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Segi Enam Research
At Roundtable (RT) 2022 - Day 1 Observations
At Roundtable (RT) 2022 - Day 1 Observations
Segi Enam Research
PalmTrack—Sep 2022 Wrap Up
PalmTrack—Sep 2022 Wrap Up

At Roundtable (RT) 2022 - Day Two

On the second day of #RT2022, we attended a few presentations which focused on the topic of enhancing workers' rights and reducing climate change. Segi Enam’s Khor Yu Leng was also invited to present the future of consumption and production patterns of palm oil. Day One observation can be found here.

The presentations were on “Enhancing Human Rights and Labour Rights, Adapting to Future Due Diligence and Deforestation Legislation”, the panels spoke about the proposed EU Deforestation Legislation. Key points from this is that EU businesses will need to know where the product comes from and that RSPO certification is not sufficient. The panel also shared on the EU future plans for supply chain legislation, Corporate Sustainability Due Diligence Directive and Forced Labour Regulation.

Source: RSPO (2022)

In the presentation on “Operationalising Labour Standards in the Palm Oil Sector”, the panel discussed how companies can do better to improve labour standards. The speakers were from industry and they shared how grievance mechanisms are important but the moderator also stressed the importance of the need to balance the power between workers and employers for it to be effective.

Segi Enam’s Khor Yu Leng spoke on “Future Proofing the RSPO - The State of Palm Oil 2050”. She curated findings about the future of consumption and production patterns of palm oil (in the context of other vegoils) with major forecasts for expansion according to key end uses. This is led by volumes from liquid biofuels (renewable diesel, sustainable aviation fuel), an uptick in oleochemicals (think hand wipes, sanitizers and the cleanliness drive of the Covid pandemic; and also for animal feed), but with more muted expectations for the rising food use of vegoils. See screenshots and comments in (I) and (II) below.

Source: Presentations at RSPO RT, annotated by PalmTrack, yuleng@segi-enam.com, 2 Dec 2022

The key narrative for palm oil’s yield per hectare needs to be replaced by a comparative on palm oil’s carbon footprint. The presentation by Jannick Schmidt (see III, IV above) highlights:

  • A certified palm oil benchmark is almost as good as sunflower oil, but rapeseed oil is significantly better on a CO2e per kg oil measure.

  • This certified palm oil benchmark is a bit better than diesel on a CO2 per km measure.

In the question and answer was a point about the lack of a business model for nature conservation. In that regard, readers should note how conservation is a notable part of United Plantation’s transition to a lower carbon footprint and also refer to the large-scale conservation project of the Rimba Collective for 500,000 hectares of conservation and restoration.

Yu Leng was also invited to speak at two side events.

At the Rimba Collective’s “Delivering on Half a Million Hectares of Forest Conservation & Restoration”, where she talked about the multi-year journey of palm oil to reach a large-scale conservation mindset. She emphasized data (transparency), scale and governance.

Rimba Collective, “Delivering on Half a Million Hectares of Forest Conservation & Restoration”: From the left: Neil Judd (Senior Advisor at Lestari Capital), Reuben Blackie (Manager, Sustainable Agriculture at PepsiCo), Girish Deshpande (Global Sustainability Director at Proctor & Gamble), M R Chandran (Advisor to RSPO), Khor Yu Leng (Segi Enam)

At Fortasbi’s 3rd Appreciation Event, she gave her insight into China’s Palm Oil Market.

Khor Yu Leng of Segi Enam speaking at Forstabi’s 3rd Appreciation Event.

Asked to speak about China market opportunities for Indonesia independent smallholder (ISH) RSPO Credits, we referred to two key reports in which Segi Enam was author/co-author:

Source: Presentations at FORTASBI event, referring to two WWF reports on sustainable palm oil market, compiled by PalmTrack, yuleng@segi-enam.com, 2 Dec 2022. Link to the presentation.

Fortasbi also awarded their top 12 buyers at the event. They were:

  • Unilever

  • PepsiCo 

  • ACT Commodities

  • Proctor and Gamble

  • Saraya

  • Nestle

  • Estee Lauder

  • Werner & Mertz

  • Blommer Chocolate

  • KAO Corporation

  • Give and Go Prepared Foods Corporation

  • Johnson and Son

There were also exhibition booths by various NGOs and other palm oil-related organisations promoting their sustainable initiatives.

