Biogas - Indonesia plantations need fiscal incentives to invest in the biogas power

4 October 2016: Indonesia plantations need fiscal incentives to invest in the biogas power 

View Point: Concept of subsidies for renewable energy misunderstood by Vincent Lingga October 1 2016 -- Several pilot projects built by plantations companies show that 10,000 to 15,000 hectares of oil palm estates can produce biogas to generate one MW for 1,000 households. The potential is quite huge as Indonesia is the world’s largest palm oil producer with a total area of 10 million ha. But plantation companies need fiscal incentives to invest in the biogas power station.

RI'€™s biogas capacity to reach 14.8 megawatts: Ministry by Fedina S. Sundaryani, The Jakarta Post, Jakarta | Thu, March 24 2016 -- the current installed capacity of biogas power plants had reached 3.6 MW, ... €œThe expected capacity will increase significantly because there are currently 25 companies that have applied for permits...Although the ministry has not announced the new feed-in tariff, Indonesian Biogas Association secretary-general Trio Chadys said that he heard the new prices would be listed in dollars. ... '€œThe last we heard, the prices would be set in dollars. The previous price was Rp 1,050, [and it is rumored] the new price will be $11.75 for biogas. If it is true, it will probably be more economically feasible for investors,'€ he said.

Editorial: Harnessing palm oil waste by The Jakarta Post, January 27 2016 -- The government launched the first pilot project late last month for large-scale solar power generation to supply rural areas in Kupang, East Nusa Tenggara. Now it is palm oil-based biogas that is poised to become a major source of electricity in rural areas that are far from the national grid of the state electricity firm (PLN).... Only a small amount of this methane is currently being captured, but several palm oil businesses have started to realize the commercial use of the liquid waste if the methane can be captured and burned to generate power. So far these small plants (usually with a one-megawatt capacity) are operated mostly to power households around the mills.  ..... It is encouraging, however, that the government has just issued a regulation that sets the feed-in tariffs for excess power from plants fired by POME-based biogas. This means that PLN is required to buy excess power from POME-based biogas-fired power plants. ... Mulyana said at the opening on Saturday of the fifth such plant in Riau, which is owned by the Asian Agri palm oil group, that biogas from the liquid waste of the 850 palm oil mills across the country could generate 1,100 megawatts. 

Capturing methane for electricity generation by Ade Cahyat, The Jakarta Post, September 19 2013 -- Due to the lack of willingness from palm oil companies and the absent of support facilities, the application of POME-to-energy is just about 10 percent of the total mills nationwide. The combination of effective government support and innovative private sector behavior can unleash the potential...

Malaysia news:

Malaysia’s Green Energy Path, Posted by Saleem Ali of University of Queensland (Australia) on September 16, 2016 -- Malaysia was a leading negotiator for the group of developing nations at the 21st session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP 21) in Paris.  Seven years ago at the COP 15  meeting in Copenhagen Malaysia had agreed to reduce its “carbon intensity” (CO2eq emissions to GDP) by 40% from its 2005 value by 2020. Its commitment was enhanced to 45% carbon intensity reduction by 2030 at the COP 21 in Paris, France in 2015, subject to conditions regarding financing assistance and transfer of technology.

Green & Smart Kahang plant completed on schedule, 7 September 2016 -- - Green & Smart Holdings - a renewable energy company generating power from biogas captured through the treatment of palm oil mill effluent in Malaysia says the the first plant, the 2.0 megawatt Kahang Biogas plant located in the state of Johor, has been completed on schedule.
... Green & Smart also confirmed that construction of the 2.0 megawatt Malpom Plant in Nibong Tebal, Penang is on track for completion by end of October 2016. The biogas system has been completed with commissioning work under way.

Kim Loong outshines its peers BY HANIM ADNAN  11 June 2016 -- Another potential revenue from the downstream segment is biogas. Kim Loong has commissioned three biogas plants in Johor. Gooi says: “Kim Loong is in the process of installing the machinery and equipment to connect its gas engine system in Kota Tinggi mill in Johor to supply 1.8MW to Tenaga Nasional Bhd’s grid.  “We expect to commission the plant by year-end.” In Sabah, the group has received approval from Seda (Sustainable Energy Development Authority) to supply 1.0MW to the Sabah electricity grid. “We also hope to obtain approval for another 1.0MW in Sabah in the near future,” adds Gooi.

Sarawak wants delay on biogas plant rule 6 February 2016 -- “We understand the Government has committed to reducing gas emission. (However) It costs not less than RM15mil for each palm oil mill to install biogas trapping facilities,” said Sabat who urged the ministry to provide incentives in terms of cost to install such facilities. There are currently more than 65 palm oil mills in Sarawak. Sabat said SOPPOA disagreed with the imposition of RM1mil a year in bonding for any palm oil mill which delayed installation of a biogas plant.

Addressing palm oil concerns  8 September 2014 -- “At the same time, we have over 200 mills looking into methane gas removal, which will supply electricity to the national grid by 2020. Most greenhouse gas emissions happen at the mills, thus lowering them will improve palm oil’s sustainability,” said Yusof. (As of March this year, biogas facilities at 63 mills have already been completed, facilities at 14 more mills are under construction and there are plans for biogas plants at a further 150 mills.)

31 October 2015: Malaysia - 113 palm oil mills with the potential to generate electricity from palm oil biogas

113 palm oil mills identified to generate electricity from biogas October 29, 2015; KUALA KUBU BARU: The government has identified 113 palm oil mills with the potential to generate electricity from palm oil biogas for the national grid Fit-in-Tariff programme.  Minister of Plantation Industries and Commodities Datuk Amar Douglas Uggah Embas said the palm oil mills were situated near electricity power sub-stations and can absorb the electricity generated.  "There is already 12 palm oil mills that are already connected to the power grid network while 79 others are in the process of being connected," he told reporters here after opening the first Bio-Compressed Natural Gas (Bio-CNG) commercial production plant using palm-based biogas. The Bio-CNG plant, located at FELDA Sg Tengi palm-oil mill in Selangor, is the first commercial Bio-CNG plant project based on palm oil mill effluent in the world undertaken by a joint venture between the Malaysian Palm Oil Board, Felda Palm Industries Sdn Bhd and Sime Darby Offshore Engineering Sdn Bhd....Malaysia: "All palm oil mills that planned to increase the supply of their fresh fruit bunch were required to install biogas trapping facilities since January 2014.

18 September 2015: Biogas projects at REA and Musim Mas. Indonesia new regulations.

The palm oil plantations powering communities and tackling climate change - Palm oil mills are generating electricity using waste methane to the benefit of local communities and company profits Sponsored by: RSPO  By Oliver Milman Tuesday 15 September 2015 14.15 BST; The rapid expansion of palm oil cultivation has resulted in the creation of vast wastewater lagoons beside plantations in countries such as Indonesia and Malaysia, the world’s two dominant producers. These murky ponds, containing the brown-hued detritus from processed palm oil fruit, release a huge amount of methane into the atmosphere – a gas so potent it traps around 34 times as much heat as carbon dioxide....A typical lagoon emits the equivalent of 22,000 cars’ worth of greenhouse gases every year, according to a University of Colorado study published last year. Methane emitted from these lagoons accounts for more than a third of the greenhouse gas emissions created by the production of palm oil....Given the remote nature of most palm oil mills, it’s hard for businesses to sell this energy to the electricity grid, but REA Holdings has struck an agreement with Indonesia’s state-owned grid to power a nearby community. The joint venture began in April this year and will supply more than 8,500 households with methane-generated electricity.“We’ve experienced conflict with some local villages in the past over land compensation, so this is a good way of creating mutual interest,” says Sophie Persey, head of sustainability at REA Holdings. “[It] helps show the community the benefits of our operations, to improve their standard of living. We want to be there for 25, 50, 75 years, so we want to have good relationships and for everyone to benefit.” There is a financial upside for REA, of course – the company hopes the electricity sold will bring in $230,000 (£149,000) in the first year. What’s more, having slashed its diesel use from 2.8m litres a year to fewer than 500,000 litres, REA is better protected from fluctuations in the global oil price....... Other firms are seeing the potential, too. Indonesian company PT Musim Mas, headquartered in Singapore, is installing methane capture in its eight mills in Kalimantan and Sumatra, with an initial outlay of between $3-4m....The main hurdle – aside from upfront costs – has been a perceived lack of government backing. But Persey believes this is changing in Indonesia, with new regulations stipulating that the government must buy any renewable energy produced by palm oil mills. A further rule on mandatory methane capture may follow.....

