids shooting in the long boats where I had the opportunity to drink jungle river water – yet to determine if I will live. At night we went into the forest to look at bugs. However, they were looking at us too, cold shiver, still. The noise in the jungle is unbelievable from the insects alone. There is no mistaking where you are.
Again the opportunity to build relationships with the other oil producing countries, challenge each other on our points of view, and learn a lot about Malaysia and palm oil especially.
2007 International Oilseeds Producers Dialog in Kuala Lumpur, Malaysia
As I sit in hour 35 on my missed flight plagued journey home from Kuala Lumpur, Malaysia, with yet no flight from Vancouver to Edmonton, I fail to convince myself of an adequate excuse as to why I couldn’t write a report. The event itself was the 10th annual International Oilseed producers Dialog (IOPD) and was held in Malaysia so the members of the oilseed producing countries could get a better understanding of the challenges and opportunities of palm oil production, not only in Malaysia, but also worldwide. France, Germany, Canada, Great Britain, United States, and Malaysia were there however Brazil, Argentina, Paraguay, Uruguay, and Italy and others who normally attend the dialog did not make this event. While the main purpose of IOPD is to allow the discussion and agreement of policy issues that affect oilseed production, mine, as I am sure my other Canadian colleagues would agree, was to learn about this giant called palm oil. More on that later.
The first discussions were around oil supply/demand/outlook projections. Since most of you know this much better than me, I will forego the details save to sum up and say disappearance and strong demand over supply make for good pricing and an industry that looks forward to the next year for sure. There was agreement that the balance made between production and demand is in the producers hands and to align the two as close as possible makes for the most stable, economically viable, and open to growth than any other scenario. Wonder if it can be done. Estimates based on supply and disappearance give the indication the next 3 years should be good for producers.
World Trade and the WTO. It was interesting to hear the American Soybean Association say the US will drive the Farm Bill, not Doha, not WTO, not other countries. It seems a bit bleak given the timing of the rewrite of the Farm Bill and WTO talks, but things in trade are also quite unpredictable. Wait and see I guess. Countries like the US and EU have the time to wait on these issues unlike Canada who needs market access, reduction of tariffs and parity of tariffs, reduction of domestic subsidies, and export subsidies in order for agricultural products to be competitive world wide.
Sustainability. Usually when I think of this term it is more economic than anything, but it is a big issue for Malaysia, the US, and especially for quite some time now the EU. It involves food safety, environmental issues and sustainable practices. The working together with NGO’s to find that balance between production and what society feels is OK to ‘do with the land’ is sustainability. Looking at the progress of other countries – and especially Malaysia as I reported on last year, Canada is woefully behind on these issues. Not that it is bad; I just wonder how open to NGO confrontation we become by the delay of incorporating sustainability of ag in Canada. Most countries represented feel sustainability is not an option but a requirement. Malaysia is really starting to feel the pressure of enviro NGO’s who are using every trick in the book to show the world Malaysia is destroying the rainforest to grow palm oil. One group in Europe set up a misleading display showing the cruel slaughter and mutilation of orangutans with the slashing and burning of forest to plant palm. Orangutans live in Borneo and Sumatra and are not native to Malaysia. You would be hard pressed to find one let alone be accused of mass slaughter. Rainforest destruction falls along the same path. Forest still covers 64% of Malaysia with trees of rubber, palm, cocoa, and coconut covering about 16.5%. Housing, infrastructure and other agriculture is 19.7%. The discussion around the table was “ Should a country have the right to do with its land what it sees fit?” Tough question since most of the rest of the world cut down their trees for war or for development and agriculture, except in the case of England who cut down their trees to build boats to cut sail to other countries to cut down their forests. So the question for Canada that while we have on farm food safety on the shelf, do we become more proactive and move forward with sustainability or wait till the NGO’s find the time to change that position and we become reactive?