Proforest

Rainforest Alliance

High Carbon Stock Approach (HCSA)

Sime Darby Plantations

Palmoil.io

Fortasbi

We will post further views for PalmTrack (subscribers only).

research@segi-enam.com | 2 Dec 2022

At Roundtable (RT) 2022 - Day 1 Observations

From 28 to 30 November 2022, the Segi Enam team attended the RSPO’s Roundtable (RT) 2022 #RT2022 at the Shangri-La Hotel, Kuala Lumpur, Malaysia. The theme was “Scaling up the sustainable palm oil value chain through collective action.”

We contributed to the judging effort for the conservation and smallholder segments of the RSPO Excellence Award, with Yu Leng as one of the three judges, alongside conservationists Dr Erik Meijaard and Dr Nadine Ruppert. The awards were given out at the evening event preceding two full days of conference proceedings on 29-30 November.

Day one kicked off with a celebration of smallholder certification:

Palm Oil Smallholders receiving certification

Professor Tan Sri Dr Jemilah Mahmood gave the keynote speech. In her down-to-earth address, she touched on issues related to the palm oil industry and stressed that more needs to be done. The open questions about palm oil include those on zoonotic diseases, air and water pollution, floods and impact on indigenous people.

Dr Jemilah Mahmood giving keynote speech

There were 13 discussion sessions (over two days) covering issues related to sustainability, conservation, certification and labour rights. We attended presentations on “The Asian Dialogue - Catalyst for Sustainable Palm Oil”, “Balancing the Needs of People, Planet and Prosperity in Sustainability Standards” and “Ensuring the Development of Sustainable Palm Oil Drives Smallholder Inclusion at Scale”, and had numerous meetings on the side lines, which covered diverse topics from labour issues to smallholder inclusion. We also looked in at evening events hosted by Musim Mas and WWF.

The Asian Dialogue - Catalyst for Sustainable Palm Oil. Key points on the businesses in Asian countries are promoting sustainable palm oil products. SuperIndo is the first business to promote RSPO certified palm oil in Indonesia.

Balancing the Needs of People, Planet and Prosperity in Sustainability Standards. Key points on how to achieve sustainability and not leaving certain stakeholders out.

Please, view the list of discussion sessions and speakers here, and presentations can be accessed here. RSPO also published its Impact Report 2022. Below are some excerpts from it. We will post further views for PalmTrack (subscribers only).

Indonesia and Malaysia remain the largest producers, collectively 80% of the CSPO volumes.

Growth in RSPO Certified Area. Stark increase in RSPO Certified Area in Africa.

Certified smallholders (scheme and independent), 22,000 globally with 65,603 hectares and FFB production at 1.2 million Biggest is in Indonesia, where there are 10,953 farmers, with an area of 26,839 hectares.

research@segi-enam.com | 2 Dec 2022

MTCC Stakeholder Dialogue

Segi Enam attended a Stakeholder Dialogue at Tamu Hotel & Suites Kuala Lumpur organised by the Malaysian Timber Certification Council (MTCC) from 31st October to 1st November 2022. Former Minister of Plantation Industries and Commodities opened the dialogue emphasising the need to focus more on the upstream market with concerted efforts to comply with US and EU regulations. The keynote address by Dr Michael Berger, CEO of Programme of the Endorsement of Forest Certification (PEFC) was focused on the recent policy change by Forest Stewardship Council (FSC) on the cut-off date. During the FSC General Assembly in Bali on 13th October 2022, the members passed Motion 37/2021 which changes the cut-off date for authorised forest conversion from November 1994 to December 31 2020. Read more about it here.  


CEO of MTCC, Siti Syaliza Mustapha spoke about Malaysia’s commitment to maintaining 50% of forest cover. Currently, approximately 5.6 million ha is certified by Malaysian Timber Certification Scheme (MTCS), which is also looking to expand certification to non-timber forest plantation products, primarily natural rubber, bamboo, rattan and honey/honeycomb - essentially rubber and NTFPs gone industrial. There is also ongoing work to maintain its status with PEFC every 5 years and plans to look into the European Union (EU) new deforestation regulation.

