My Say: Breaking down silos in the palm oil industry

This article first appeared in Forum, The Edge Malaysia Weekly, on June 6, 2022 - June 12, 2022.
My Say: Breaking down silos in the palm oil industry
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Last week, news that Datuk Zuraida Kamaruddin, Minister of Plantation Industries and Commodities (MPIC), had resigned sent shock waves through the palm oil industry. Since the 14th general election in 2018, we have had three ministers — Teresa Kok Suh Sim, under Tun Dr Mahathir Mohamad; Datuk Dr Mohd Khairuddin Aman Razali, under Tan Sri Muhyiddin Yasin; and Zuraida, under Datuk Seri Ismail Sabri Yaakob. 

As the country rides the most perfect storm in the palm oil industry, discontinuity and anxiety are certainly not welcome. 

Science and engineering head start

On May 16, I delivered a webinar for the Institution of Chemical Engineers’ Palm Oil Processing Special Interest Group titled “The Sustainability of Science and Engineering in the Malaysian Palm Oil Industry”, where I shared how we have squandered the head start our technologists have given us in the palm oil industry due to the inability of its stakeholders to work well together.

These are some examples I gave.

1. Deterioration of Bleachability Index (DOBI)

In the late 1970s, refiners sometimes experienced difficulty in bleaching crude palm oil (CPO) even though it met the specifications at that time. Bleaching tests were impractical as they took a long time and the tankers delivering the CPO could not be expected to wait for hours. In 1982, Dr P A T Swoboda at Palm Oil Research Institute of Malaysia (PORIM) (now Malaysian Palm Oil Board [MPOB]) developed a rapid test, DOBI, using UV absorbance. After 22 years, it was adopted by the Malaysian Palm Oil Association (MPOA) and Palm Oil Refiners Association of Malaysia (PORAM) on July 1, 2004.

The index graded CPO into the following categories: sludge palm oil, poor, fair, good and excellent. A higher DOBI indicates also that the fruit is more fresh, ripe and free of contaminants. The index for fair was 2.31 to 2.92. The CPO DOBI specifications were set at a maximum of 2.31, that is, the lowest acceptable quality, and it has remained so to this day. In 1999, Keck Seng (M) Bhd reported a mean value of 2.96.

We have missed the opportunity to set Malaysian CPO apart as good quality as we are the only country to include DOBI in the CPO specifications. Since then, CPO specifications have not been updated.

2. Biodiesel

MPOB started research and development on biodiesel in 1982 and has two patents. The technology is well established and continues to improve. Malaysia started with a blending mandate of 5% in 2014, then 7% in 2016 and 10% in 2019. This year, it is 20%. Indonesia started with 15% in 2015, 20% in 2016 and 30% in 2020.

In Malaysia, 31 plants were established but only 18 are in operation today. At B20+B7 (the blending levels for the transport and the industry sectors), the contribution to our total primary energy supply will be 1.5% as renewable energy (RE). Implementation has been slow as biodiesel appears to be the ambition of MPIC and biodiesel producers only.

3. Nutrition

Palm oil is healthy and does not increase heart disease risk and does not cause weight gain. A first paper verifying this, titled “Effects of Palm Oil on Cardiovascular Risk” by Y H Chong and T K W Ng from PORIM and the Institute of Medical Research (IMR) was published on March 1, 1991. Since then, countless papers to this day have been published in reputable journals establishing that palm oil is safe and healthy to consume. Academician Tan Sri Emeritus Professor Datuk Dr Augustine Ong has proven countless times why palm olein is the tropical equivalent of olive oil.

In a recent paper titled “Saturated Fats and Health: A Reassessment and Proposal for Food-Based Recommendations: JACC State-of-the-Art Review” by Astrup et al on Aug 18, 2020, it is reported that systematic studies find no significant association between saturated fat intake and coronary artery disease or mortality, and some even suggested a lower risk of stroke with higher consumption of saturated fat. In the context of contemporary diets, therefore, these observations would suggest there is little need to further limit the intake of total or saturated fat for most populations. Palm oil is considered a saturated fat.