Malaysian sustainability and responsible palm oil production (RSPO) which certainly could encompass another report, it basically covers all the areas of production and good practice, social, economic, environmental, and legal. There are 8 different areas involved:
1. A commitment to transparency
2. Compliance with applicable Laws and regulations
3. Commitment to long-term economic and financial viability
4. Use and quick adoption of best practices by growers and miller.
5. Environmental responsibility and conservation of natural resources and biodiversity
6. Responsible consideration of employees and individuals and communities affected by growers and millers.
7. Responsible development of new plantings.
8. Commitment to continuous improvement in key areas of activities.
Policy. Each country gave its view on policy and government and what is happening in their own country. Canada presented positions on trade, environment, transportation, safety nets – or lack thereof, etc. The size and scope of the tar sands and the upcoming challenges in terms of CO2 emissions, water use and general environmental concerns. Nothing of special note from any country.
Food vs. fuel. Here is a topic easy to avoid discussing while discussing. This is what happened, as the group could not stay focussed on the core of the issue. Canada asked if the question comes down to “Does the farmer have the right to produce and sell production to any application they see fit or is agricultural land only for the production of food?” The room was pretty quiet. Several observances since and talking to others go along with that question. We don’t grow food for the poor; we grow food for the rich only. If we purchased products from those poor countries we would do more for hunger than trying to grow more expensive ag products and think we are feeding the world – cause we’re not. The issue is not about food vs. fuel but about food vs. non-food use of crops. It is about pharmacology uses, plastics, isolates, plant reactors for specific purpose, specific proteins, on and on. Not just about fuel. Food is not moral it is simply a product. Governments and the treatment of their people and the decisions on how to deal with hunger are moral issues. Do we become more proactive on this issue or let others run with it creating misconceptions and sound bytes contrary to reality? I think we best become proactive.
Also on fuel was the talk in Germany and the burning of straight ****seed in big trucks. These are a dual tanked dual burning truck as in it starts on normal diesel and then when it is warm along with heaters in the veg oil tank, it switches over and burns veg oil. Works quite well and sure cuts down the cost of biodiesel production. Who knows, some miracle additive from an oil company to deal with viscosity may render all the biodiesel plants useless. New technological challenges spawns new technology every day.
Malaysia and Palm oil. Malaysia is a British colony that achieved full independence exactly 50 years ago. The population of Malaysia is around 28 million and with Kuala Lumpur at about 3.5 million. KL didn’t seem any busier than any other Canadian city, but farm more modern looking and more cosmopolitan than any Canadian city. The Petronas towers only 4 short years ago the tallest buildings in the world along with a lot of new construction give downtown richness in colour and style and is beautiful. The key to survival in this city is stay off the roads and on the sidewalk – or you’re gonna die. They drive like I have never seen in my life before with motorcycles by the hundreds filling the spaces between cars and lane splitting on the narrow streets.
Palm oil is one of the 17 major oils traded in the global edible oils and fats market. A long history as it has been consumed for as long as 5000 years ago in Egypt. Palm is not native to Malaysia but was brought over from West Africa and introduced to the peninsula of Malaysia, then Malaysia, as an ornamental plant by the British in 1870. In 1917 Henri Fauconnier planted the palm to be cultivated for oil at the Tennamaran Estate.
It wasn’t until the 1960’s that the value of palm was realized as the government tried to change poverty through agricultural diversity by planting palm to complement rubber. Also the government resettled landless farmers on farmland mainly to grow palm. These are Federal Land Development Authority (FELDA) and the Federal Land Consolidation and Rehabilitation Authority (FELCRA). Of the 4.2 million hectares of land in palm the Small Land Owners (SLL) account for 853,000 hectares and the land cannot be sold except by expropriation by a city. Of the 300,000 small landowners they generally have less than 40 hectare with the majority around 5 hectare in farm size. Many live on their small farm and grow palm while some join with other SLLs and get the land professionally managed. FELDA and FELCRA have associations to help with lobbying of government and also sit on the Malaysian Palm Council which is much like our Canola Council of Canada.
