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Segi Enam Research
POC2023 Panel Session - Palm Oil ...
Environment, Regulatory compliance
Yuleng Khor
The positive of the EUDR - inclusive of ...
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IDEAS-FedEx: Highlights on RCEP and how it can ...
IDEAS-FedEx: Highlights on RCEP and how it can benefit your business
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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

Palm oil

[Sample!] PalmTrack—US CBP Workshop on Forced Labour

Yesterday, the US CBP conducted a virtual workshop on forced labour facilitated by MPOC. The one hour-long workshop provided a useful guide as to how the agency generally enforces its anti-forced labour tools, as well as how it modifies and revokes imposed export bans. 

There are primarily three types of forced labour enforcement tools the US CBP exercises: Withhold Release Order (WRO), findings, and penalties. Note the difference in standard of proof for each tool—“reasonable suspicion” has a much lower bar than “probably cause”, the latter requiring that the US CBP “conclusively demonstrate that the merchandise is prohibited” due to elements of forced labour along the relevant supply chain.

As of 8 June 2022, the US CBP reports on its website that Malaysia has six WROs and one finding.

According to the US CBP, its forced labour enforcement process comprises a nine-step process, initiated whenever it receives a tip, whether from “internal channels” or received from external sources, e.g. civil society, “tips from researchers”, about exported merchandise produced using forced labour. 

Companies slapped with WROs and/or findings are allowed to submit requests for modifications to and/or revocations of their export bans. The US CBP uses on ILO indicators as a guide when considering these requests. 

In response to a question posed about how companies could provide evidence that its goods were not produced using forced labour, it was emphasised that companies are strongly encouraged to hire a reliable, independent auditor as an assessor, although the US CBP quickly clarified that it does not and will not dictate any specific requirements of said auditor. Interestingly, one of the speakers had expressed bewilderment that one Malaysian company had opted to use its “internal auditors” to challenge its export ban and hoped that the US CBP’s later rejection of the aforementioned company’s report assessment assessment emphasises its insistence for an independent audit.

research@segi-enam.com | 9 Jun 2022

For online view only. Please do not redistribute without our express permission. We offer sponsor & subscription services for those who wish to do so.

Corporate Subscription offers more granular info-data details on product, trade and vessels mentioned in our reports.

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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Indonesia Lifts Palm Oil Export Ban

Indonesia has lifted its palm oil export ban following an announcement made by President Joko Widodo today on 19 May. Exports of CPO and other refined products, including cooking oil, may resume on 23 May this Monday.

According to the President, the decision to lift the said ban was made in consideration of the welfare of the 17 million workers in the palm oil industry in spite of the fact that cooking oil has not reached the target price of Rp14,000 per litre, although bulk cooking oil has reportedly reached more than national needs. In the meantime, the government will continue monitoring the supply and price of cooking oil. The government had been facing mounting pressure to reopen its export routes since the implementation of the ban on 28 April.

[Sample!] PalmTrack—Iceland Announces Reversal on Palm Oil Ban

Iceland has announced a reversal of the supermarket chain’s removal of palm oil product (since 2018) amidst a shortage of sunflower oil. Citing it as an “unintended consequence of the [Russia-Ukraine] war,” CEO Richard Walker states that the move is only “a last resort and as a strictly temporary measure” and that only certified sustainable palm oil will be sold. In 2018, Iceland became the first major UK-based supermarket to pledge to remove all palm oil from its own-brand food and ran a Christmas advert in collaboration with Greenpeace featuring a cartoon orangutan fleeing from its rainforest habitat which was being destroyed by palm oil growers. The ad was later pulled for breaching political advertisement and communication rules.

Iceland’s U-turn comes amidst calls for urgent action by farmers in anticipation of rising food prices and shortages. In its letter to the government, the National Farmers’ Union warns that the country’s food security is at risk due to multiple reasons arising from the war in Ukraine, including labour costs. Ukraine accounts for 45% of the rapeseed and more than 25% of the maize imported into the UK, while 80% of its sunflower oil imports originate from the Black Sea region.

