Palm Oil Tribune Vol 6 No 6 by mapsglobe

PALM OIL TRIBUNE

Palm Kernel Oil Expeller

Palm Plantation Tribune

Palm Oil Tribune

Palm Downstream Tribune

Next Chapter Media

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“Automation

applied to an inefficient operation will magnify inefficiency. Automation may be a good thing,but don’t forget that it began with Frankenstein”

Bill Gates

Malaysia is strengthening collaboration with India on palm oil production, supporting India's research and development e orts. Malaysia is also prepared to meet India's growing demand for palm oil, working with companies like Emami Agrotech. During a recent visit to India, Prime Minister Anwar Ibrahim discussed expanding trade and investment with major Indian companies, including HCLTech and Tata Consultancy Services (TCS). HCLTech plans to expand its operations in Malaysia, focusing on AI and digital engineering, creating over 1,500 jobs. TCS is set to double its workforce and open an AI and Cyber Security Centre. Malaysia continues to attract digital investments, with nearly RM162 billion approved between 2021 and 2024. e visit resulted in potential trade agreements worth RM8 billion across various sectors.

Malaysia Ready to Meet India’s Palm Oil Demand, Supports

R&D Initiatives

(2 September 2024)

African nations expressed interest in boosting their palm oil industry capacity during meetings with Indonesian President Joko Widodo at the 2nd Indonesia-Africa Forum. Foreign Minister Retno Marsudi noted that several African countries are keen to join the Committee of Palm Oil Producing Countries (CPOPC) and seek collaboration to enhance their palm oil capabilities. ese discussions highlight Africa's e orts to strengthen its palm oil sector, signaling potential partnerships with established producers. African countries aim to tap into existing expertise to drive industry growth and improve their competitiveness in the global market.

(22 August 2024)

African nations keen to boost palm oil capacity

Automation in Milling

In today's fast-paced and competitive environment, automation has become essential for the milling industry. e need for greater e ciency, consistent product quality, and enhanced safety standards has driven the shi towards automated systems. Automation reduces the reliance on manual labour, minimises human error, and optimises resource use, ensuring that milling operations can meet the growing demands of the market. By integrating automation, mills can achieve higher productivity, lower costs, and maintain a competitive edge, making it a crucial component for the future of milling.

Smooth Transition to Automated Systems

Consistent Quality Control

Automation ensures precise control over milling processes, leading to consistent, high-quality output. By automating tasks such as temperature, pressure, and ow rate monitoring, mills can maintain optimal conditions, reducing errors and ensuring a uniform product.

Continuous Productivity Continuous Productivity

Automation reduces reliance on manual labour, enabling uninterrupted 24/7 operation. is continuous productivity maximises the utilisation of machinery and resources, while scheduled maintenance and automated alerts help prevent breakdowns and minimise downtime.

Real-Time Monitoring and Data Management

Automation provides real-time data on performance metrics, allowing for quick adjustments and better decision-making. Integrating sensors and monitoring devices ensures processes remain within safe and optimal ranges, enhancing both safety and e ciency.

Inventory and Maintenance Optimisation

Automation streamlines inventory management by ensuring timely replenishment of raw materials and spare parts, reducing the risk of production delays. It also optimises maintenance through automated alerts, minimising downtime and keeping equipment in peak condition.

Reducing Risky Tasks and Enhancing Safety

Automated machinery handles hazardous operations, such as palm fruit sterilisation and extraction, reducing the need for human intervention and minimising the risk of accidents. Automation continuously monitors safety standards, improving hazard detection and enabling immediate corrective actions, which reduces human error and enhances overall safety.

Boosting Product Quality

Automation minimises human error and the risk of product damage, ensuring consistent, high-quality oil production. Precision in automated processes results in cleaner, higher-quality oil, meeting or exceeding industry standards.

Key Factors in the Selection and Integration of Automation Technologies

Training & Compliance

Invest in sta training and ensure technologies meet regulatory standards.

Cost-E ectiveness

Choose automation solutions with a strong ROI and potential for cost reduction.

Maintenance & Support

Select vendors o ering easy maintenance and reliable support.

Ensure new systems are compatible with existing equipment and can scale with future needs. Compatibility & Scalability

Processing E ciency

Prioritise technologies that reduce time and increase throughput.

Addressing Technological Challenges

Each stage requires specialised equipment and processes, which can be di cult to automate e ectively. Additionally, the variability in the quality and quantity of the palm fruit bunches challenges automated systems to handle di erent inputs consistently.

Integrating automation technology with existing milling infrastructure presents a challenge but essential.

