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Losers lay siege, palm oil emerges the winner: Position Paper

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Wednesday, 30 May 2012

Untitled DocumentWritten by Frank Tate

I remember the absolutely fascinating book that was prescribed for compulsory reading for our literature lessons in early secondary school - a book on logic entitled "Straight and Crooked Thinking". This was a classic written in the 1930’s by Robert H. Thouless who was the Professor of Educational Psychology in Cambridge University.

Unlike most books on logic, Thouless sets out an exhaustive list of dishonest and crooked arguments that people are able to come up with to posit their case – dishonest tricks and faulty premises that violates the principles of logic. For instance, soldiers who lose their lives in a war will be called "heroes" or "martyrs" by their country or groupings invested in their cause, whilst their opponents will label them as "enemies or invaders killed".

This brings me to Michael Jacobson and the so-called "Center for Science in the Public Interest" (CSPI). Jacobson and the CSPI has made it something of a career to launch ill-conceived and unsubstantiated attacks against Malaysian palm oil.

The trouble with Jacobson and CSPI is that they have a long chequered history of utter disregard for truth and scientific facts, often inflating figures and claims to advance their agenda and deceptive findings. The truth of the matter is that much of the "science" emanating from the verbose sounding "Center for Science" would be hard pushed to reach the level of a secondary school science project! What is interesting is that they distribute their reports without peer review, which is the way by which real science operates. This is fundamental to science before any report can be regarded as scientifically credible. A search on the net shows that the CSPI has an annual revenue in excess of USD 16 Million, which raises the question as to whose hidden interests they really represent!

They failed abjectly in their early forays against Malaysian palm oil in the eighties by alleging that Malaysian palm oil is manifestly unhealthy, causing heart trouble, strokes and hypertension. When the weight of scientific evidence that palm oil was an inherently healthy oil that is low in trans-fatty acids and rich in anti-oxidants (and therefore heart friendly) was brought to bear on Jacobson and CSPI , they quietly retreated to their "Center" to lick their wounds and to plot another devious stratagem.

Recently, Jacobson and the CSPI have re-emerged with their gun-sights readjusted. This time they took aim at the issue of deforestation coming up with a campaign called "Cruel Oil: How Palm Oil Harms Health, Rainforest and Wildlife". This was picked up by NGOs in the UK and the BBC even sent a film crew to Malaysia to shoot footage of the so-called habitat loss of orang utans allegedly caused by oil palm cultivation. The NGOs called for consumers to avoid palm oil products which had allegedly come from unsustainable sources.

The irony of it all is that the converse is true. The Malaysian Palm Oil Council (MPOC) led by its energetic CEO, Tan Sri Datuk Dr. Yusof Basiron quickly convened a symposium in London to address the issue. Using scientific facts to refute the charges, the MPOC decided to reveal this was a lie and pointed out that it was UK agriculture that was unsustainable. Firstly, Malaysia, with less than one third (devoted to palm oil cultivation) of the cultivated area of the UK, generates twice as much oxygen and absorbs twice as much carbon dioxide as UK agriculture. The UK too uses up more than 70% of its land mass for agriculture whereas in Malaysia, oil palm land accounts for only 13% of the land mass.

To add insult to injury, UK agriculture is heavily subsidised – to the tune of Euro 6.4 billion for an agricultural sector which earns 24 billion Euros per year. This heavy subsidy works out to an earning of Euro 1440 per hectare, and after deducting the subsidy component, net revenues of Euro 1000 per hectare per year is the UK production. The Malaysian palm oil industry, on the other hand, earns Euro 6 billion per year or Euro 1500 per hectare of revenue yearly which clearly outstrips the UK agricultural unit earnings. If the purchasing power parity is applied to revenue, the Malaysian palm oil industry is far superior in terms of the sustainability indicators, when compared to UK agriculture. Without the subsidy, the EU agriculture would be totally unsustainable. With the subsidy, they contribute to environmental damage due to the over-use of fertilizers, weed-killers, and the inexorable destruction and removal of their forests.

The superior sustainability of the Malaysian palm oil industry is patently obvious, and it is clear that the Malaysian oil palm cultivation is superior to any large scale agriculture in the tropics or temperate countries, in terms of sustainability parameters. The plantation industry is professionally managed, with many of them such as IOI Corporation, Golden Hope, PPB Group and KL Kepong, operating as listed corporations on the Malaysian stock market where corporate governance and corporate responsibility are well practiced, more than farm activities in other parts of the world. In addition, it is well known that each hectare of oil palm produces 10 times more oil compared to the soybean crop produced in the EU or USA.

In my view, it is time that Malaysian palm oil takes a good look at the situation. Rather than fight a constantly "moving target" such as the CSPI, the time might be right for Malaysian palm oil to brand itself as a "branded ingredient". This was a strategy used successfully by other commodities such as Nutrasweet, Canola (rapeseed) Oil and even Evian water. In fact so successful is Evian that a bottle of their branded water costs many times more than an equivalent quantity of gasoline. Intel picked up on this and adopted this strategy so successfully that "Intel Inside" is now virtually ubiquitously found in virtually every notebook and desktop computer using their micro-processor and made them a selling point for the end product. This strategy is tailor-made and particularly effective for commodities. Such an approach attracts a price premium for the "branded ingredient" because of the value perception and implied quality inherent in the finished product!

The end result is a win-win situation for all players in the supply chain, from the producer of the "branded ingredient" to the down-stream manufacturers to even retailers. By adopting this strategy, Malaysian palm oil can rise above the commodity market to gain a competitive advantage over less progressive competitors. THE END.

Comments
RayLey3  19. October 2012 at 12:19 am

It is hard to believe that Europe does not want to level the playing field as far as palm oil is concerned.


Jan Paul  31. October 2012 at 05:07 pm

It looks like the EC and CSPI have some fishy under-the-table goings-on! It makes me puke!


Teresa Ann  26. November 2012 at 09:33 pm

Oh my! The EC should have viewed the palm oil problem using a win-win situation. Instead of a zero sum situation. Why don't they let palm oil in on joint ventures with other European vege oil producers so that they won't get run over by palm oil exports.



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