19 May 2015: Asian Agri completes two biogas plants soon, to build another 15 with total 30MW capacity within 10 years

Economy in brief: Palm oil mill effluent used to generate power The Jakarta Post, Jakarta | Business | Tue, May 19 2015, 8:56 AM; The Asian Agri plantation group will soon inaugurate the operations of two power generation plants fired by biogas from palm oil mill effluent (POME) which has mostly been emitted into the atmosphere, thereby contributing to greenhouse gas (GHG) emissions and global warming.“We have been building five POME-based biogas power generation stations in North Sumatra, Jambi and Riau, each with an installed capacity of two megawatts, and two of them are scheduled to start up operations later this month or early June,” Asian Agri managing director Kelvin Tio told The Jakarta Post.Tio said green activists had attacked the conversion of land into oil palm estates and POME as among the biggest emitters of GHG.“But by processing POME into biogas to generate electricity, we cut GHG emissions and at the same time develop a new source of renewable energy which is suitable for rural electrification.” Asian Agri, Tio said, conducts GHG calculations for all of its mills and estates annually to enable them to identify crucial areas in their production chain and thereby provide guidance on emission reduction. Auditors verify the GHG calculations for international sustainability and carbon certification (ISCC) and Roundtable on Sustainable Palm Oil (RSPO) certifications. Assuming households in rural areas each use 900 watts for 24-hour supply, each of the five biogas power plants can meet the electricity needs of 2,000 houses, he added. According to Tio, a palm oil mill with an hourly capacity of 60 tons that requires fresh-fruit bunches from 15,000 hectares of oil palm trees can supply enough biogas to generate two MW of power. “Asian Agri, which manages 160,000 ha of oil palm plantations, of which 60,000 ha are owned by smallholders, plan to build 15 more biogas power stations each with a 2-MW capacity within the next 10 years,” Tio added. - See more at:

1 May 2015: Gas Malaysia in biogas tie-up with Sime Darby Offshore

Gas Malaysia partners Sime Darby unit in BioCNG distribution venture Published: 28 April 2015 3:03 PM Gas Malaysia Bhd has teamed up with Sime Darby Offshore Engineering Sdn Bhd (SDOE), a wholly-owned subsidiary of Sime Darby Bhd, to undertake biogas compressed natural gas (BioCNG) distribution business extracted from the palm oil mill effluent. In a filing with Bursa Malaysia, Gas Malaysia (fundamental: 2.1; valuation: 1.1) said it today signed a joint venture (JV) agreement with SDOE for the purpose. Under the deal, the two companies will form a JV company, in which SDOE will hold a 51% stake and Gas Malaysia the remaining 49%.........Gas Malaysia. It added that the JV will serve as a platform for the group to supply natural gas to new customers currently not serve by its existing pipeline. “The parties seek to optimise the combined strengths of each partner in their respective fields....SDOE is primarily involved in systems integration and marketing of products and services in the oil and gas/petrochemical industry. - See more at:

Gas Malaysia in biogas tie-up with Sime Darby Offshore Wednesday, 29 April 2015; PETALING JAYA: Gas Malaysia Bhd has partnered with Sime Darby Offshore Engineering Sdn Bhd (SDOE) to distribute biogas compressed natural gas (BioCNG) extracted from palm oil mill effluent (Pome).
Pome is the voluminous liquid waste that comes from the sterilisation and clarification processes in milling oil palm. In its filing with Bursa Malaysia, Gas Malaysia said the rationale for the joint venture (JV) was to optimise the combined strengths of both parties in their respective fields. “The JV will serve as a platform for Gas Malaysia to supply natural gas to new customers currently not served by the company’s existing pipeline,” it said in a statement yesterday. The parties would form a JV company and have an eventual issued and paid-up capital of RM5mil divided into five million ordinary shares of RM1 each, with SDOE as the major shareholder with a 51% stake and Gas Malaysia, 49%. The JV company would be engaged in the provision of sale, supply and transportation of BioCNG as well as carrying out design, construction, installation and commissioning works, among others.......

17 November 2014: I hear that the 2020 target is not being implemented. Only (a) new mills and (b) mills requesting licence for higher capacity must have methane capture.

Also note our recent posting: Wednesday, November 5, 2014, Sarawak biogas concerns

5 Nov 2014: Sarawak biogas concerns

Palm oil mills’ biogas capture implementation in Sarawak a major challenge — Soppoa
Posted on November 5, 2014, Wednesday; "KUCHING: One of the progressive initiatives of the palm oil industry is the target to get all palm oil mills installed with biogas capture facilities for utilisation to eliminate methane gas released into the atmosphere.... The industry has been regulated by Malaysian Palm Oil Board (MPOB), which is imposing the mandatory installation of biogas trapping or methane avoidance facilities in palm oil mills as a condition for any new mill construction or existing mills applying for throughput expansion in the country.... “However, Soppoa would like to draw attention that the existing conditions in Sarawak is very different from that of Peninsula Malaysia in terms of infrastructure developments, legal implications as well as tariff considerations.”
Foremost, it said gridlines in Sarawak are still lacking which includes infrastructure for feed-in capability into the power grid for utilisation of power supply generated from palm oil mills in the State,as well as infrastructure for electricity supply to rural areas.... “Also, a significant number of mills are located in remote locations, which are quite a distance away from the main grid. Therefore, this could result in high implementation costs,” Soppoa underscored.... Secondly, the supply of electricity in Sarawak comes under the purview of Sarawak Energy Bhd (SEB) which oversees all power generation for domestic and industrial utilization. The cost of power generation by SEB in Sarawak is low, probably significantly below cost of production from palm oil mills.... Therefore, the industry will have to negotiate for a mutually acceptable feed-in-tariff rate with SEB.
To date, the palm oil industry had invested substantially in 67 palm oil mills in Sarawak..."

1 April 2014: Malaysia regulations requires palm oil mills to install biogas facilities by 2020 and MPOB had proposed that from 1 Jan 2014, all new palm oil mills and existing ones should install full biogas capture or methane avoidance facilities.

So far, 60 out of 430 Malaysia palm oil mills have installed biogas production and only 4 are selling renewable energy to the grid. The problems at end 2013 included: a) high cost: At RM 9 million per MW, newer biogas plants can be set up for RM18 million– still a relatively high figure. FIT was non-competitive for some time: a 60 MT/hr palm oil mill installing a biogas power plant of about 1.8-2.0 MW capacity will gain about RM 3.34 million in revenue, RM 1.84 million net profit and a payback period of 9-10 years[1]; b) Low CER price: a 60 MT/hr palm oil mill will generate an estimate of 30,000-40,000 tonnes of CO2eq; with the current market price of EUR 0.60/tCo2e, the revenue generated for such a mill would be approximately RM 90,500 per year – not enough to cover the consultant fees! [2] Various less than favourable renewable energy policies should also be reviewed. (source: Green energy from palm-based biogas, BELL Group’s Experience On Biogas Capture by Liana Low, PIPOC, 19–21 Nov 2013 –  also refer to data updates and slides below).

BELL Group also points out that "energy from palm oil mill effluent / POME is a waste management issue and NOT just for ‘Power Generation Plants’. Methane could be upgraded to biomethane as a vehicle fuel. This could significantly reduce NGO criticisms & actually show governments in developed countries what renewable energy can achieve."  (source: ibid).