Upgrading machinery to be compatible with automation systems is costly and time-consuming.

Ensuring the reliability and safety of automated systems is crucial to preventing disruptions in milling operations.

Skilled labour may be in short supply. Training programs and ongoing support are essential to equip sta and ensure successful automation in oil palm milling.

Source:

Datin Stella Ambrose Deputy Chief Executive O cer of Sawit Kinabalu Sdn. Bhd.

"Automation applied to an inefficient operation will magnify inefficiency. Automation may be a good thing,but don't forget that it began with Frankenstein"

Bill Gates

Palm Oil Industry in ailand

In 2023, global palm oil production reached 78 million tonnes, with the majority coming from Indonesia and Malaysia. ailand ranks as the third-largest palm oil producer globally, though its production accounts for less than 5% of the world’s total output. ailand's palm oil production is highly concentrated geographically, with about 86% of the planted area located in the southern provinces, including Surat ani, Krabi, Chumphon and Nakhon Si ammarat. e remaining plantations are scattered across central, northeastern and northern regions.

As of 2022, ailand's total planted area for oil palm stood at 1.1 million hectares, producing 19.1 million tonnes of fresh fruit bunches (FFB) or 3.4 million tonnes of crude palm oil (CPO). However, the driving force behind ailand’s palm oil industry is smallholders, who manage over 80% of the country's oil palm plantations, covering approximately 880,000 hectares in the southern region. Oil palm cultivation in ailand has expanded rapidly since 2009, fuelled by the ailand government's Alternative Energy Development Plan (AEDP), which aims to increase the share of renewable energy (including palm biomass and biogas) to 30% of nal energy consumption by 2037.

ailand exports limited quantities of CPO, with the government periodically encouraging exports to manage domestic prices and prevent supply surpluses. Imports are typically restricted to periods of domestic shortages, especially when CPO bu er stocks dip below the reserve level of 250,000300,000 tonnes.

Suret ani

Chumphon

Nakhon

Si Tammarat

Krabi

Trang

As of 2021, 85% of Thailand's oil palm plantation concentrated in Southern Regions.

Structure of the Palm Oil Industry

Plantation

Mills

Re nery

e National Oil Palm Policy Committee oversees the palm oil industry, ensuring stability and competitiveness across the supply chain. e Committee’s responsibilities include allocating oil palm supply between household and industrial consumers, regulating imports, and intervening in the market to stabilize prices. It coordinates with several government bodies, such as the Ministry of Industry, the Ministry of Energy, and the Ministry of Commerce, which oversees FFB pricing through the Central Committee on the Prices of Goods and Services. As of September 2023, the purchase price of palm oil was set at 5.06 THB per kilogram, with regulations stipulating that mills should only buy fruits with at least 18% oil content, enhancing the quality of ai palm oil.

ailand’s palm oil industry is well-structured and supported by various government ministries and agencies. Small-scale farmers are the backbone of the plantation sector, while the midstream and downstream sectors are dominated by large independent producers who have made signi cant investments in these areas. A key strength of the ai palm oil industry is its comprehensive supply chain, which involves approximately 410,000 households, mostly small-scale farmers. Unlike in Indonesia or Malaysia, where smallholders o en participate in Nucleus Estate Schemes (NES) or such as FELDA scheme, most ai farmers operate independently, without formal contracts or links to palm oil mills.

Currently, there are 132 palm oil mills in ailand, with a total installed processing capacity of about 5.6 million tonnes of CPO annually. Large mill operators o en own plantations and produce palm planting materials.

e supply chain also includes 22 palm oil re neries, with an annual production capacity of 2.5 million tonnes. Large re ners are o en integrated with other parts of the supply chain, including palm oil mills and consumer product manufacturing.

1.1M Hectares

Tonnes FFB

132 Mills 5.6M Tonnes CPO

22 Re neries 2.5M Tonnes production

Future Prospects

e future of ailand’s palm oil industry looks promising, with steady growth expected. e government aims to expand the total cultivation area to 1.6 million hectares by 2029, focusing on the northeast region. Farmers are encouraged to increase plantation sizes through high domestic prices and the government’s income guarantee scheme.

Several successful government programmes have facilitated the expansion of oil palm planting in ailand:

Income Support Programme: On April 21, 2023, the National Oil Palm Policy Committee approved payments to palm growers for the di erence between the guaranteed price and the reference price for plantations up to 25 rai in size, provided the plantations are at least three years old and producing fruit. Note: 1 hectare = 6.25 rai.

Biodiesel Mix Management: e government manages the biodiesel component mix (B5, B7, B10, and B20) to stabilize the domestic palm oil market, o set rising diesel costs, and mitigate the cost-of-living crisis.