The government of Malaysia is very stable. During the formation of the colony, workers from Indonesia, India, and Malaysia became the three major groups. After independence, those three same groups have about 90% of the majority in government and work well together and have been in power a long time. Those three groups make up the majority of the population still today. Ag policy and lobbying is quite simple and effective with the Malaysian Palm Oil Council representing SLLs, all the state schemes like FELDA, FELCRA, private estates etc and come to government with one voice united. Farmers pay no levy as both the industry and the farmers know the farmers pay for it anyways as the price is just less. With a very stable government, generally satisfied people, huge #’s of committed landowners makes for also a stable and consistent production of palm. That and the fact it remains between 26 and 34 degrees day and night all year with an average rainfall of 2000 mm (6 ½ feet) and 90% humidity of course.
While soy used to be the production king, of the 150 million metric tonnes (mmt) of oil production palm now has 27% and soy is at 24%. Animal fats are at 11% and ****seed is at 12%. Canola, well it just is really small now isn’t it? Of the 150 mmt of oil produced Canada’s canola share last year was 2.5% roughly. Annual global production growth during 2000 – 2006 period is 4.2% annually. Palm oil showed the highest growth rate at 9.1% per year. Soy and ****seed grew at 5.6% and 2.2% respectively. In 2006 growth of all oils is 6.2%, palm is 9.4% and soy is at 4.7%.
The push for palm, as for all other production it seems, is to produce more on the same land. Of the 231 million hectares used for oil production, palm accounts for only 4.2% (9.86 mHa) of the land yet accounts for 27.5% of the oil production. Soy utilizes 42% of the land or almost 10 times as much (92.63 mHa) and accounts for 23.6% of the oil produced. Of the 37 mmt of palm production, Malaysia has 16.1 mmt, Indonesia has 15.9 mmt, with Thailand, Nigeria, Colombia, and all others produce the remaining 5 mmt.
In terms of production most plantations average 3.5 tonnes per hectare. For comparison canola produces in Canada around 0.6 tonnes per hectare. New varieties are being planted that consistently produce 6 tonnes per hectare and start high yield as early as 3 years. This alone has the potential to almost double production.
About the palm. The lifecycle of a palm tree is 25 years. Once planted you are married to that variety for the next 25 years unlike our annual crops that if don’t work out one year, we simply choose another variety for next year. The tree itself begins either as a pre-germinated and oriented (plant it upside down and it dies) or as a cloned cutting from a nursery. The tree itself grows very fast and after only 3 years with a very wide base (trunk) already begins producing palm. New varieties are even high yield at 3 years. The fruit bunch looks like a big bees nest with fruit the size of an oblong plumb covering the nest. The bunch weighs about 10 to 20 kg with 1000 to 3000 fruits per bunch. They can be round or oval and are usually a reddish yellow colour. There are 24 bunches produced every year by the tree and with each bunch is one leaf or frond. They ripen in turn so about every 2 weeks a bunch is ready to be cut off. The bunch is ready when about 10 fruits fall out of the bunch and it will achieve 20% oil extraction with 3-8% kernel content. Cut it too early and there is reduced oil production. One bunch takes about 6 months to mature from flowering. The kernel is of course inside the fruit meat (mesocarp) and is where the new tree will germinate from if allowed to grow. Different oils come from the mesocarp and from the kernel and are crushed separately. The labour of course comes into play simply by having to visit every tree every 14 days all year every year for 25 years until the tree is too tall to harvest. The worker simply reaches up with what looks like a carpet knife although much bigger, cuts off the one leaf below the bunch and then cuts off the bunch. Leaves are piled between trees and allowed to compost leaving a pathway for the workers to put the bunch in a cart as it goes by. Once the tree is too tall to harvest, the tree is poisoned, knocked down and then allowed to compost while the new tree is growing and the cycle continues. The trees grow at a rate of about 60 cm / year and you can almost hear them grow. Trunk diameter is about 60 cm and the leaves are green. Also there are about 140 to 160 trees planted per hectare. The tree will live for over 100 years but it simply is too tall to harvest so economically the life is 25 years. I’ll talk about fertility in the plantation resort section. One of the few pests is a rat. However rather than chemical control, owls are used to control them. A bird house every few hectare is all that is required.