Data updates: [1] A 2.0 MW plant would have earned revenue of RM5.5mil a year on the old rate of 33.83 sen/kWh (2000 x 365 x 24 x 93% uptime x $0.3383/kWh). The new rate is 39.7 sen/kWh basic, plus potential bonuses of 1.99 sen (engine efficiency above 40%) and 5 sen (local engine). So 2MW plant will earn revenue of RM6.5mil, with potential to rise to RM7.6mil a year. [2] CER price now only EUR 16 cents (June settlement), see

On palm biogas for power generation, we were alerted by Gan Tee Jin to Malaysia’s Sustainable Energy Development Authority / SEDA's ( just announced (on 21 March 2014) substantial increase in feed-in tariff for biogas power.
  • Bonus tariff of 7.86 sen available for Biogas (Landfill/Sewage) has been opened to all sources of biogas by changing the definition to "use of landfill, sewage gas or agricultural waste including animal waste as fuel source".
  • Bonus tariff for "locally manufactured or assembled gas engine" was raised from 1 sen to 5 sen. Caterpillar is presently the only local assembler.
  • Bonus tariff for engines with at least 40% efficiency remains at 1.99 sen.
  • Degression rate changed from 0.5% to zero, meaning that projects implemented in later years enjoy the same tariff as this year.
A review and calculation prepared by Mr Gan Tee Jin and shared with Khor Reports finds: With the new tariff structure, 50km distance from the grid is likely viable for a 2MW biogas power plant (typical 60 tph mill with 300,000 tpy crop intake can do 2MW, with gas to spare for the boiler, provided good biodigester technology is used). Economies of scale do not favour smaller mills/power plants, but I suspect a 1MW plant will be viable if connection distance is within 10km. However, there are two potential bottlenecks - network capacity and feed-in quota - so the system may not be able to accommodate everyone. My reasoning is as follows: several projects have already been developed based on old FiT rate of around 34 sen/kWh, so I assume the bonus rates of 7.86 sen (landfill biogas) and 5 sen (local engine) go entirely to pay for longer connection distance. Extra revenue is 2000kW x (365 x 24) hrs x 93% uptlime x $0.1286 = $2.095 mil/year. Further assuming 7 year payback, the extra revenue justifies a capex of up to $2.095 x 7 = $14.6 mil or 58km of cabling @ $0.25mil/km. As a rough guide, I understand from Tenaga Nasional that the cost of installing overhead 11kV cables to be $0.25 mil/km.

Khor Report's comment: The Malaysia palm oil industry seeks to boost it sustainability efforts and this policy would help on GHG emission reduction measures[3]. It is notable that in developed countries, large corporations are promising to buy renewable-energy credits, to reduce their carbon footprints by going "100% green energy" [4]. The idea of clean energy is therefore gaining much attention and having a palm-based renewable energy sector is possible for Malaysia. However, two potential bottlenecks remain: network capacity and feed-in quota. How far will Malaysia power generation accommodate everyone in the palm oil sector? Assuming a 2MW biogas plant per mill, might 800MW from palm biogas be reached? Any technology uncertainties also have to be ironed out. Certainly from a business political front, we must take note of the current over capacity in power generation and the clout of the independent power producers or IPPs which also benefit from subsidised gas from PETRONAS, the Malaysia state-owned oil & gas producer. The rise of Malaysia palm biogas may not be straightforward, but the improved feed in tariff is promising . Undoubtedly, the palm oil sector will hope this will be supported by sufficient quota availability. So, watch this sector for constrained development within the context of Tenaga Nasional's monopoly. Other countries might consider an approach to liberalize power generation and permit oil palm mills to generate electricity via new local microgrids to serve new areas or to compete [5].

[3] Controversial new default values created by the European Commission point to why Europe is going cold on crop biofuels, but also highlights the benefits of methane capture;  

[4] How much progress have corporations made on their 100% clean power goals?, Tuesday 25 March 2014;; Software giant SAP on Monday said it plans buy enough renewable-energy credits to figuratively power 100% of its worldwide operations with clean energy. The company joins a growing number of businesses gunning for 100% green energy. Which corporations have made the most progress so far?

[5] Khor Reports' Palm Oil e-newsletter Nov/Dec 2013, "Time for New Strategies?": Reconsider the role of palm oil in local energy use. Malaysia’s biogas directive is a good starting point. Set for 2014 launch, it requires every mill to set up a biogas facility for methane capture; presumably to improve the greenhouse gas (GHG) profile for Malaysian palm oil. Aside from implementation and technological risks, there are obvious suggestions to improve Malaysia’s feed-in tariff for biogas power and allow easier grid connection. Khor Reports suggests a feasibility study on microgrids for remote areas. In the semi-urban zone this might challenge an incumbent power utility and it would work less well in countries with subsidized power. However, could this help firmly establish the localized use of palm biogas, biomass and biodiesel in new places? Many developing countries sorely need power in certain rural areas. They could encourage mills siting next to a mining facility or another energy hungry user. Economists might plan for processing clusters that could aid rural development.

Research and tech market news: Review of studies attributing "good and bad", Documentary - Appetite for Destruction: The Palm Oil Diaries and University of Uppsala’s high fat muffin study

29 Sep 2016: Review of studies attributing "good and bad" 

Good – palm oil from Mesoamerica and Africa as 2-7% was from forest in 1989. Bad – Southeast Asian oil palm, as 45% comes forest area. 
“Our analysis reveals regional trends in deforestation associated with oil palm agriculture. In Southeast Asia, 45% of sampled oil palm plantations came from areas that were forests in 1989. For South America, the percentage was 31%. By contrast, in Mesoamerica and Africa, we observed only 2% and 7% of oil palm plantations coming from areas that were forest in 1989. The largest areas of vulnerable forest are in Africa and South America.” Refer to "The Impacts of Oil Palm on Recent Deforestation and Biodiversity Loss" by. V Vijay et al. (2016) in  PLoS ONE 11(7).

Bad – rapid forest to plantation conversion; and pre-2005, Sabah and Sarawak worse than Kalimantan. Indonesia post 2005 rapid conversion.  
People have been arguing that plantations should be developed on degraded lands, and a recent study found that is true more in Kalimantan in Indonesia (up to 2005) than Malaysian Borneo where plantation industry was the principle driver of the loss of forest because of the speedy rate of conversion (within 5 years). “Between 1973 and 2015 an estimated 18.7 Mha of Borneo’s old-growth forest were cleared (14.4 Mha and 4.2 Mha in Indonesian and Malaysian Borneo). Industrial plantations expanded by 9.1 Mha (7.8 Mha oil-palm; 1.3 Mha pulpwood). Approximately 7.0 Mha of the total plantation area in 2015 (9.2 Mha) were old-growth forest in 1973, of which 4.5-4.8 Mha (24–26% of Borneo-wide deforestation) were planted within five years of forest clearance (3.7-3.9 Mha oil-palm; 0.8-0.9 Mha pulpwood). This rapid within-five-year conversion has been greater in Malaysia than in Indonesia (57-60% versus 15-16%). In Indonesia, a higher proportion of oil-palm plantations was developed on already cleared degraded lands (a legacy of recurrent forest fires). However, rapid conversion of Indonesian forests to industrial plantations has increased steeply since 2005.” Refer to "Rapid conversions and avoided deforestation: examining four decades of industrial plantation expansion in Borneo" by D. Gaveau et al. (2016) in Scientific Reports 6: 32017.

Bad – conversion of forests to produce palm and soybean oil used in junk foods. 
Researchers estimated the amount of land — and the potential amount of forests — required to produce the palm and soybean oil used in junk foods….. We will need an estimated 17.1 million metric tons of vegetable oil for junk food production by 2050, which would require something like an additional 5 million to 9.3 million hectares (12.3 million to 23 million acres) of soybean land and about 0.5 to 1.3 million hectares (1.2 million to 3.2 million acres) of additional oil palm land,… Using historical trends… much of this oil palm and soybean expansion will occur at the expense of tropical rainforests. Refer to "Junking tropical forests for junk food?" by J.S.H. Lee et al. (2016) in Frontiers in Ecology and the Environment.


14 Sep 2016: Documentary - Appetite for Destruction: The Palm Oil Diaries and University of Uppsala’s high fat muffin study

Palm oil: bad news for forests, and your liver  12/09/2016 -- Food companies were left with a dilemma: they couldn’t use trans-fatty acids, but they needed an ingredient that would provide that smoothy, creamy taste their customers loved. As Prof Bruce Griffin from the University of Surrey told me, “palm oil was introduced as a natural substitute for trans-fatty acids”.... Despite replacing an unhealthy ingredient, palm oil-producing countries have suggested palm oil is perfectly healthy. The Malaysian Palm Oil Council even suggests that studies show palm oil, in liquid form, is “comparable to the much touted gold standard olive oil for its effects on blood cholesterol”.... Under the researchers’ guidance, I did my own version of the experiment that mimicked the official study. For six weeks, I ate three muffins a day containing palm oil on top of my normal diet.... In the University of Uppsala’s controlled study they noticed that participants from both the palm and sunflower oil groups gained about 1.6kg in weight. However, the palm oil group gained “more liver fat, total fat, and visceral fat” than the sunflower oil group. This means the fat was gained around vital organs, which can be very dangerous in the long term..... I think we need to reconsider not only how we produce this oil, but also, given the health consequences, whether we should be eating so much of it in the first place....Appetite for Destruction: The Palm Oil Diaries is available on Amazon and iTunes...