In its article A World That’s More Expensive Is Starting to Destroy Demand, Bloomberg writes: “Much like gasoline, demand for groceries in the developed world tends not to change much with price. Shoppers may change what they buy—ditching pricier items for cheaper substitutes—but they still have to buy. Yet restaurants find rising prices an obstacle as they try to rekindle business post-Covid. Gus Kassimis, owner of New York City-based Gemini Diner, customers are ordering fewer steaks and seafood, so he’s decreased his purchases from suppliers by about 10%. Gemini boosted menu prices once and is poised to do it again. ‘People are more cautious on what they spend,’ Kassimis said. ‘I don’t know how much more consumers are willing to take.’”

Intentions to shift source to responsible/sustainable/certified/renewables in many sectors may now be taking a back seat. We have been checking if Iceland is a member of the Roundtable on Sustainable Palm Oil (RSPO), and it is not currently so. Some think it used to be a member and left when it decided to stop using palm oil.

Notably, Iceland's affordable frozen foods might do well in under tougher economic circumstances, as it is a major supplier of "cheaper substitute" prepared/processed foods—refer to screenshot above of its homepage, which features GBP1/USD1.32 per unit frozen items and savings. Iceland brand frozen potato products cost about GBP0.8–1.4 per kg while its pizza and chicken products are about GBP3–6 per kg, priced below the likes of Young’s and Birds Eye.

research@segi-enam.com | 29 Mar 2022

For online view only. Please do not redistribute without our express permission. We offer subscription services for those who wish to do so.

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10 a.m., 30 Mar 2021

Editor’s note: See also the rather scathing article on The Star by M.R. Chandran on what he dubbed the ‘Saga of Iceland Foods’, where he wrote:

Why does it always take war and the Russians to bring the West to its senses? United Kingdom food manufacturers have been warned that supplies of sunflower oil would run out in weeks as crops are trapped in Ukraine and Russia, who between them produce 70% of this stuff…

Things are becoming clear now to billions of people in the Third World that the powerful and rich are up to their necks with hypocrisy and choking on it. Imagine, war and armaments and hate and hypocrisy are not banned but a crop like oil palm can be?

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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Orangutans in a Social Media Storm

Plantation and Industries Minister Zuraida Kamaruddin made an admittedly bewildering statement during a dialogue session organised by the Malaysian Palm Oil Council (MPOC) on 5 Jan 2022: according to her “in Malaysia, if you see orangutans, orangutans will kill you first. Not we kill the orangutans first.” Conservation experts have understandably responded to the Minister’s, pointing out the comments were inaccurate.

The Ministry has since issued an official statement, claiming that the remarks were taken out of context and that it was said in jest.

Orangutan and deforestation issues have been the iconic question for palm oil. The Minister’s apparently flippant comments are a challenge for palm oil promotion intentions, but she points to the bigger (missed) context her call for a focus on orangutan issues and data. Positive and decisive actions on orangutans should be the next step from this inordinate social media storm.

Getting serious about orangutans. The info-data issues include: 

  1. Orangutan population data has always been a bit difficult as it is based surveys and back-casting. Newer research seems to estimate a lot more orangutans in the past, and the reduction is often proportionate with forest loss. Some industry observers are suspicious of this, and they also worry about misleading images including a popular photo of an orangutan being "attacked by heavy equipment" that keeps circulating on social media. In fact, we hear that the animal, named Hyundai, was being rescued by this equipment. 

  2. NGOs should be more public and transparent with their information. There are even some accusations online lack of accountability for corporate donations for orangutan efforts. Whether true or not, from first hand experience, we know it is hard to find public information about primate conservation projects and their costs. 

  3. Primates are complex and not cuddly creatures, and all wild animals need to be treated with respect to reduce conflict with humans. This is a theme of conservation efforts and forums that MPOC has sponsored. Our late 2019 review of MPOC’s wildlife projects are here, and the project list has not seen updates since although there is news of some new initiatives. 