The dialogue was separated into a few different sessions, each with its own focus. Stakeholders from various groups were invited to speak and share their thoughts, and the meeting was convened primarily on the new non-forest certification draft titled “Guidelines on Application of Requirements for Non-Timber Forest Products Certification in MTCS ST 1002:2021 Malaysian Criteria and Indicators for Sustainable Forest Management under the Malaysian Timber Certification Scheme”. 

Source: MTCC (2022)

In the first session, “Policy and Direction of Forest Plantations in Malaysia”, the Malaysian Timber Industry Board, Forest Development Sarawak and Sabah Forestry Department shared about the current status of Malaysia’s forest plantations and the latest goals for forest plantations. There are concerns about the lack of workers and the lack of markets. 

The second session focuses on the current and future trends of timber. As reported by MTC, Malaysia's total timber trade for 2022 (up till August) is at RM23.5 billion (Export: RM17.4 billion; Import: RM6.1 billion). Exports to the USA, Japan, Singapore and Australia grew at double digits; dominated by (45%) wooden furniture. 

Source: MTCC (2022)

Source: MTCC (2022)

The various challenges in obtaining certification include labour, the previous cut-off date by FSC and land dispute issues. 

Green Building Index (GBI) presented a brief of its rating tool which was launched in 2009 to assess and recognise buildings that meet the green standards; unfortunately, use of certified product is only one out of its 100 indicators, which is hardly encouraging of its use!

During the panel discussion, the main focus was on how stakeholders are affected by forest certifications, whether the 2010 cut-off date is still relevant and what are the impacts of any changes in the cut-off date. Seems that forest certification to some extent greatly affects businesses due to compliance but certification also helps to protect native people’s way of life. However, it seems new players in the timber industry find it difficult to be certified due to the 2010 cut-off and will benefit from the changes in the cut-off date.

The second day of the dialogue was on non-timber products. Main focus on bamboo, herbal plants and Agarwood. Global Platform for Sustainable Natural Rubber (GPSNR) also presented its involvement in the natural rubber industry and its future plans to develop the Knowledge Sharing Platform for Smallholders. In 2021, GPSNR published the Good Agriculture Practices which can be found here.


The final presentation of this session created much buzz. The Malaysia Forest Funds (MFF) introduced the country's REDD Plus plan, to help Malaysia’s commitment to achieving net neutrality under the Paris Agreement. Read more about it here, and in our upcoming blog post on it.

Source: MTCC (2022)

Source: MTCC (2022)

MTCC discussed further details of the draft guidelines on the Certification of Non-Timber Forest Products (NTFP), asking participants to provide feedback. From the floor, this included comments about the need for a more defined term as to “appropriate safety and operational equipment”, more commitment to help smallholders, to expand the coverage to plantations outside of forest areas and not to affect the rights of indigenous people. A remark was also made by SIRIM that guidelines cannot be audited. This means that MTCC needs to develop principles, criteria and indicators. 

research@segi-enam.com | 25 Nov 2022

Interview: Malaysia's hung parliament sees markets slip, but unlikely to affect growth trajectory: Observers - CNA

Segi Enam’s Research Principal, Khor Yu Leng, was recently interviewed by Channel News Asia (CNA) on her thoughts on Malaysia's economy due to the political situation as a result of Malaysia’s 15th General Election, which resulted in a hung parliament, the first in Malaysia’s history.

She shares her thoughts on the current status of the Budget 2023 and what are the policy changes Malaysia can expect to see.

Read the article here.

Interview: Tight Election Leaves Malaysia in Limbo - China Daily

Segi Enam’s Research Principal, Khor Yu Leng, was recently interviewed by China Daily regarding Malaysia’s 15th General Election results, titled “Tight Election Leaves Malaysia in Limbo”. Below is an excerpt from the interview:

The hung parliament is the result of feuding among political elites and a highly polarized electorate, said Khor Yu Leng, director of Segi Enam Advisors, a consultancy in Singapore. Election Day produced "surprise upsets as big names were easily toppled by the green Islamic wave", she said.