News update for early 2016 - Fungus fermentation and Sime Darby's super seeds

Fungus Fermentation Turns Palm Waste Into Fodder -- Farmers often use agro-industrial waste - such as rice bran - as animal feed, but these crop residues lack protein, vitamins and other nutrients, the study says. The scientists from the University of Malaysia Perlis (UniMAP) used the fungus Aspergillus terreus to produce large amounts of protein through the fermentation of palm pressed fibre and palm oil decanter cakes, two types of palm oil milling residue.

Sime Darby sees higher profit with new genome super palms BY P. ARUNA 5 April 2016

Sime Darby eyes 15% better palm oil yield By Ahmad Naqib Idris / The Edge Financial Daily   | April 26, 2016
Major milestone for Sime Darby BY P. ARUNA  9 May 2016

Super Seed Identified to Produce More Palm Oil Using Less Land  May 09, 2016 Robert Hii Sustainable Business Consultant

30 Nov 2015: Organic is best for wildlife but "conservation grade" non-organic supports 20% more plants and butterfly species

Can farms be good for nature without being organic? - The organic-or-not debate ignores a crucial further option. Setting aside tracts of land for wildlife habitat can benefit bees, butterflies and plants without harming crop yields - Research found that organic farms are the best for wildlife, but conservation grade non-organic farms still support 20% more plant and butterfly species.... by Karl Mathiesen 18 November 2015

19 October 2015: Global obesity driven by Westernised diets pushed by food companies, MPOB promotions  in China and oil palm gene work

Global obesity rise puts UN goals on diet-related diseases 'beyond reach' - Westernised diets blamed as figures predict failure to meet 2025 target of no increase in obesity or diabetes beyond 2010 levels by Sarah Boseley and Helen Davidson in Darwin Friday 9 October 2015 17.19 BST

Ministry hopes for more R&D allocation in Budget 2016 Bernama | Published on October 06, 2015 14:38 MYT

MPOB to step up promotions in China 15 September 2015; "We are looking at not just promoting/exporting the oils but also other palm oil-based products. We now moving mainland towards the west to regions like Chongqing besides our tradition markets of Guangzhou, Shanghai and Beijing," he told Bernama on the sidelines of the Palm Oil Health and Nutrition Forum in Beijing on Tuesday. Wan Mohammad said the nutritional values of palm oil, its non-food applications as well as its usage in pharmaceuticals would be the key areas for MPOB in promoting the edible oil. He said MPOB was looking at not just exporting the edible oil but also palm-based products to achieve the gross national income (GNI) contribution target for the industry of RM178 billion by 2020. On whether anti-palm oil campaigns such as the "no palm oil" food labels in Europe would affect exports to China, Wan Mohammad said issues like environmental and deforestation played up in Europe would not surface in China. He pointed out that the ban on the use of palm oil in infant formula preparation in 2013 had been resolved following research results and effective action taken by Malaysian Government to convince the China Food and Drug Administration. Consumers in China have accepted palm oil as one of the important vegetables oil for consumption and imports of palm oil increased nearly 50% from 3.85 million tonnes in 2004 to 5.63 million tonnes in 2014. China's imports of palm oil from Malaysia stood at 3.9 million tonnes last year.

MPOB to focus on non-food applications, health benefits to promote palm oil in China September 16, 2015, Wednesday

MPOB, partners identify genetic secrets to help palm oil yield Published on: Friday, September 11, 2015

Mutation discovered in oil palm genes: a game changer? Copyright: Ian Teh / Panos. Scientists had noted that some prized oil palm clones grow into barren adults. The cloned palms turned out to have epigenetic mutation in mantled genes. Researchers are working to simplify the diagnostic test that will tag abnormal clones...

Stopping ‘bad karma’ could save palm oil industry millions By Niamh Michail+, 16-Sep-2015 Scientists have identified a genetic defect in oil palms, called bad karma, which reduces yields – a finding that could save industry both time and money, they say.

13 September 2015: MPOB pursues new palm-based products in neutra and pharma, MPOB partners identify genes for yield improvement, palm oil additive marketing questions

R&D to produce new palm oil-based products by Bernama  Sep 7th, 2015 10:57 am; Malaysia will continue to undertake research and development (R&D) to come out with new palm-based products, including nutraceutical and pharmaceutical, for the global community. Plantation Industries and Commodities Minister Douglas Uggah Embas said today the Malaysian Palm Oil Board's (MPOB) offices in the US, Europe, Africa, Pakistan and China would assist the industry by continually working with authorities and industry players to increase the uptake of palm oil for food and non-food sectors.... "These studies have proven that palm oil is indeed a nutritionally superior oil," he said. Success of industry has attracted detractors...

MPOB, Partners Identify Genetic Secrets To Improve Palm Oil Yield KUALA LUMPUR, Sept 10 (Bernama) -- The Malaysian Palm Oil Board (MPOB) and its research partners from the United States have identified genetic secrets to improve oil yield via the use of oil palm clones.  "Through the research on the oil palm genome, we have identified a transposable element named 'Karma', which is responsible for the low-yielding mantled fruit.  "The discovery has led to the development of a simple, leaf based test that can identify 'Bad Karma' and predict mantling before palms are planted in the field," MPOB said in a statement today.

Epigenetic Study IDs Locus Linked to Unfavorable Phenotype in Cloned Oil Palms Sep 09, 2015    | a GenomeWeb staff reporter  NEW YORK (GenomeWeb) – Muted methylation of the transposon Karma appears to explain the unpredictable, spontaneous production of oil palm clones with undesirable phenotypes such as abnormal fruit shape and low yield, according to a study appearing online today in Nature. Researchers from Malaysia and the US did an epigenome-wide association study (EWAS) to search for potential culprits in this spontaneous process, known as mantling, in the African oil palm plant Elaeis guineensis...

Palm Oil Additive May Not Stand Up To Scientific Scrutiny, Marketed as a healthier oil due to its apparent stability and lower oil absorption rates, Afdhal palm oil may not stand up to the scrutiny of critics.        Science and Development Network  | September 15, 2015  |  Editorials Read more from Asian Scientist Magazine at:

RSPO RT13: Reader feedback on HCS+ HCSA and RSPO convergence and more. RSPO Next "commensurate effort" and floor price efforts are no-go? Link for presentation downloads. Members terminated / suspended. EU’s Product Environmental Footprint (PEF) initiative.

RSPO Roundtable annual meeting was held in KL over three days, 17-19 November 2015 (well, there was also a reception on 16th evening).

24 Nov 2015: Reader feedback on HCS+ HCSA and RSPO convergence and more

Editor: Thank you for various reader feedback on several topics. One segment immediately below and incorporated into text further down.

Reader feedback on issue of HCS+ and convergence with HCSA and RSPO: By the way, HCS+ is proposing the Palm Oil Welfare Index (POWI). Is this required when growers are asked to do comprehensive SEIA /SIA / FPIC before any new development? Or is it the same data to be re-packaged under POWI? Some highly regarded new planting developments use the “simplified template for PalmGHG”. If growers feel the results from the simplified palmGHG is the answer to new development, then we can just forget about HCSA and HCS+?
Please also refer to other Reader feedback below in the relevant sections below:
  • A subtle shift with NGO support to push buying / take-up of certificates....
  • Lots of talk of smallholders.
  • Floor price?

23 Nov 2015: RSPO Next "commensurate effort" and floor price efforts are no-go? Link for presentation downloads. Members terminated / suspended. EU’s Product Environmental Footprint (PEF) initiative.