Therefore, the broad dietary guidelines of 30% of total daily calorie intake for oils and fats is now equally applicable to palm oil, which has been limited to 10%. Yet, the Malaysian Dietary Guidelines 2010 by the Ministry of Health (MoH) that limits the intake of saturated fats to less than 10% of total daily calorie intake has not been updated. The Malaysian Food Pyramid 2020 incorrectly puts oils and fats in the same category as sugar and salt at the apex of the pyramid. If Malaysians do not support palm oil as healthy, it is difficult to expect the rest of the world to do so.

The silos

A reason why the technological head start has not been leveraged is that the palm oil industry and the government ministries work largely in silos. Our industry captains have short-term and narrow goals of maximising immediate profits. The government and ministers are focused on self-interest and therefore cannot see the future for the nation. The sector is therefore reactive rather than proactive. Industry and government need to work hand in hand for the benefit of the entire industry and the nation, be forward looking, have strategic thinking and quick collective decision making. We can move faster and better if we get our act together. 

While I have given technological examples, these comments apply equally well to commercial and labour issues. Having said that, I must note that there are pockets of excellence and I am always on the lookout for these to share and inspire others.

The stakeholders

A solution to overcoming the silo mentality is to first take a look at who the stakeholders are.

As Chart 1 on previous page shows, upstream has the largest number of organisations whereas downstream there is almost always a single sub-sector organisation. This can give difficulties to MPIC agencies like MPOB or the Malaysian Palm Oil Certification Council (MPOCC) to get a balanced consensus.

An umbrella body

I would propose an umbrella body with the name Malaysian Palm Oil Industry Group (MPOIG) that recognises both the tonnage and sub-sector (see Chart 2).

This will create a level playing field for the industry players. In the chemical sector, the Chemical Industries Council of Malaysia (CICM) is the umbrella body that represents the various sub-sector chemical groups (ranging from oleochemicals, paints, fertilisers, petrochemicals, agriculture chemicals, industrial gases, coating resins and biodiesel sectors) following a restructuring exercise in 2001. When Tan Sri Rafidah Aziz was the minister of international trade and industry from 1987 to 2008, she found that, at annual MITI dialogues, she was speaking to many chemical trade associations on recurring issues. So she suggested the umbrella body.

The Malaysian Oleochemical Manufacturers Group (MOMG) is an honorary member of CICM’s executive committee as oleochemicals come under MITI and not MPIC.

Ministries

On the government side, it would be good if some ministries could be merged as there are always overlaps, some more than others. A good example was the Ministry of Energy, Science, Technology, Environment & Climate Change (MESTECC), where the related portfolios were better streamlined. It is vital to have the policies in each ministry aligned with the national strategy so that all are moving in the same direction. An area which will become critical will be in dealing with climate change as almost all ministries will be involved. There are also a number of Acts and regulations that need be updated. An example is the Environmental Quality Act 1974 (Act 127), which is almost 50 years old.

Within MPIC, apart from the agencies MPOB, MPOC (Malaysian Palm Oil Council) and MPOCC, there is the Palm Oil and Sago Industries Division (BISS) and Biofuel Division (BBA). Given the importance of palm oil and its byproducts to Malaysia, there should be a head of palm oil industry in MPIC, who would be the first point of contact for the chair of MPOIG. He would also provide continuity for the palm oil industry as we have to accept that the minister is a political appointee. A long-term policy aligned with the national strategy would ensure that the palm oil industry stays on course.

There should also be some continuity in MPIC agencies. Heads and chairs of their boards/council since GE14 have changed, with only the director-general of MPOB, Datuk Dr Ahmad Parveez Ghulam Kadir, remaining. This has been disruptive for the industry.

A national aspiration

Reorganising will help in some ways to break down the silos but it remains for the people in them to feel passionate about the future and the greatness of palm oil to totally bring down the silos. In December last year, Zuraida declared, “Malaysia has steadfastly worked towards promoting the important message that palm oil is a nutritious and affordable food for all. Our scientists — who also collaborate with renowned research institutions worldwide — continue to explore new technologies to ensure that the industry remains dynamic, spawns high-income jobs and entrepreneurial opportunities, and raises export earnings. At the same time, the government is striving to establish a zero-waste industry that is sustainable, well-regulated and mindful of the needs of end-users.” 

This is a national aspiration that can be quickly achieved when all the actors work together, free from thinking and working in silos.


Ir Qua Kiat Seng is a senior lecturer at Monash University Malaysia

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