The customer is always right

IF we want to continue selling palm oil and its by-products to the markets in Europe and America, we must allow our products to be certified by a world body.  We may sell the oil to China and India as we do at present with or without their insistence on certified oil by RSPO (Roundtable on Sustainable Palm Oil), but time will come when these two countries will have to abide by the standards set by that world body only.

As more and more refineries are being set up in China and India, the oil products will find outlets in other parts of the world including the European Union with 500 million consumers. What about those consumers in the Americas?

There the standards are strictly enforced. Whether we like it or not, they are the buyers of our products. In this respect, remember the venerable maxim: the customer is always right.

For the past week, there has been news about the suspension of certification of FGV and IOI – two of several giant oil palm planters in Malaysia. Both companies have been registered with RSPO and have been enjoying the benefits of a world network of markets for their oil since their membership.

FGV (Felda Global Ventures Holdings Berhad) has sought a temporary suspension of RSPO certification in respect of its 58 palm oil mills while it undergoes internal spring cleaning. For IOI, however, the suspension of its certification by RSPO is allegedly because of its non-compliance with the RSPO standards in respect of one of the segments of its palm oil-based products. Hopefully, the suspension will be lifted soon as efforts are being made to rectify whatever the problem was with the certification. From thence, it will be business as usual.

Importance of RSPO

Those who are not in the plantation industry may like to know why RSPO is so important in the oil palm business.

Established in April 2004, RSPO is a watchdog consumer organisation. Its objective is to promote the growth and use of sustainable palm oil products fit for the world market. To ensure sustainability, it sets quality standards via the application of its principles and criteria. By these standards the primary producers and the manufacturers of palm oil by-products all along and throughout the chain of custody are judged by its consumers. Its offices in KL and later in Geneva, Switzerland monitor the development of this industry.

While RSPO membership is voluntary; the benefits of membership are enormous. Just think of the 500 million Europeans who not long ago were sceptical about the health aspects of palm oil and have now realised that this is a cheap edible oil which is safe as a food or component of a food.

Before the companies such as Nestle and Kellogg’s, to name two of the voracious consumers of the oil, buy it, the oil must be certified fit for consumption.

In the market place, dealers in palm oil must remember the old maxim – the customer is always right.

What has RSPO got to do with us in Sarawak?

Plenty.

Malaysia had been a leading producer of palm oil until Indonesia caught up with us and together we produce almost one third of the edible oils required by the world.

In her own right, Sarawak has become a primary producer of palm oil. Introduced to Sarawak by the Commonwealth Development Corporation (CDC) and Sarawak Development Finance Corporation – later taken over by the Sarawak Land Development Board (SLDB) – both operating in the northern part of the state, the humble kelapa sawit has become a golden crop for us. In 1976, the Sarawak Land Consolidation and Rehabilitation Authority (Salcra) came into the scene to develop Native Customary Rights land for the crop. Later the Land Custody and Development Authority (LCDA) in partnership with private companies came in, and the acreage of land planted with the palms has increased tremendously.

I don’t even know how many acres are under palms planted by participants of these two agencies alone. There is much more land under private companies, and a number of mills in operation.

Now you see the relevance of quality standards of palm oil and the importance of RSPO certification of the produce, in our case.

All this underlines the importance of palm oil in our economy and to the economic welfare of the smallholders of which there are many.

When the pioneers introduced commercialisation of kelapa sawit to Sarawak in the early 1970s, there was scepticism all around but the pioneers persevered with the formation of SLDB by the state government and the coming of the CDC from Sabah to Miri.

Did you know that many of the pioneers were Sarawak boys. Mention the names of Wan Habib Mahmud, of Redhuan, of Tay Choo Foo or of Edwin Lau or of Benedict Bunsin and you ought to thank these Felda-trained plantation managers for their contribution to the industry. Mention the name of Hollis Herrick Awell and of Sabri Ali (Katun), two Sarawak boys then working for the CDC in Sabah, and you ought to thank them for planting oil palm in Miri District.

I mention these names because I want you to relate them to RSPO with reference to the standards of oil palm development according to the criteria and principles of good husbandry.

These were first rate managers – Felda trained or BAL Estate trained of palm oil development, who set all these standards which RSPO likes.

One of the rules of thumb in planting oil palm is to avoid destruction to the environment – the rivers and the streams, the erosion of the soil and the water catchment areas. A strip of land or forested area along rivers, at least 66 feet from the highest water mark is to be avoided.

However, from the 1980s through to the 2000s until recently, there was liberal issuances of Provisional Leases to so-called planters, including fly-by-night contractors.

Sometimes peat swamp was included in the leases because there was no proper survey on the ground before the lease was issued. Land subject to NCR has been included under the mistaken belief that they were all “unencumbered state land”.

Now this is the sort of problem that the European buyers of our palm oil take into consideration before they buy it. The RSPO does not recommend companies, especially those owned by European interests to buy palm oil or derivatives if they know that the oil has been extracted from palms planted on such land.

Not all planters are irresponsible, however. There are a couple of good ones in Sarawak and they are certified by RSPO. They sell their oil at a premium; they have nothing to fear from NGOs.

Way to go, mate!

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