Editor: Have heard from RSPO observers that RSPO Next "commensurate effort" and floor price efforts are delayed and may end up no-go. Also note that EU’s Product Environmental Footprint (PEF) initiative: Fratini Vergano report
You can look at RSPO RT13 presentations here:
Other highlights from RSPO website:

Day 2 & 3: Market uptake problem, RSPO Next calls for "commensurate effort" but can quasi-matching get through legal compliance? Quality of audits. Floor price. Smallholders focus. Jurisdiction approach. Sec-Gen wrap up. A tame GA13? (updated 20 Nov morning to add what's new and data at top)

Below are abridged notes on selected talks and panel sessions at RSPO RT13. They are not comprehensive!

Editor's notes on what specialists say is new at RSPO RT13, includes:
  • A subtle shift with NGO support to push buying / take-up of certificates already in production and for RSPO Next to have take-up commitments. The acceptance of the idea of "commensurate effort" is novel. And something that CGM and Retailer sector would find new in the 13 years plus of RSPO. [Reader feedback: The first RSPO certificates were only available from year 2008 onwards, United Plantations was the 1st company in the world to receive the cert].
  • Call for comprehensive smallholder plan more or less acknowledges that trickle-down from corporate sector centric policies has been dissatisfactory. Will this find jurisdiction approach as sufficient? Audience was lackluster when asked on jurisdiction approach helping smallholders.
  • RSPO alignment-convergence with other (higher) voluntary pledges mooted and some details suggested. But do other NGOs really want to converge? Market share tussles have been quite apparent. If policy innovation effort is any indicator (but data indicators this year not good, see below) the question is: Is RSPO gaining back its mojo? This is helped by buyers and producers readjusting and realigning after the big changes triggered by the trader-processors sub-sector to pull to non-certification traceability.

Editor's notes for the data minded:
  • In LMC reports (; including presentation at MPOB PIPOC on cost of certification compliance driving the push toward non-certification traceability), this year's RSPO market share of global palm oil seen by some specialists as stuck at about 20pct. It has been increasing at 2pct-age points per year in recent years. So the slowdown this year raises many questions. Editor: This data point might explain the innovative moves on jurisdiction approaches to attract new membership volume, including for smallholders.
  • RSPO panelist notes the need for a lot of buying in the last 6 weeks of the year. There are many CGM and Retailer buyer pledges set for end 2015!
  • GreenPalm experts point out the drop in PKO certificates price and volumes. They reckon that the push up of PKO certificates to $80 plus has diminished demand volume. Worth checking this out.


Day 2. Opening ceremony for RSPO RT13.

Zainal Abidin rendered two hit songs. Hijau - Zainal Abidin

Biswirajan Sen of Unilever, RSPO head. Talked of Haze Crisis pointing to need for sustainable palm oil not avoiding palm oil. Focus on jurisdiction approach to simplify admin (ed: and cost?) and include smallholders and government. RSPO Next voluntary add (ed: help get back mind and market share?). Coalition of capable and willing with inclusiveness

Bakke of Sime Darby. Sustainable Palm Oil Manifesto spent RM12 million on HCS and socio-economic development studies. To varying degrees, there are commitments to sustainable development. RSPO has reached 20pct of global production and Sime Darby has reached 99pct. But only half is sold as certified product. He calls on buyers not to wait, but to buy. Calls on working on the rest of agriculture (palm oil as a small land use footprint). Step away from propaganda, and work openly and honestly. Small farmer are important. Developing countries lack the funds to subsidise. Developed countries don't have much natural forest left. We need equitable development. Sime Darby initiatives: a) A new platform - Open Palm - traces high proportion of FFB, CPO, PKO to mill and estate and b) To assist small farmers, look and act beyond boundaries for fire safe zone up to 5km.
Oil palm versus primary forest. University of York study for RSPO. Reporting oil palm at half of biodiversity and quarter of carbon versus primary forest. Fragments need to be over 10,000 ha to recover.

Quality of audits. Answering strong questions on credibility of RSPO audits. A panelist suggestion to break link the between company that hires the auditor by allocating the auditor at random. No other concrete answer. Resolution for GA later on this issue. RSPO says it will fix the situation.
Link: Dodgy auditors undermine palm oil group’s ‘sustainability’ claims 16 November, 2015

RSPO Next. Some worries about its take up rate and cannibalise demand for regular CSPO but RSPO reps strongly assure audience this will not happen! Look also at "free and fair labour" and "commensurate effort."  

Jurisdiction approach.
  • Sabah says it has to be competitive and needs to attract investors including for POIC project. Why would buyers focus on Sabah product. If palm oil market collapses, Sabah can still sell if it goes branded. Sabah confirms that its goal for 100pct CSPO is entirely RSPO.
  • Seruyan in Central Kalimantan. Its Bupati/Regent worries that deforestation has not benefited locals peoples. Sees palm and other commodity certification has the only way to help smallholders. Fears for loss of market access. Not sure yet which brand to adopt.
  • South Sumatra. It's Governor reports 200,000 smallholders for oil palm. It will work with assistance from IDH in a program that covers palm oil and other commodities.
  • RSPO explains that the jurisdictional approach is to reduce transaction cost for smallholders. Save on HCV assessment, HCS and SEIA by doing all this at landscape level as shared cost with government and NGOs. This will also remove need for HCV set-asides and allow land swaps. With such scale, individual smallholder transaction cost can fall. Question was asked to audience if the jurisdictional approach will help smallholders. Response perhaps less than half certain?
 Including smallholders.
  • Lots of talk of smallholders. A panel leader asked if there is a need for "RSPO Light" for smallholders as there has been a lot of talk of smallholders but few of them. [Reader feedback: Instead of making the requirements easier for smallholders, it was tightened further. They are certified under Group Certification. The first draft review was rejected by stakeholders (mainly grower) and the RSPO WG came up with the 2nd draft - still not yet approved. The requirement for smallholders is not much easier or simpler compared to what a large company has to do. There has not been much voice or bargaining from the smallholders all this while, in spite of having a seat. I am sure strong representation can do this more justice].
  • Editor: past promotion of smallholders has centered on talk of increased yield including startling big claims e.g. 50pct yield increase.
  • This time a RM150,000 study done by UPM on Keresa and Sapi mills taking into consideration tree age and other key factors. Editor: But questions remain on key issues: i) on cost of certification - not asked, ii) no clear presentation of before-after time periods for the changed outcomes, iii) with "to be certified" status included, perhaps not an unsurprising to see some focus on perceptions instead of hard data (more of the latter better?), and iv) clarification on who paid for what - did palm oil mills pay for smallholder groupings and extension services or was it MPOB?
  • From question from the floor on funding of reports, ISEAL panelist noted their efforts to encourage studies without directly paying for it. Panelist also raised question of RSPO transparently looking at possible negative outcomes of its programmes. Editor: Indeed, on the side-lines an NGO complained to me that one presenter was too concise about sources of funding: "That study was actually mostly paid for by xxxxx! Why wasn't that mentioned?" But I do think that if you do need a specific study, you may need to fund it - but that does means that the study has to be more rigorous than ever!
Floor price? Ceres asked about floor price on certificates set at smallholder costing. MPOA notes that asking smallholder to make a "leap of faith" to achieve only a 20-50c premium is a problem! There needs to be buy in from smallholders i.e. there need to be solid financial benefits. Committee is being set up to look at the floor price question. Editor: Some very senior agriculture specialists worry that a floor price would become the traded price and would end up distorting the economics of certification. [Reader feedback: For many years the RSPO ex-president (Jan Kees Vis of Unilever) has made it clear that there should be no discussion on premiums for CSPO etc. This is apparently against competition rules. I thought premiums are based on willing buyer,willing seller basis?]