There can and should be more public information about orangutans (and other endangered species) from all stakeholders. If we are to care about conservation, we have to get serious about the costs as well as how much area and animals we can cover. Transparency and accountability are key. 

For more context of the Malaysia social media storm: Malaysian netizens have been criticising Malaysian politicians for many months now. The wrong words or tone are picked up terribly fast on TikTok, Twitter, and other social media platforms. Over the years, there has been a struggle to promote a positive image for palm oil. A previous effort to put Prime Minister Mahathir as the face of Malaysian palm oil, with a recommendation to "take a spoon a day", came up against counter-currents in domestic opinion as an investigation of school children talking about sustainable palm oil caught many by surprise (and there will be ongoing efforts to ensure children do not “badmouth” palm oil). Mahathir himself was also caught up in political issues with India, triggering a call to boycott Malaysia palm oil.

For more, listen to the BFM podcast here following the Minister’s alleged joke: Zuraida, Orangutans and Palm Oil: Unpacking the Issues

[Sample!] PalmTrack—Global Map of Key Palm Oil Company Vessels

PalmTrack continues with its exclusive update on palm tanker movements. Here’s a sample article of what we’ve been up to recently:

The above near real-time map shows estimates of tankers associated with major palm oil groups for 14 Dec 2021. Most appear to operate more frequently within the Southeast Asian region, with several deployed to key destinations including India, China, and Sri Lanka. We have a tanker watchlist of nearly 50 vessels of over 3 million net tonnage; many of these vessels appear in the map above, including the GS Future, Venus, and Melati Dua.

research@segi-enam.com | 14 Dec 2021

For online view only. Please to do not redistribute without our express permission. We offer subscription services for those who wish to do so.

Corporate Subscription (upcoming) offers more granular info-data details on product, trade and vessels mentioned in our reports.

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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Every year
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PalmTrack—A December 2021 Recap

As PalmTrack enters well into its second month, we continue to offer readers exclusive updates on the palm products trade. Here are a few snippets of the news we covered this past month:

We have a tanker watchlist of nearly 50 vessels with over 30 million net tonnes associated with key palm oil companies. Subscribe to PalmTrack and head on over to our post to see a near real-time map showing the estimated positions of some of these tankers.

As 2021 draws to a close, there are several recent key news and chatter surrounding the palm oil trade. Read our post for some of our market observations about food safety, sustainability, and Thailand from our interviews with experts.

Following reports on Indian refiners reducing their palm oil purchases and making the switch to sunflower and soybean oils, we have collected data on palm-related tankers sailing from Indonesia to India. Read our post for an analysis of this sample of data.

Other news:

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

End of Moratorium Raises Environmental Concerns in Indonesia

Indonesia’s three-year moratorium on new palm plantations ended in 19 September 2021 and so far, the government has yet to indicate whether the freeze will be extended. Without clear regulations, environmentalists are understandably worried about the possible spikes in deforestation rates. There are also concerns that the issues identified during the implementation of the moratorium, such as the 3.4 million hectares of illegal plantations, have not been fully addressed.

Experts and activists are thus calling for a renewal of the moratorium, citing that verbal assurances from the officials that no new permit applications will be entertained are not sufficient.

A photo of a palm oil plantation in the Jambi province. Credit: Antara Foto/Wahdi Septiawan/via REUTERS/CNA

Instead of the moratorium, it would seem that the government will now rely on the infamous Omnibus Law to address the problem of oil palm concessions within forest areas. In an interview with Reuters, President Joko Widodo stated that he has “ordered for this to be inserted in the law so that we don't have to renew it every time it expires... So when (the country's) leadership changes, there is no change in policy.” While it does not prohibit new plantation permits, the 2020 regulations did stipulate that new palm oil concessions are capped at 100,000 hectares, although there is notably no limit to the number of plantations allowed annually.