She was alluding to PAS, which has adopted green as its party color, and how linking up with PN has "harnessed youth support" and won among swing voters.

PalmTrack—Sep 2022 Wrap Up

Here is a wrap up of the some of the issues PalmTrack covered in Sep 2022:

  1. Malaysia plantation labour issues seem to be escalating. There is now worrying talk about destination market checks and signs that at-risk suppliers are facing buyer jitters. Indonesia suppliers may gain. This is amidst heightened problems for authorities to deal smoothly with migrant labour recruitment compliant with Indonesia, Bangladesh, and other requirements.

  2. Going by Malaysia’s palm oil production in the last 15 years, it is clear that yield-productivity management is in a major rut, a warning to producers in other countries. The more recent ups-and downs seem to be driven more by the climate cycle of El Niño dry/La Niña wet than anything else, at least at the aggregate level. Read more on PalmTrack.

  3. HCPO or high FFA CPO is the big new trend at palm oil mills. The processing of loose and rejected fruits gives a product with 35-40% FFA that suits HVO and more. But Malaysia’s unfavourable pricing for loose fruit is likely to hinder its supply. Indonesia prices a premium for loose fruits and buyers should see better prospects here. We talked to specialists to find out more.

  4. BOM officially declared a La Niña on 13 Sep 2022. However, the meteorological agency has stated that projections indicate this third dip to be short-lived and is expecting the phenomenon to peter out by early 2023.

  5. The EU Parliament has adopted the proposal on deforestation-free products. The regulation aims to eliminate deforestation in the import supply chain for the EU for several key commodities and products, including palm oil and soy.

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

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Boba Boom - Part 2: Rise of the Health-Consciousness

Back in November 2019, Khor Reports studied the bubble tea (Boba) trend in Malaysia and the sugar level in the beverages. Click here to read it.

Momentum Works and qlub recently published a report, “Bubble Tea in Southeast Asia”. It is estimated that the 2021 market size for Boba in South East Asia alone is US$3.66 billion. Clearly, this Boba trend is not dying out anytime soon. With newer brands launching, this is still an ever-growing market.

Khor Reports previously tracked the sugar level of beverages in Malaysia and found out that one serving of bubble tea is double the amount of the daily recommended sugar intake. In 2019, 1 out of 5 adults in Malaysia has diabetes and about 3.9 million people are above the age of 18. This is a worrying trend. The prevalence of diabetes is also an upward movement from 2011 to 2019. So, what measures can be taken to tackle this issue?  

Looking at Singapore, the Health Minister recently announced that Food & Beverages (F&B) outlets preparing freshly brewed beverages are to include a nutritional label on their menu to indicate the sugar level of the beverages and certain beverages are not prohibited from being advertised. Beverages falling under Grade C or D, such as Boba, will be affected by the advertising prohibition as most of their beverages have high sugar content.

As consumers become more health conscious, they may soon start opting for beverages with Grade A or B. Shops will need to revamp their menu or change the amount of sugar used in their beverages in order to attract those consumers. To reverse the trend of diabetes incidences, Malaysia should adopt this policy to encourage its citizens to choose healthier beverages option.

Wong Ivan, Guest Writer | 4 Oct 2022

Singapore F1 Grand Prix Gets into Green Gear

Singapore Formula 1 Grand Prix is kicking climate action into higher gear. The event will last three days leading up to the 61-lap race on the evening of 2 Oct 2022.

According to a media statement by Singaporean-based biofuels company Alpha Biofuels, “when the night race returns to the streets of Marina Bay in September—after a two-year hiatus due to the pandemic—a full sustainability audit will also be conducted, which could see data such as the amount of carbon emissions and waste generated by the event being measured and reported for the first time.”

Responding to CNA’s queries, a spokesperson from Singapore GP said that the existing track lighting will be replaced with more energy-efficient LED lights from 2023, and that it will switch to electric or hybrid support vehicles where applicable.