RSPO Sec-Gen's wrap-up comments. Includes:
  • "Beli yang baik" consumer campaign in Indonesia.
  • Singapore's "Axe the Haze" consumer campaign. He notes that buying RSPO products is one part of the solution, but that alone cannot save the haze problem.
  • Markets. CFNA participation about China market and looking to sustainable guidelines for China investments overseas. UK collaboration via Infit (fact check needed). Editor: Attendees point out that China and UK say they will commit to RSPO and other credible programmes. Link: RSPO statement on UK progress report News, 18 November 2015
  • EU has goal for 100pct sustainable. Latest national alliance (to drive uptake) is for Italy.
  • Remediation and HCV Compensation Procedure policy has been endorsed by the Executive Board. This was 4 years in the making. (Editor: Specialists note that NGOs were surprised by relatively low level of compensation funds generated by the RSPO companies. but this policy is regarded as being a limiting factor in new grower membership sign-ups).
  • Those not submitting ACOP reports will be taken to task. 15 members have been terminated and 20 suspended with due process. Action taken last year too.
  • RSPO members need to band together to mitigate the haze. RSPO will convene the best on this. Certified areas are safe haven from rampant fires. How to help outside concessions? Concession map disclosure is important (Editor: legal position is that information may be voluntarily released by the company in Indonesia and many countries but Malaysia map release legality not checked yet?). Look and act beyond boundaries. In 6 months, to come out with something concrete on this.
RSPO GA13. Includes financial report. RSPO update on its smallholder fund - noting slow disbursement trend. Proposal from Oxfam, something long needed - a comprehensive smallholder focus (voted for strongly at 186). Code of conduct resolutions to strengthen action on members not promoting palm oil. Committee set up to look at floor price. Editor: Broadly, no major contentious resolutions as some in audience says RSPO issues are in maturity (and specialists also say some contentious issues were taken off!).

Post GA ruminations. Editor: RSPO Next expected to generate some legal compliance worries resulting in time out for possible reconsideration of committed ratios / volumes matching approach.


Editor's notes for Day 1.

Editor's notes and items noted by industry: a) "Free and fair labour" concept which includes living wage and industry note on problems of casual labour, b) apparent dial-back on RSPO HCV Compensation which has been challenging RSPO membership growth - specialists note simplifications of the matrix into two columns (instead of three which previously differentiated members with certified units and members without) and provision for certificates even after a tough Compensation status (not entirely surprised given the halt in production capacity market share growth at 19-20% this year and uncertainty driven by HCV Compensation?), c) Convergence talked of for HCS methodologies of RSPO GHG Calculator, HCS+ of Sustainable Palm Oil Manifesto, and Greenpeace's HCS Approach (which does notes it is different in protecting young regrowth trees), d) Marketing efforts in China and India - RSPO promoters continue to ask for tariff differential to favour CSPO in India, e) Side-lines chatter about the relative silence on the Haze crisis, f) intriguing to see how mills market themselves for traceable-to-mill GreenPalm certificates, g) oleochemicals wondering about traceable oleo amidst frank views by L'Oreal that its buyers only really care about safety and animal testing issues, h) Lots of talk of including smallholders and government, both of which lacked clear focus for quite a while but now to receive more attention and i) the related shift to jurisdictional marketing (sub national units eg. South Sumatra with IDH and Sabah with RSPO?).
I am attending RSPO RT13. First talk attended on social and labour issues. Prevalence of casual plantation workers, lack of independent unions, need for living wage, problem of forced labour and female workers issues discussed.
HCS+ study sets 75tC/ha hard threshold within carbon neutral approach and seeks more benefits to smallholders and fairer model. Looking to converge with Greenpeace's HCS Approach.
Greenpeace HCS Approach for landuse planning. Reports Asian Agri and BASF to join. Not just palm oil but also for pulp and paper, rubber and soya. Geographic expansion to Africa and Lat Am.
At RSPO RT13 talk on FFB supply chain issues. Talk by WWF Indonesia.
Traceable Greenpalm certificates coming January 2016!

On attendance, organizers report 800 plus. Still strong despite switch from Bangkok venue plan. Expert observers reckon on 1/3 new faces including lots of apparent non Asia origin young executives and many NGOs new to palm oil scene.

Smallholders: Links for RISDA and FELCRA of Malaysia, Over 400,000 oil palm smallholders in Malaysia eye MSPO certification says NASH (independent smallholders are those with under 40 ha of oil palm land); Indonesia targets 5.5 million ha of forest to local people with 2.5 mill ha targeted for 2015 with 20% from forest concession areas (forestry companies raise concerns); Pope Francis urges rights for downtrodden against "new colonialism"; RM900 per Felda settler dividend plus "duit raya" / Eid gift but not for some 13,947 settlers (about 6.5% of total) who have sued Felda or who have not participated in Felda replanting, carried out unauthorized activities or sold produce outside Felda

18 October 2015: Links for RISDA and FELCRA of Malaysia

RISDA is big. 1 million ha. and can compare to 2002. and news here: and Objective: Smallholders earn at least RM2, 500 per month by the end of 2015 the family.

14 July 2015: Over 400,000 oil palm smallholders in Malaysia eye MSPO certification says NASH (independent smallholders are those with under 40 ha of oil palm land)

Big boost for small palm oil planters in Malaysia Hanim Adnan, The Star/ANN, Petaling Jaya | Business | Mon, July 06 2015, 3:58 PM; Over 400,000 oil palm smallholders in Malaysia will finally get to see their estates certified as producers of sustainable palm oil under the Malaysian Sustainable Palm Oil (MSPO) certification standard initiated by the Government.With an initial fund of 50 million ringgit (US$13.2 million) allocated for this purpose, many independent smallholders are more receptive towards getting the MSPO certification, compared with the stringent rules and costly auditing process imposed on them when trying to acquire Roundtable on Sustainable Palm Oil (RSPO) certification, which is the world’s first palm oil certification standard. “For independent smallholders with oil palm land size of 40 hectares and below, it is just too expensive to fork out the certification fee of 10,000 ringgit to get the RSPO agents to audit their land.“The stringent rules have also put off their interest to be RSPO-certified,” says National Association of Smallholders (NASH) president Aliasak Ambia. Unlike the organised smallholders under the Felda settlers scheme whose cost for RSPO certification is mostly supported by Felda, independent smallholders in the country lack the financial back-up to undergo RSPO auditing, he says.“What more with the stringent RSPO auditing which often questions local smallholders on their crop yield, and, agricultural and management practice which has resulted in many smallholders in Indonesia, Thailand and Malaysia rejecting the RSPO sustainability movement,” says Aliasak. - See more at:

Could Europe’s drive to segregated palm oil exclude small producers? By Caroline Scott-Thomas+, 02-Jun-2015 A European push toward segregated certified sustainable palm oil may inadvertently exclude smaller producers from the supply chain, says GreenPalm manager Bob Norman.

10 July 2015: Indonesia targets 5.5 million ha of forest to local people with 2.5 mill ha targeted for 2015 with 20% from forest concession areas (forestry companies raise concerns); Pope Francis urges rights for downtrodden against "new colonialism"

Pope Francis on Thursday urged the downtrodden to change the world economic order, denouncing a "new colonialism" by agencies that impose austerity programs and calling for the poor to have the "sacred rights" of labor, lodging and land.... In one of the longest, most passionate and sweeping speeches of his pontificate, the Argentine-born pope also asked forgiveness for the sins committed by the Roman Catholic Church in its treatment of native Americans during what he called the "so-called conquest of America." .... Quoting a fourth century bishop, he called the unfettered pursuit of money "the dung of the devil," and said poor countries should not be reduced to being providers of raw material and cheap labor for developed countries.....

New ruling upsets forestry firms | The Jakarta Post; Indonesia. The government has set a target of allocating 5.5 million hectares of forest to local people in the next four years, the majority of which will be taken from around 30 million hectares of existing forest concession areas...... This year alone, the government plans to give 2.5 million hectares of forest to local people, with 20 percent from concession areas..... Forestry companies have raised concerns over a new ministerial regulation that requires them to allocate at least 20 percent of their existing concession areas t…

8 July 2015: RM900 per Felda settler dividend plus "duit raya" / Eid gift but not for some 13,947 settlers (about 6.5% of total) who have sued Felda or who have not participated in Felda replanting, carried out unauthorized activities or sold produce outside Felda; Najib points to FGV hopes for 420,000 hectares in PNG

Dividends and aid for Felda settlers  By Syed Umar Ariff and Teoh Pei Ying - 7 July 2015 @ 8:18 PM;  JELEBU: Prime Minister Datuk Seri Najib Razak today announced a total of RM88.8 million in Felda Global Ventures Holdings Bhd (FGV) dividends and raya aid that would be distributed to almost 100,000 Felda settlers nationwide. Out of the total, RM59.2 million were FGV dividends and RM29.6 million raya aid to 98,688 Felda settlers. "I hope that the raya aid will ease the financial burden of settlers in preparation for Hari Raya. "But those who are Felda settlers but do not participate in Felda schemes, or do not send their crops to Felda will not receive dividends or duit raya," said Najib at the break of fast event with settlers in Felda Pasong 4. Najib said payment would be made on July 13. The payment of the dividends were of 6 cents interim dividend, and 4 cents final dividend. Also present was Negeri Sembilan Menteri Besar Datuk Seri Mohamad Hasan and Felda chairman Tan Sri Mohd Isa Samad.