CPO Export Promotion: To address domestic supply surpluses, the government promotes CPO exports by providing subsidies and monitoring stock levels.

Value-Added Product Development: e government is focused on adding value to the palm oil industry by targeting eight product groups, including bio-transformer oil, eco-friendly detergents, bio-lubricants, and bio-jet fuels.

CPO Stock Management: Funds have been allocated to develop and implement a system for monitoring and managing CPO stocks.

Palm Oil Import Controls: e government also manages and controls palm oil imports at various customs checkpoints.

Challenges

Despite its strengths, the structure of ailand’s palm oil industry presents environmental challenges and di culties in obtaining sustainability certi cation for smallholders. While the industry has had some negative environmental impacts, these are governed by national laws and are not unique to oil palm cultivation. E orts are being made to raise awareness among farmers and the broader society about the importance of environmental protection.

To meet market demands for sustainability, the ailand Alliance for Sustainable Palm Oil (TASPO) was established in October 2022. is alliance, supported by the Roundtable on Sustainable Palm Oil (RSPO) and the ailand Environment Institute, includes key stakeholders in palm oil production, distribution, and consumption. TASPO aims to strengthen the industry’s commitment to sustainable development, aligning with the United Nations Sustainable Development Goals (SDGs).

As one of the world’s leading palm oil producers, ailand plays a crucial role in advancing a more sustainable industry locally, regionally, and globally. e country has the potential to increase the demand for and supply of certi ed sustainable palm oil. Policymakers, businesses, and consumers all have critical roles in supporting sustainable palm oil by fostering demand and helping smallholders adopt responsible practices that meet global certi cation standards, improve operational e ciency, and enhance access to international markets.

Source: Extracted from Krungsri Research

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Source: Business Today Editorial

the cooling job market and employment growth, which remained below 100,000 for the second month.

Top Picks: RHB's top picks include IOI Corp, LSIP, and Sarawak Oil Palms (SOP), favoring both pure and integrated planters on valuation grounds.

Stock Upgrades: Kenanga also upgraded KLK and PPB to buy due to recent so ened share prices, presenting valuable buying opportunities.

2024 EVENTS

I S Pa n Am erica n eoch em ica ls C onference

Su sta ina ble Av ia tion Fu tu res APAC C ong ress

4 - 6

- 4

sta ina ble Av ia tion Fu tu res

rth Am erica C ong ress rriott Ma rqu is, Hou ston, U SA - 3

d G loba l Ag ritech Su m m it ATES) 2024

ba h I nterna tiona l C onv ention ntre, Sa ba h

e R itz - C a rlton C oconu t G rov e, a m i, Florida , U SA - 9

MPO C Foru m a nd G a la Dinner

Sh a ng ri- La Hotel, Kuala Lumpur

8 - 9

Food a nd Kitch en Ta nz a nia

Da r Es Sa la a m , Ta nz a nia

9 - 11

1 4 th PALMEX I ndonesia 2024

Sa ntika Prem iere Dy a ndra Hotel & C onv ention, I ndonesia

9 - 11

Arg u s Biofu els Eu rope C onference & Ex h ibition

Q EI I C entre, C entra l London, U K

15 - 17

O ils & Fa ts I nterna tiona l C ong ress (OFIC) 2024

Ku a la Lu m pu r C onv ention C enter ( KLC C ) , KL

22 - 23

Hea tech I ndonesia

J a ka rta I nterna tiona l Ex po, I ndonesia

23 - 25

NOVEMBER

PAR KR O Y AL C O LLEC TI O N Ma rina Ba y , Sing a pore - 8 0th I ndonesia n Pa lm O il onference ( I PO C ) a nd 2025 rice O u tlook li I nterna tiona l C onv ention C entre, donesia - 9

TH Y ABI TED Fa ts & O ils ong ress e Ma rm a ra , Anta ly a , Tu rkey

11 - 13 ou ndta ble C onference on u sta ina ble Pa lm O il ( R T2024 ) m a ri Ba ng kok, Ba ng kok, Th a ila nd

6th C entra l Asia n I nterna tiona l x h ibition - Foodex po Q a z a qsta n a kent I nterna tiona l Ex h ibition ntre, Ka z a kh sta n