United plantations Berhad, Jenderada Estates in Teluk Intan. This was a visit to one of the top plantations in Malaysia. This is a private estate managed by a third generation Dane, Carl Bek Nielsen. A progressive plantation of 41,000 hectare with an additional 13,000 hectare opening in Indonesia soon, doing palm and cocoa and one of the very few left doing coconut. They are seed developers, plant cloning labs, pre-germinated seed sellers, and fruit growers. They have their own scientific staff and are publicly traded last year netting around 38 million. They have pushed yield from the traditional 3 to 4 t/ha to almost averaging 6 t/ha on all their land based on variety development, spacing, fertility, cloning etc. They have their own crush facilities as well as processing palm and palm kernel into products and refined oils. They combust a portion of the crushed bunches (mash) in a boiler creating steam for power generation. The exhaust is utilized to dry crushed fruit mash that is turned into organic fertilizer in a huge tumble dryer. Nothing goes to waste. They have 6000 workers and have built housing for them and their families numbering 13,000. A hospital, bakery, food stores, schools, churches and even an old folks home make the plantation almost a city of Indie, Indo, and Malay workers. And work they do. 160 trees per hectare and 41,000 hectare makes for about 6.5 million trees that need a bunch cut off every two weeks. That translates into 156 million bunches cut off annually. About 4% of the trees are being replanted every year and since it takes 3 years to start producing, 12% of the land is in rejuvenation. An amazing thing was to watch a backhoe slice up a tree for compost. Apparently no other machine will work other than a tungsten carbide blade welded to the backhoe bucket and they do about 160 trees per day. That’s why they have 6000 workers I guess. Was a long bus ride from KL, but along the way saw plantations and generally how people lived. Saw the banana trees and noticed the bunches are bagged to keep off diseases and insects until mature. Nothing like a fresh banana (or a half dozen) from the UPB plantation, yum.
Plantation Resort. Tekam Plantation Resort, Tun Razak Agricultural Research Center, Sungai Tekam, Pahang Darul Makmur. This facility was a self sustained 13,000 hectare research/production/experimental/scientific/ and a resort with land owned by FELDA. It is a seed germinating and plant developing research farm taking attributes from trees all over the world and creating new species of palm, fruits, cocoa, rubber, and many other products. It also was a resort that helps generate some income and provide an education haven for growers who want to learn more about the crop they are growing. Very inexpensive, quiet, peaceful, endless supply of fresh fruits and the best coffee you will ever drink all picked fresh every day. It had chalet cabins – no air conditioning however. For the palm and seed development, there are very few issues with the palm tree itself. Basal rot where the bottom of the tree pinches off is about the only concern, but not a real big issue. Factors to improve yield are the same as for any crop. Species that have sites for 20 bunches instead of 14 improve yield and leaf size or leaf area index increase provides a bigger engine to produce fruit. Shorter tree height reduces harvest cost and can prolong the economic life of the tree. They have a 30 30 plan which is to increase yield and oil content by 30% and have achieved over 26% oil content in the new varieties. Yield has almost doubled so they have been quite successful in that regard. It takes at least 10 years to determine if a new species is stable and is actually a better tree than previous so it is very long term trial work. Of all the trees there are actually very few species resulting in quite a limited gene pool. This makes it challenging to make improvement without biotechnology. They have taken the position not to go the GM route but to potentially use instruments of GM instead to produce conventional varieties.
Located at Enstek, Negeri Sembilan a new facility operational already since Sep 2006 that is a biotech facility to assist in research. Activities include the production of clones, R&D cloning efficiency and cost of production in suspension culture and molecular markers for abnormality and amenability. They support activities of cloning the Dura and Pisifera (main two species) with marker assisted selection and DNA fingerprinting. Reverse engineering thru GMO is another possibility although I couldn’t quite get a straight answer for sure.