Najib announces RM88.8 million for Felda settlers, payment starts next week Published: 7 July 2015 8:39 PM; "We need to be with Felda, do not stray too far away... actually those who confuse Felda people are those who come to Felda like pests out to poison the minds of settlers so much so when we do good, the people say otherwise," he told Bernama. He said Felda has various plans to improve the income of settlers and overcome the constraints of land to be developed as plantations in the country. He added that FGV planned to purchase 420,000 hectares of land in Papua New Guinea which could generate revenue double the amount in this country as the volcanic land there is fertile. - See more at:

Anak sees red with Felda by Malaysiakini 1:53PM Jul 8, 2015; National Felda Settlers' Children's Association (Anak) has slammed Felda for depriving settlers of their annual payment for initiating legal action against the agency. This is after Prime Minister Najib Abdul Razak yesterday announced a RM600 dividend and RM300 "duit raya" for Felda settlers but excluded those who had sued Felda. Settlers who refused to participate in Felda's replanting scheme, carry out land activities without its authorisation or did not sell their produce to Felda were also excluded. Anak president Mazlan Aliman (photo) described this as a victimisation of settlers and an act of revenge.  "If they sue Felda.. It is the settlers' right as enshrined in the Federal Constitution. Several Felda settlers had sued the agency, claiming Felda cheated them by using an inferior grade to determine the purchase price of their oil palm fruit even though they were of superior quality. Mazlan said a total of 13,947 settlers were denied payment for the second year in a row....

27 June 2015: PAS bids Anak chief goodbye but vows to keep helping group ; MPOB getting tough with rogue planters and middlemen, 23,000 Sarawak Smallholders Licensed To Sell FFB

PAS bids Anak chief goodbye but vows to keep helping group Published: June 16, 2015 04:07 PM GMT+8; PAS bids Anak chief goodbye but vows to keep helping group Published: June 16, 2015 04:07 PM GMT+8 Share this article - See more at:

MPOB getting tough with rogue planters and middlemen — Uggah Posted on May 24, 2015, Sunday; SRI AMAN: The Malaysian Palm Oil Board (MPOB) has received 300 complaints of theft from oil palm planters with 13 people caught, 24 planters given show-cause letters and eight vehicles confiscated. Minister of Plantation Industries and Commodities Datuk Amar Douglas Uggah Embas revealed that the cases were recorded in Miri and Sibu areas. “For this, I am giving a warning to factories not to buy stolen oil palm fruits from any unknown parties and we have directed factories to have a record of fruit bought from genuine licensed planters,” he said at a press conference after officiating at the Transformation and Development Programme for small oil palm planters in Sarawak held at Hotel Sri Simanggang here yesterday. “We also do not allow these planters to sell two tonnes at one time in a month and 24 tonnes a year. There is a system where the factory must refuse to buy fruits from planters when it has exceeded two tonnes   he added.Uggah also wants collection centres to submit reports to MPOB with a list of sellers including the tonnage and the centre’s total purchase figures.

‘Ops Sawit Kenyalang’ a success — Sulim Posted on May 25, 2015, Monday SIMUNJAN: Malaysian Palm Oil Board (MPOB)’s `Ops Sawit Kenyalang’ that was launched last July has achieved remarkable success with at least 800 new licences issued monthly to smallholders throughout the state. MPOB Sarawak regional head Sulim Lumong said the monthly 800 new licencees represented an increase of 600 new licencees when compared to the figure before the launch of the special operation. “For the month of April this year, we approved 1,414 applications. Up to date, we have 23,000 licenced smallholders with a total area of 140,188 hectares for the whole of Sarawak,” he said when met by reporters at a new palm oil plantation site at Kampung Sg Alit here yesterday. Sulim pointed out that the big increment happened after the government implemented the ‘two tonnes per hectare’ policy. “A lot of smallholders did not apply for the licence because they can tumpang (ask help for sale) here and there. When we implemented the policy, they cannot sell already. So they got no choice but to apply.” He said farmers were not required to register when they first started out, but a smallholder licence must now be acquired before they could sell the fresh fruit bunch (FFB). Read more:

RM1 million federal aid for 95 oil palm smallholders by Lim How Pim, Posted on May 25, 2015, Monday; SIMUNJAN: Ninety-five smallholders in Kampung Sg Alit here have received federal subsidies totalling over RM1 million for planting oil palm. Minister of Plantation Industries and Commodities Datuk Amar Douglas Uggah Embas said the subsidies were for land preparation and purchase of seedlings, fertilisers and pesticides. “The total area is 118 hectares and RM9,000 is given per hectare. This is for a period of two years and should enable the smallholders to produce fresh fruit bunch (FFB),” he said when met by reporters after presenting the subsidies to representatives at Kampung Sg. Alit, about 100km from Kuching yesterday. Present was Minister in the Prime Minister’s Department Nancy Shukri. Uggah said the government also granted subsidies of RM3,000 per hectare for smallholders who were not participants of the Smallholders Development and Transformation Programme. Each family is entitled to such subsidy for a maximum of three hectares. “We notice some smallholders are keen to plant oil palm so they buy seedlings and do land preparation themselves. But along the way they have problems buying the inputs, and that’s where we come in to support them. Read more:

23,000 Sarawak Smallholders Licensed To Sell FFB  Published on Monday, 25 May 2015 07:35; SIMUNJAN -- Some 23,000 smallholders in Sarawak are licensed to sell oil palm fresh fruit bunches (FFB) as of April this year, said Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas. He said this involved 140,188 hectares of land cultivated with oil palm. "In July 2014, when the Ops Sawit Kenyalang crackdown was launched to curb theft of FFB, only about 200 smallholders had the licence. "Since then there was a rush for the licence. We are very strict now, all millers and collection centres must submit names of sellers of FFB each month the Malaysian Palm Oil Board (MPOB)," he told reporters after handing over oil palm seedlings to farmers of the Kg Sg Alit Oil Palm Cluster in Simunjan, Sunday.

23 June 2015: Palm oil a matter of national security for Malaysia (especially for smallholder interests) - opinion - /khorreports-palmoil/2014/11/rspo-meeting-sabah-considering-100.html

22 June 2015: While the FGV-EHP proposed deal has raised market concerns, an argument for the deal: it is a strategic partnership to benefit smallholders and other stakeholders?
FGV-EHP partnership: a way forward to prosperity for two nations – HS Dillon Published: 20 June 2015 12:49 PM; The recent press statements reporting that Felda Global Ventures (FGV) intends to buy a substantial stake in EHP, and the ensuing debate, revive old memories. It is indeed remarkable that what had been my dream as a senior official of Indonesia's Ministry of Agriculture, thwarted by vested-interests nearly quarter of a century ago, is now being promoted by visionary entrepreneurs.
Obsessed with creating greater equality in rural Indonesia, I gladly welcomed my appointment as Head of The Team for Restructuring State-owned Plantations in 1993. Due to strong support from the then very honest minister of finance, Marie Muhammad, we managed to consolidate the previous 26 separate corporate entities into nine plantation groups. Talking to the press after the brief meeting, the PM stated that Malaysia, facing land constraints, had no other option but to invest in oil-palm plantations in Indonesia. We then started to explore avenues for cooperation with senior Malaysian officials, including private placement into our state plantations. With the best Malaysian plantation management practices, utilising state-of-the-art technology, and good corporate governance, we could have launched an IPO within five to six years after entering into such a partnership. Therein, the Malaysian investors would have reaped relatively quick yields, and our state-owned plantations would have ranked among the best. Of course, the powers that be in Indonesia, gleaning rents from the status quo, did not allow this to materialise; but that is a different story.... Most of the current exchange has revolved around whether the Heads of Agreement signed last week by the two parties is commercially sound, in the narrow sense of generating immediate profits for their shareholders....But that which has been omitted from the exchange is what interests me the most: the smallholders and other stakeholders. This is more than just another B2B deal, it is a People-Private Partnership on both sides. Most observers apparently are not aware of the genesis of FGV, and do not realise that more than a 100,000 members of Felda are shareholders. Around 60 years ago, former prime minister Tunku Abdul Rahman decided to launch a massive initiative to help poor rural households climb out of poverty, who at point were not very different from their Indonesian cousins.....Education and rural infrastructure managed to lay the foundations of a productive middle-class. Now the descendants of the erstwhile poor Malaysian smallholders have become bosses, with oil-palm holdings being tended by the progeny of the still poor rural Indonesian households. Indeed, by overcoming rent and wage barriers to expansion, this FGV-EHP partnership should enable Felda members to continue earning handsome returns, but around the same number of Indonesian smallholders already partnering with EHP in contract-farming schemes, also stand to benefit.....FGV institutional memory would be better suited to striking rapport with rural Papuan households, for instance, than the colonial institutional memory inherited by a number of Indonesian plantation managers.....What would be the repercussions, or what economists call second-round effects? Other Indonesian plantation groups might enter into such partnerships to remain competitive...

