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Malaysia targets Africa and the Amazon for oil palm expansion

Malaysia targets Africa, the Amazon for oil palm expansion

Malaysia targets Africa and the Amazon for palm oil expansion
August 25, 2008

Facing land scarcity at home and environmental complaints, Malaysian palm oil producers should look overseas to expand operations, a high-ranking Malaysian agricultural minister said Monday.

Speaking to reporters in Kuala Lumpur, Malaysian Plantation Industries and Commodities Minister Peter Chin Fah Kui repeated an earlier call for Malaysian palm growers to use their expertise to establish oil palm plantations in Africa and South America.

“There’s a need to look beyond Malaysian shores,” Chin was quoted as saying by Bloomberg. “It’s difficult to say how much land Malaysia needs, but we are encouraging our local companies to invest to other countries.”

Facing increasing criticism from environmental groups over deforestation and pollution from plantations, the palm oil industry has launched a two-pronged response: cleaning up operations by establishing criteria for sustainable production (the Roundtable on Sustainable Palm Oil – RSPO) and global PR campaign to promote the virtues of palm oil while simultaneously attacking critics via editorials, blogs and web sites. The marketing effort has included misleading claims on the carbon balance and biodiversity value of plantations.

According to Chin, Malaysia currently has about 4.4 million hectares of land under cultivation, while another 2.2 million hectares are available for oil palm estates. Most expansion is currently taking place in the states of Sabah and Sarawak on the island of Borneo.

Malaysia is the second largest producer of palm oil after Indonesia. Figures from the Malaysian Palm Oil Board show that production in 2007 stood at 15.8 million tons, while export revenue reached a record 45.1 billion ringgit ($13.6 billion) due to surging palm oil prices.

Chin’s comments come shortly after Malaysia’s Land Development Authority FELDA announced plans to immediately establish 100,000 hectares (250,000) of oil palm plantations in the Brazilian Amazon. To facilitate oil palm expansion in the Amazon, the Brazilian government is now weighing legislation that would allow land owners to include plantations as part of their “forest reserve” requirement. The law would enable Amazon landowners to boost forest-clearing on their land from 20 percent to 50 percent.

Oil-palm plantations in and around Tanjung Puting National Park in Kalimantan, Indonesian Borneo Satellite image courtesy of Google Earth.

Oil palm expansion is also occurring in tropical Africa, the region where Malaysia’s palm stock originated but where yields lag far behind those of industrial plantations in Southeast Asia. In October 2007, a Chinese company signed a billion-dollar contract to develop more than 3 millions hectares of Democratic Republic of Congo (DRC) for oil palm plantations. In June this year, Unilever sold its oil palm holdings in Cote d’ Ivoire (Ivory Coast) to Singapore-based Wilmar International and Olam International.

Analysis by the Woods Hole Research Institute suggests that DRC has the potential to convert 778,000 sq km of forest land for oil palm plantations. The Brazilian Amazon has 2.3 million sq km of forest suitable for oil palm.

Brazil to establish oil palm plantations on degraded Amazon rainforest lands
Brazil will allow the establishment of oil palm plantations on degraded lands in the Amazon rainforest under a agreement signed between Brazil’s ministers of agriculture and the environment, reports Folha de S. Paulo. Environment minister Carlos Minc said the proposed law aims to expand biodiesel production in the Amazon without contributing further to deforestation, but environmentalists argue the plan will effectively cut the amount of forest landowners are required to keep on their property from 80 percent to 50 percent, thereby accelerating forest conversion and breaking an earlier promise by Minc that the government would not change the restriction.

Amazon palm oil: Palm oil industry moves into the Amazon rainforest

Malaysia’s Land Development Authority FELDA has announced plans to immediately establish 100,000 hectares (250,000) of oil palm plantations in the Brazilian Amazon The agency will partner with Braspalma, a local company, to form Felda Global Ventures Brazil Sdn Bhd. FELDA will have a 70 percent stake in the venture.

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