They also have the world’s biggest flowerpot. A palm sits in a large cement tub of 10 meter diameter where they can measure and control water infiltration and fertility. The palm is twice as big and productive as those around it. Fertilizer requirements of the trees are quite high. 4 kg per tree and 160 trees per hectare is 640-kg/hectare fertilizer used. They use Mono Ammonium Phosphate (MAP) and since they use huge amounts of potash, they know exactly where Canada is, namely Sask. Sulphate form sulphur is required as the ground lacks the bugs for elemental sulphur. They tried introducing the bugs for elemental but the natural bacteria just eats them for lunch. This frustrates them tremendously because they knew exactly of the huge piles of sulphur at the tar sands to which the response was if only they could they would, but can’t. They also will be coming under pressure to reduce nitrates, phosphates and sulphates in the water so there may be a limitation in the future in terms of production. We in Canada may face those same issues sooner than we think. Plants that fix nitrogen planted between the trees has been futile also as the palm blocks out the sun below and it dies. To have vines reach up for the sun blocks the light to the palm and reduces production. For now fertilizer – lots of it, until they can’t.
The other major activity of the plantation is seed germination. A lengthy process with lots of special knowledge, manual labour, separation, identification, inspection and packaging. They retail around 50 cents each and are cost recovery. The plantation also does new fruit species and trees research. We went out into the fruit plantation research farm, stood under fruit trees and ‘sampled’. An amazing experience eating cocoa, coconut, oranges, apples, (not exactly like an apple but the only way I can describe so you will understand, they looked more like the shape of a big strawberry, had the pulp of an apple, taste like a sweet crab apple), g****fruits the size of a squarish football with 4 compartments and seed like pockets of juice and pulp, jack fruit, dragon fruit with skin that looks like a dragon, papaya, mango. G****fruits that looked like oranges and oranges that looked like g****fruits. All ripe, fresh from the tree, and as Dave Parsons would say, “To die for”…
The cost of pesticides to some fruit trees and especially the cocoa and coconut are forcing farmers to go with palm. Simple economics.
Indonesia and palm production. Just this year Indonesia is becoming #1 in palm production. Around 8 million hectares was slashed and burned years ago and simply is in grass right now. Given the strong prices in oil, no reason why this won’t be planted also. If old varieties of trees are planted that still amounts to 24 mmt of oil. To produce that oil with canola it would take pretty much all the arable land in western Canada above what we already produce. Since it is unlikely expansion will come from slack operators and more like UPB, 4-5 tonnes per hectare on new plantings with high yielding varieties is not unreasonable. While both Indo and Malay have limited acres they are very good acres. Indo has no palm council riding rather on the shirttails of Malaysia letting them do the work. From a government, sustainability, council and association basis, Indo and Malay are very different countries.
We went to the Taman Negara national park to learn about the rainforest and experience it. While it would take a report even longer than this one to explain our adventures there, suffice it to say, visit one some day. They are a wonder of resource as long as they are not cut down. We even had time to spend with an aboriginal tribe learning how to make a blow gun, darts, how to extract poison for the dart from the antiaris toxicaria tree, make plastic resin and glue, and sand down the dart pieces and counterbalance with a leaf called “sandpaper leaf”. Let the leaf dry and it works just like 400 grit sandpaper. We learned how to make a fire with rattan and I think matu tree, some scrapings from palm and bamboo. It took me a little less than 3 minutes to make a fire using this material. We went rapids shooting in the long boats where I had the opportunity to drink jungle river water – yet to determine if I will live. At night we went into the forest to look at bugs. However, they were looking at us too, cold shiver, still. The noise in the jungle is unbelievable from the insects alone. There is no mistaking where you are.
Again the opportunity to build relationships with the other oil producing countries, challenge each other on our points of view, and learn a lot about Malaysia and palm oil especially.
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