Malaysian palm oil futures edged down at the close of trade on Friday, recording a fifth session of losses in six and tracking weakness in China's Dalian Commodity Exchange, traders said.
KUALA LUMPUR: The European Union (EU) and France are not the enemy of palm oil and the market will continue to be open for the crop especially now with the Pakatan Harapan government's credible policies in safeguarding the environment.
In making the remark, French Ambassador to Malaysia, Frederic Laplanche, acknowledged that palm oil's long association with deforestation and destruction has damaged the image but things are changing.
“I can see the Malaysian government is tackling the environmental issue and the trust deficit among the European consumers positively. It focuses its efforts on these two objectives, which I think are really good and important.
“On the one hand, you got the mobilisation to promote the palm oil and improving its image which is lacking in the mind of the public opinion. So the government launched the promotion campaign, Love MY Palm Oil to help clear the crop's name,” he told Bernama.
“And secondly, the development of an ambitious policy to promote environmental protection, including maintaining over 50 per cent biodiverse tropical rainforest, to cap Malaysia's total area for oil palm at 6.5 million hectares (ha) (from 5.8 million ha in 2018) and no oil palm cultivation on peat soil, as well as improving sustainability is indeed crucial in order to regain the trust of the European consumers. And this is something that we can fully support,” said Laplanche.
NO BAN ON PALM OIL
Other developments that are encouraging are Sabah's move to fully embrace the Roundtable on Sustainable Palm Oil (RSPO) certification and at the federal level, the drive for the Malaysian Sustainable Palm Oil (MSPO) certification initiative.
“Besides the Ministry of Primary Industries, the Ministry of Energy, Science, Technology, Environment and Climate Change has also listed down strong policy on renewable energy and solar development.
“Additionally, the Ministry of Water, Land and Natural Resources develops policies to curb deforestation and to encourage reforestation in degraded areas. So all these put together makes strong and credible policies for the environment,” he explained.
Laplanche stressed that there is no ban on palm oil going into the EU, but what is happening is that France and the EU as a whole are gradually withdrawing the incentives for palm oil to be added into the diesel mix.
“The reason (for withdrawing the incentives) is because the calculation that was made showed that there is a problem of balance and carbon impact.
“Of course, I must be clear that although there is no ban, these measures will probably result in a reduction in the use of palm oil as a biofuel in Europe, depending on the prices of fossil fuel.
“Indeed, by withdrawing the fiscal incentives, the economic case for adding palm oil into diesel could disappear because palm oil is more expensive than traditional fossil fuel at current market prices.
“But it is important to understand that it is not a ban, and we are only talking about withdrawing an incentive, and only for palm oil as a biofuel. There is absolutely no change in policy regarding palm oil used for food products and basic material for the oleochemical industry at the French or the EU level”.
EU NOT AN ENEMY OF PALM OIL
He said that the EU was among the first to introduce the incentive for biofuel and it is among the last regions in the world to still give incentives for palm oil and biofuel.
“Most of the other countries have either never given the incentives for palm oil to enter their market as biofuel or had withdrawn them for a long time. So I would not like people to think that the EU is an enemy of palm oil, and of Malaysia. It's not the case.”
The EU, according to him, has consistently provided a big market for the Malaysian palm oil, and becoming the second largest customer for palm oil in the world, just behind India.
He also said that the EU is not going to change import tariff for palm oil and in fact, the tariffs for imported palm oil to EU is among the lowest in the world.
Paris recently published new statistics for France-Malaysia bilateral trade, which showed an increase of 11.4 per cent for Malaysian export to France last year across all products, reaching more than RM11 billion.
With a more modest 3.4 per cent growth in French exports to Malaysia, this country registered almost RM2 billion trade surplus with France, an increase of 73 per cent compared with 2017.
DEVELOP DIALOGUE BETWEEN MALAYSIA AND FRANCE
Meanwhile, Laplanche also said there is a need for a close dialogue between France and the Malaysian government.
“That is what we are doing at the moment. We develop a dialogue with the government and palm oil producers as much as we can.
“And we also decided to bring in our Environment Ambassador Yann Wehrling to visit Malaysia in early April where we took him to Sabah to have a look at conservation project there, wildlife habitat and oil palm plantation so that he can witness what is happening on the ground here.
“Then we come back to Kuala Lumpur to hold a session with joint committee between both governments on palm oil cooperation. Basically, the market in France and Europe is going to continue to be opened for Malaysian palm oil,” he said.
Asked if the EU would remain as the world's second largest buyer of palm oil, he said it would change depending on the population and development in other countries.
“We have 500 million people, while China has about 1.4 billion population and India 1.3 billion population but let me assure you that Europe will continue to be an important client of palm oil including France,” he said.
In 2018, India was the largest palm oil buyer with 15 per cent, followed by the EU 12 per cent, China (11 per cent), Pakistan (7.0 per cent), the Philippines (4.0 per cent), Turkey (4.0 per cent) and the US (3.0 per cent).
COLLABORATION IN AGRICULTURE
Laplanche called for cooperation between Malaysia and France, in the field of environment and agriculture.
According to him, France's agriculture, just like Malaysia's, is based on family farms. The country could share its experiences with Malaysia on developing organic agriculture and specific local branding, in the context of small farms agriculture.
“With these experiences, France wants to bring more added value to the family farms. This is what we wish to bring forward in our dialogue with Malaysia.
“And on palm oil, we have a research centre here looking on the agronomy of oil palm, called CIRAD (International Centre for Agricultural Research for Development) and this is also an area where we can work together, to make sure that oil palm can continue to grow in the best conditions.
“You can grow your revenue without growing your acreage by raising your yield on the same acreage and that's one of the missions that the French research centre is pursuing,” he added. - Bernama
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