By Paul Lim
Malaysia considers stopping palm oil exports to the EU. This was reported by Euractiv and Reuters in mid-January.
Well, go ahead – if Malaysia thinks it can do away with exports to the EU and if it can find other markets that can make up for the loss of European markets.
The EU is the third largest importer of palm oil. It accounted for 9.4% of palm oil exports from Malaysia – 1.47 million tonnes in 2022, down 10.5% from a year earlier.
The Reuters report highlights the expected decline in EU demand for palm oil over the next 10 years.
These days we see products on the shelves which have labels stating they do not contain any palm oil.
So, there is a good reason for Malaysia to look for alternative markets, to end its dependence on the European market.
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But how fast can Malaysia find new markets in the Global South, in China, in India? Aren’t there other countries of the Global South which produce palm oil too, especially through Malaysian and Indonesian companies, which deforested their forests?
How can oil palm plantations be set up without forest clearing? Aren’t they all in this Council of Palm Oil Producing Countries (CPOPC), led by Indonesia and Malaysia?
Palm oil is found in so many products it may seem to be indispensable. But don’t forget, palm oil was not used in these products before – and, just like there is synthetic rubber, it is not impossible for palm oil to be replaced with alternatives. Consider the many products that now carry the label “contains no palm oil”.
Deforestation is not the only story we hear. We also come across accounts of orangutans and other animals disappearing. There are campaigns to stop using palm oil as a biofuel and to exclude palm oil from European markets in the long run, while treating forests as carbon sinks.
A drop in demand for palm oil will put the livelihoods of oil palm smallholders in jeopardy.
But this was the choice of past Barisan Nasional governments, which encouraged smallholders to grow oil palm to earn better money and lift them out of poverty. They jumped on the bandwagon when palm oil prices were rising and doing well.
A sobering thought, however, is that in France, for example, some farmers are committing suicide because they do not have the financial means to continue farming. Are there smallholders in Malaysia in dire straits financially?
If we explore the background of these smallholders, we would discover they were growing other crops not considered profitable. But these are the very people who are crucial to food security in Malaysia.
We have all these reports of Malaysia moving from self-sufficiency in rice production to becoming a major importer of rice. Rice fields have been turned into factories.
However, there are now calls to ensure food security, asking people to grow vegetables in their gardens, in their small plots of land.
Under this new government, there should be a change of direction, giving more emphasis to food security than to palm oil. Is it far-fetched to reconvert these plantations into land to produce food? Perhaps such land has been so heavily polluted that producing food could be a danger to human health.
Malaysia’s next-door neighbour Thailand continues to be a major rice producer while industrialising to become a major base for the automotive industry.
In the EU, from its beginnings as an economic community till now, food production and food security have always been its base. This is reflected it in its budget allocation.
The monoculture of oil palm plantations is a legacy from colonial times. Initially, these were rubber plantations. Note monoculture still exists in Europe except that these are monocultures of many food crops on huge scales.
After deforestation centuries ago, the Europeans realised their past mistakes and focused on reforesting, conserving and preserving to bring back biodiversity. In the EU, there are dedicated forests for furniture, for the construction industry and others.
For Malaysia, palm oil and petroleum production are the pillars of the economy. Palm oil represents the dominant part of Malaysian agriculture; hence the anger when Europe and the US want to curb palm oil among others, like soya from South America.
Malaysia has to rethink how to diversify its agriculture away from its dependence on palm oil exports – just as Europe has to move away from dependence on Russian oil and gas – instead of complaining all the time of being shut out from its traditional markets for palm oil.
Malaysia has a new government, but does this new government have the guts and the political will to move away from palm oil into food crops and restore food security in Malaysia?
The country should also consider moving away from petroleum to renewable energy.
On the industrial front, the Look East policy has not made Malaysia as successful as South Korea, Japan and Taiwan, which have more balanced economies, having both agriculture and industry and now moving into the digital world.
At the base of all this in Malaysia has been the full-time engagement of party politics, of political power, of racial politics, which has diverted the country’s attention from revamping its economy. The pages of Aliran reflect this preoccupation of Malaysian politics.
Now, this new Malaysian government talks about repairing the economy. Good luck, but stop complaining about palm oil. Instead, look at how to diversify the Malaysian economy – a country with abundant resources and so much diversity it could have been a model for the Global South.
Our small neighbour to the south, with no natural resources, has made it into the developed world. Why can’t Malaysia, which theoretically is in a better position?
So stop complaining over palm oil market restrictions and start thinking, planning and acting to diversify the Malaysian economy – not for the benefit of cronies or certain interest groups, but to benefit all the people of Malaysia. Diversification is the name of the game to avoid overdependence.
Paul Joseph Lim is a retired academic with a deep concern for the future of Malaysia and its people
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PJL is absolutely right.
But this country will remain in the third world and continue to be driven by its racist politics. PMX has proven to be a NA and eloquent TO. To preserve his 👑 is his foremost priority. Mat Sabu is clueless to drive any Agricultural transformation . He should begin by visiting the archives and dig up Tun Razak’s Green Book.