1 May 2015: The Corporate Capture of Sustainable Development by Leslie Sklair; /khorreports-palmoil/2015/05/the-corporate-capture-of-sustainable.html

29 April 2015: Could the fall in palm oil prices be good news for farmers?

Also on Felda settler smallholders here: /khorreports-palmoil/2015/04/felda-settlers-study-sneak-peak.html

Could the fall in palm oil prices be good news for farmers? By Jaboury Gazoul  Apr 24 2015
Thus when the palm oil price declines, so does fertilizer affordability. The capital and credit available to large commercial oil palm companies buffers them from low prices, and allows them to continue to purchase and apply fertilizer. Capital and credit are not so readily available to smallholders. Even when smallholders have ready access to fertilizers through links to companies, their fertilizer costs are deducted from their Fresh Fruit Bunch sales to these companies. Consequently, smallholders have been reducing fertilizer inputs, and yields on smallholder plantations in Indonesia are declining. The gap between the success of large company plantations and that of smallholders is widening
..........The situation in Africa is very different. In West Africa, the development costs of large palm oil estates are more than twice as high as in Indonesia. These ventures are profitable only if the price of palm oil remains high. With low prices, these actors are now rethinking their investment and development strategies. Many projects have greatly downsized, postponed or abandoned oil palm development altogether. Structural factors such as the availability of, and access to, land for development is a key limitation, but this has been exacerbated by the current low prices for palm oil. Some companies, however, have sought to increase partnerships with the smallholder sector through outgrower schemes. Such schemes comprise a central milling facility that is supplied by smallholders who receive inputs and technical assistance from the company. In this way, the industries can meet their production targets while shifting the burden of development onto smallholders who become indebted to banks for the extended credit. Smallholder debts are gradually repaid as the Fresh Fruit Bunches are delivered to the industrial mill. In the past governments had to “force” companies to engage with smallholders, but today outgrower schemes are high on the companies’ agenda. This opens a window of opportunity for small-scale farmers to enter the sector, benefiting from a more level playing field. It also, however, exposes them to higher risks. If the palm oil price continues to drop, smallholders might prove unable to repay their Cameroon, smallholders will have room to grow, but limited support will stymie their efforts to do so. The new National Strategy for the Development of Sustainable Palm Oil Production will likely oblige companies to work with smallholders, but the extent and depth of this obligation remains uncertain.....In Colombia, the combination of low palm oil prices and bud rot disease, which afflicts around 25% of the planted area, affect the viability of the oil palm sector, reflected by the recent decline in the oil palm expansion. High production costs already make the sector heavily reliant on governmental incentives. Low prices and widespread disease is sapping the political will for continued support of this sector (an issue that is further complicated by government negotiations with rebel groups who hold sway in some areas where oil palm is grown). At present, smallholders and other producers are buffered from low international prices by a national price stabilization fund and import tariffs (and a large domestic biofuel market), but this only serves to increase the sector’s dependency on government support to maintain market competitiveness............So the effect of palm oil price declines on smallholder communities varies by region. It is not always bad, but neither is it obviously good. In Africa at least, concerns about massive ‘land grabbing’ by oil palm companies in Africa are somewhat alleviated for now. Smallholders might capitalize on this hiatus, but only if they can overcome the barriers to entry. Ironically, it is company outgrower schemes, as developed in Indonesia and increasingly in West Africa, that might be the means by which these barriers are overcome. Should this be achieved, then preferential expansion of oil palm by smallholders might hold the seeds for a more equitable distribution of economic benefits. It might also allow for more heterogeneous and patchy landscapes, which is good for biodiversity. This possible future needs support and facilitation by large oil palm companies, producer states, but also by corporate buyers who have social responsibility to promote livelihood and environmental sustainability......This article is published in collaboration with ETH Zurich. Publication does not imply endorsement of views by the World Economic Forum....

16 February 2015: RSPO certification and compliance cost cited at just over RM400,000 per site per year (50 smallholders @50 hectares)

Info cited of a real quote on smallholder RSPO certification costing from a service provider. About RM400,000 per site per year; for a site comprising 50 smallholders of 50 hectares each. We did ask, but the name of service provider is not disclosed at this point. We know a handful are active in this sector. The conclusion is that the current premia indicate break-even for such a smallholder (assumes 100 percent of certificates sold under mass balance); which means no incentive to certify unless with the financial support of a large company. Bottom line: companies with processing assets can garner more from RSPO certification; the premia gains are out of reach of smallholders.
First posted here on 14 Feb 2015: /khorreports-palmoil/2015/02/attended-mpoc-forum.html

Note: The lack of incentive for smallholders then ties in with the rising effort of large companies to create special support programs. Olam has been active on smallholder projects - its core business is about gathering numerous products from many smallholders. Also note the Danone and Mars project below.

12 February 2015: Danone and Mars move on smallholder sustainability and livelihoods with fund - debt finance, farmer incomes, carbon credits...

Danone and Mars launch £79m fund for smallholder farmers The Guardian - ‎Feb 5, 2015‎
Fund will prioritise key crops including vanilla, cocoa, sugar and palm oil, but Oxfam says multinationals need to improve everyday dealings with smallholders... This content is sponsored. by Oliver Balch. Thursday 5 February 2015 07.29 EST.... Danone and Mars, two of the world’s largest food multinationals, yesterday announced their intention to invest €120 million (£79m) over the next decade in an investment fund aimed at increasing the productivity of smallholder farmers.... The Livelihoods Fund for Family Farming will make between four and five investments per year, averaging around €3-5m (£2.3m-£3.8m) each. The projects, which will span Africa, Latin America and Asia, will focus on low-tech, sustainable farming practices that are easy to adopt and quick to scale.... The rationale behind focusing on the world’s 500 million family farmers is self-explanatory, according to Victoria Mars, chairman of the board at the eponymous US confectioner whose brands include M&Ms, Twix and Snickers. Smallholders make up over 70% of the world’s production of raw materials, she notes: “So if we’re going to have all the ingredients we need to make our products, we have an interest in helping them.”.... Danone and Mars hope other companies will follow their lead and invest additional equity in the fund. Likewise, the two companies are talking with government agencies and international lenders about possible debt finance.... the returns are unconventional. For starters, social and environmental factors weigh alongside economic concerns. Key output measures of those projects backed by the fund, for example, will comprise increases in farmer incomes, improvements in farmer livelihoods and benefits to the environment (especially carbon emissions mitigated or sequestered through reforestation).... Any financial returns will be used to repay any debt raised, with the remainder reinvested in future projects. In some cases, private investors may also be eligible for carbon credits that can be traded or used to offset their emission reduction obligations.... The fund isn’t entirely without precedent. In 2011, Danone launched a carbon investment fund, which has today grown to around €40m and counts nine other corporate investors, including Schneider Electric, Crédit Agricole and Hermès. The fund has so far financed the planting of 130m trees that it claims will sequester an estimated 8m tonnes of carbon dioxide....