The official Singapore Grand Prix website confirms that management consultancy Faithful + Gould has been appointed to write a Carbon Footprinting Report identifying emission sources of concern. The results will be then audited by Tüv Süd PSB.

On that note, take a look at F1’s 2026 target for 100% sustainable fuel and how ARAMCO creates F1’s sustainable fuel. Also significant is Singapore’s import of renewable (hydro-powered) energy from Laos, its challenges, and questions on large-scale dams.

See below for the sustainability commitments listed on the Singapore Grand Prix website:

Source: Singapore Grand Prix (accessed 26 Sep 2022)

research@segi-enam.com | 30 Sep 2022

More Public Attention on Malaysia Flood and Climate Change

In December 2021, heavy rainfall had resulted in severe flooding in numerous areas within Peninsular Malaysia. Regarded as one of the worst flood disasters the country has seen in the recent years, the flood effectively displaced an estimated tens of thousands of residents and was further proof that Malaysia is not—and will not be—spared from the growing effects of climate change.

Malaysia has yet to forget the devastation the floods had caused—topic of climate change is becoming an increasingly important and popular one, particularly online. Accordingly, activists and environmentalists have taken the opportunity to highlight the gravity of the situation, oftentimes working hand-in-hand with the media as a platform where the public can be kept abreast about the matter.

Kini News Lab is one such platform and its most recent article is “When the Water Rises: A Malaysian Climate Change Story,” which described how climate change has adversely impacted the livelihoods, standards of living, and psychology of Malaysians across the country. The article also allows readers to see annual temperature and rainfall changes in various locations since 1952.

A part of the article also covered rising sea water levels, yet another threat Malaysia is facing as a direct result of climate change. In the worst case scenario for Malaysia, sea levels could very well rise up to 0.74 metres by the 2100 year, plunging low lying and coastal areas underwater.

Khor Reports did a short review several years ago comparing between the best and worst case scenarios for key areas where the land is at risk of coastal flooding by 2050: Land Reclamation Projects and Sand Dredging/Mining Sites in Peninsular Malaysia ver. Oct 2019.

We also wrote a piece on the politics of floods, with criticism about land development coming from businessmen and bureaucrats interviewed: Malaysia - the Political Economy of Land Development (or the Politics of Flood). While attention on coastal and flash floods is gaining attention, we would also like to highlight the issue of ground water flooding that can worsen flood woes (see box below).

PalmTrack—Aug 2022 Wrap Up

Here is a wrap up of the some of the issues PalmTrack covered in Aug 2022:

  1. The rise and fall of key agri-food commodity prices feels like a blast from the past, but many prices remain at multi-year elevated levels, notably fertilizers and also the likes of palm oil. In this two-part series, we look at recent news views from The Economist, FAO, and what some say about the 2008/09 price bubble and food speculation in Part 1 before moving on to what commodity traders say about the role of "non-commercial traders” in the recent early 2022 food price bubble in Part 2.

  2. PalmTrack has been updating on recent and upcoming palm oil sustainability issues. There are three parts to this series, and each highlight the following points of interest gathered from close observers: greenwashing, legality, product pricing for smallholders (fair trade), traceability to farms, carbon emissions, and political-policy challenges.

  3. In our posting ‘Sarawak CPO production to overtake Sabah’, we covered the forecast for Sarawak to be the biggest CPO producing state in Malaysia, the timber-to-palm transition of its big state suppliers, and the decline of its timber business segment, especially downstream amidst log supply woes. Now, we look at market access and dip into some issues for Sarawak timber and palm supplies.

  4. Our latest discussion with labour experts revealed a wider regional competition for agricultural workers rising and expanding. We expect the Covid recovery to drive change toward a more formal and compliant agricultural labour supply. We case study Australia, who are reportedly now focusing on Indonesia and Oceania, and Taiwan who has opened up for agricultural labour workers from Southeast Asia in 2020.

  5. BOM raised a La Niña alert on 16 Aug, the final step before an official La Niña. In the meantime, BMKG on 12 Aug revealed that while the dry season in Indonesia is expected to last from August to October, La Niña may still result in heavier-than-usual rainfall within the country.

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

$380.00
Every year
$38.00
Every month