13 - 15

Biofu els Ex po 2024 R eina ssa nce London Hea th row Hotel, U K

14 - 15

Food I ng redients Eu rope 2024 Messe Fra nkfu rt, G erm a ny

19 - 21

C lea n C ities a nd U rba n Dev elopm ent Foru m 2024 M R esort & Hotel, KL

20 - 21

1 0th I C I S Asia n Su rfa cta nts C onference

PAR KR O Y AL C O LLEC TI O N Ku a la Lu m pu r, KL

20 - 21

Sm a rt N a tion Ex po 2024 a nd

EVM Asia 2024

MI TEC , KL

20 - 21

C O EX Food W eek 2024 C oex Ha ll, Seou l, Sou th Korea

20 - 23

a la y sia n Pa lm O il Vendor

ev elopm ent Foru m by MPO C

g y pt

y pt I nterna tiona l Ex h ibition C enter

I EC ) , Eg y pt

Food Africa 2024

y pt I nterna tiona l Ex h ibition C enter

I EC ) , Eg y pt

3 - 5

O SFA O ils a nd Fa ts Section

nnu a l Dinner 2024

llow C h a ndlers’ Ha ll, London, U K

2025

DECEMBER YEAR

lm O il Econom ic R ev iew & tlook 2025

y a le C h u la n Hotel, KL

14 Jan

Palm oil stands as a testament to human ingenuity and agricultural excellence, ranking among the top ten vegetable oils traded globally. With a history spanning over 5,000 years, it is now a staple in 1 in 10 food products on grocery shelves worldwide. is versatile oil is a crucial yet o en overlooked component of our modern food systems.

In the pursuit of sustainable development, true progress must address not just environmental concerns but also social and economic dimensions. e 1987 Brundtland Report, "Our Common Future," emphasises that sustainability involves a holistic approach integrating these three aspects. For developing countries, development should be central to sustainability discussions, ensuring that progress is both green and equitable.

e "Triple Bottom Line" of Planet, People, and Pro t is a popular sustainability framework but o en re ects the priorities of developed nations. For developing countries, especially those reliant on agriculture, a broader perspective is needed. Sustainability here means optimising limited land resources to boost livelihoods while protecting the environment. e cultivation of crops like oil palm in Malaysia illustrates how development and sustainability can co-exist.

In Malaysia, the oil palm industry is a source of national pride. Over the past 67 years since independence, Malaysia has become a global leader in palm oil production and export, driving socio-economic prosperity and ensuring political stability. e industry's growth has profoundly improved the lives of many, particularly in rural areas and among smallholders.

Despite these signi cant contributions, the full impact of Malaysian palm oil is frequently undervalued. e debate around oil palm o en swings between viewing it as a blessing or a detriment. As one of nature’s gi s, palm oil o ers the golden opportunity to provide a meaningful and positive impact on the global landscape.

Decoding Palm Oil: Essential Insights for Balanced

and Informed Sustainability

Conversations Part I

Palm oil, a key agricultural commodity in many tropical countries along the equator belt, shows how industry can foster economic growth while supporting environmental stewardship. In Malaysia, the palm oil sector has driven signi cant socio-economic progress, bene ting millions especially smallholder farmers. is success story highlights how responsible management can make agricultural industries engines of development.

e principle of Common but Di erentiated Responsibilities (CBDR), established at the 1992 Earth Summit, acknowledges the di erent capacities and responsibilities of nations. Developed countries, having industrialised earlier and contributed more to greenhouse gas emissions, face di erent expectations compared to developing nations. CBDR recognises that while all countries share environmental challenges, approaches should re ect their unique circumstances.

For developing countries, incorporating development into the sustainability model is crucial. e palm oil industry, when managed with a focus on both economic and environmental sustainability, can serve as a model for how emerging economies can thrive. Embracing and optimising such industries allows developing nations to advance sustainably, proving that economic progress and environmental care can go hand in hand.

e call to action is clear: We must support and amplify models that foster development while preserving our planet. As we re ect on the achievements of the Malaysian oil palm industry, we should ask: Does this sector exemplify a sustainable commodity aligned with our future vision of nation building and how to promote it? How can we further support and enhance such models to ensure they lead the way in achieving both national prosperity and sectorial sustainability?

Remarkable E ciency of Oil Palm as an Agricultural Species

e oil palm, botanically known as Elaeis guineensis is a prime example of e ciency and productivity in plantation landscapes, thriving along the equatorial belt within approximately 5 degrees north and south of the equator. It is the most productive oil-bearing crop, thriving with ample sunshine and generous rainfall. with one hectare yielding up to 8 times more oil than other oilseeds - over 3 tonnes annually. In contrast, soybean, rapeseed and sun ower crops produce only 0.46, 0.81 and 0.68 tonnes per hectare per year, respectively. is e ciency highlights the oil palm's potential to meet global demands while using land more e ectively than any other edible oil crop.

Malaysia, home to just 0.4% of the world's population, cultivates oil palm on 17% of its total land area. Despite representing only 0.1% of global agricultural land, Malaysia contributes 20% of the world’s exports of edible oils and fats. Malaysian oil palm growers achieved this without relying on farming subsidies typical in Europe and the US. Instead, they contribute signi cant taxes that support national development and infrastructure.

Oil palm cultivation's energy e ciency further underscores its environmental bene ts. MPOC highlighted that the energy balance, measuring output-to-input ratios, shows that oil palm is highly resource-e cient. Producing a tonne of oil palm requires fewer agrochemicals and fossil fuels compared to other oilseeds. With an energy ratio of 9.6, oil palm far surpasses rapeseed's 3.0 and soybean's 2.5. is e ciency reduces emissions and pollutants, preserving water, soil and air quality, and exemplifying sustainable agriculture.

Palm Market Outlook for 2025

Malaysia Palm Oil Production (Mmt) 2025

Dr Sathia Varqa, a senior analyst at Fastmarket Palm Oil Analytics, provided an insightful outlook on the palm oil market during a recent conference, addressing key trends and factors expected to shape the industry in the year ahead.

Key Trends in Malaysia :

No1

Malaysia’s palm oil production has seen an 11% increase overall, although challenges persist, particularly in Sabah, where production has dropped due to replanting activities and insu cient rainfall. In the event of a strong La Nina, production projected to be optimistic.

No2 Ringgit on the Rise

A stronger Malaysian ringgit, while a sign of economic resilience, presents challenges for the palm oil industry. As the ringgit appreciates against the US dollar, Malaysian palm oil becomes more expensive for international buyers, reducing its competitiveness on the global stage. Export performance may struggle if this trend continues.

No3

Geopolitics: e Unexpected Calm

Despite ongoing geopolitical turmoil, including the Ukraine-Russia war and tensions in the Middle East, global crude oil prices have remained unexpectedly stable.

No4 Biodiesel in Indonesia

e world’s largest palm oil producer continues to impose high levies and taxes on CPO to nance its biodiesel program. e palm-based biodiesel mandate is set to increase from 35% to 40% starting on 1st of January 2025. is policy has bene ted Malaysia, as buyers turn to Malaysian CPO. is shi has helped maintain lower stock levels in Malaysia, which in turn has supported stable prices.

No5

UCO: e New Export Star

Exports of UCO (Used Cooking Oil) have more than doubled compared to biodiesel in the January to July 2024 period, compared to the same period last year. UCO is increasingly being used by Singapore and the European Union as a low-carbon intensity (CI) feedstock for sustainable aviation fuel (SAF). is trend is expected to continue, with UCO becoming a more signi cant export product as biodiesel exports gradually decline.

No6

China’s Export Hurdles

Both Malaysia’s and Indonesia’s exports have fallen by 500,000 MT this year, attributed to economic weaknesses in China, which have signi cantly impacted demand. As China struggles with its economic challenges, the outlook for palm oil exports remains uncertain.

No7 EUDR Uncertainty

ere is signi cant uncertainty surrounding European Union’s Deforestation Regulation (EUDR), set to take e ect on 1st of January 2025. e regulation which prohibits the import of palm oil products sourced from land deforested a er 2020, raising concerns about how compliance will be monitored and its impact on trade. is has led to stockpiling in European markets as buyers prepare for potential disruptions.

Palm Production Outlook

Palm Production Outlook in Indonesia

According to forecasts from the Indonesian Palm Oil Association (GAPKI), production is expected to be at or as much as 5% lower than in 2023, primarily due to drought conditions in Kalimantan.

Palm Production Outlook in Malaysia

Dr. Sathia expects Malaysia’s palm oil production to surpass 19 million MT in 2025, depending on key factors discussed earlier. He also noted that exports could be lower in August and September due to heavy buying in July, when exports reached about four-year high. However, there would be slight pickup in September onwards as India’s buyers prepare for Diwali festivals. Palm oil prices are expected to remain stagnant between RM3,700 and RM3,900 per tonne on the CPO futures markets, with production being the main price driver for the rest of the year.

Unlocking

2nd November 2024, Genting International Convention Centre (GICC)

Seminar Registration:

Malaysian Sustainable Palm Oil (MSPO) Level 2, Tower 2B, UOA Business Park, Unit 2-1, No 1, Jalan Pengaturcara U1/51, Seksyen U1, 40150 Shah Alam, Selangor.

Phone : +6 03 2181 0192

Email : info@mspo.org.my www.mspo.org.my