Greenpeace and TheTreeMap: Nearly 15% of Palm Plantation Located Within Forest Estates

A recent report published by Greenpeace and TheTreeMap made a damning conclusion: about 3.1 million out of the 16.4 million hectares of oil palm plantations in Indonesia fall within forest estates, including national parks, wildlife sanctuaries, and UNESCO sites. The report further details that of that 3.1 million hectares, approximately 1.6 million are industrial plantations, claiming that this illustrates a “catastrophic failure of law enforcement to protect the forest estate.”

The report brings us back to our own geospatial analysis of Riau and Central Kalimantan while working with SIIA on the Haze Outlook 2021, although our interest lies more in the Indonesian government’s ambitious project to set up food estate programmes across the archipelago. While the exact locations of these programmes are still relatively unknown, the maps below show that much of the land of the districts earmarked for food estate projects consist of either peatland or areas protected areas recognised by the International Union for Conservation of Nature (IUCN) and/or under moratoriums prohibiting the conversion of forest land into commercial plantations.

As experts and environmental groups continuing to play the role of the watchdog to the government, it would be interested to see how the focus would shift to food estate programmes. With organisations like Tempo and The Gecko Project revealing damnatory information, including attempts allegedly made by Defence Minister and head of the food estate project Prabowo Subianto to steer the project to a politically connected company, it wouldn’t be surprising to see more reports like the one published by Greenpeace and TheTreeMap—albeit more focused on food estate programmes—making headways into the news.

NEW! Khor Reports' PalmTrack Kicks Off

September is a month of a couple of new things for Khor Reports—the first was our PolTracker: Malaysia—1 Sep 2021, an online-view only report tracking hot topics and themes in Malaysia’s political economy and backed by data from social media and human-sourced intel.

This time, we are shifting our focus back to the staple of our work: the economics of the palm oil industry. Khor Reports is proud to present PalmTrack!

unsplash-image-sfjS-FglvU4.jpg

In PalmTrack, we offer exclusive updates surrounding the palm products trade. Written by Khor Reports/Segi Enam Advisor’s Khor Yu Leng and Nadirah Sharif, we aim to provide info-data driven insights with reference to granular trade statistics, near-time shipment/cargo information, and human-source market intelligence. PalmTrack mainly covers key Indonesian ports.

At the moment, subscription is free! Members will have access to relevant research data and news stories, including trade updates from key export countries and reports on sustainability and geopolitical conflicts. We also offer more granular trade and vessel data mentioned in our reports for corporate subscribers.

Interested? Subscribe by clicking the button below! Questions? Feel free to reach out to us at research@segi-enam.com.

Identifying Small Wins towards ISPO Certification of 1 Million Palm Oil Smallholders in Indonesia in 2025

Last week, Strengthening Palm Oil Sustainability Indonesia (SPOS), IPB University, and ANGIN-Wageningen University hosted an online dialogue session on the possibility of ISPO-certifying one million Indonesian smallholders by 2025. Overall, experts speaking at the dialogue appear cautiously optimistic about the ambitious goal, with several pertinent points:

  1. Marieka Leegwater from Solidaridad Palm Oil Program reiterated that transparency is imperative for ISPO standards to be effectively enforced and receive recognition by value chain and government. In response to a question about fostering a fair relationship between mills and smallholders, Marieke opines that it cannot be forced, as the former are typically in a better position contractually than the latter. 

  2. Rukaiya Rafik from Forum Petani Kelapa Sawit Berkelanjutan Indonesia (FORTASBI) was optimistic about the possibility of certifying one million smallholders by 2025. Data is already available, as are incentives, although the latter is not yet well integrated throughout the supply chain. Rukaiyah agreed with Marieke’s answer on the question on mill-smallholder relationships, adding that it presents a good opportunity to encourage smallholders to get certified. 

  3. Frans Claassen of Margarine, Fats and Oils (MVO) explained that several initiatives and measures introduced, including the ISPO and relevant presidential moratoria, have contributed towards international recognition of sustainable palm oil from Indonesia. Success stories help, such as the declining deforestation rates linked to palm oil plantations for four years in a row in Indonesia. With specific reference to ISPO, increased transparency, continuous improvements, and clear benefits for the smallholders are key to strengthening its credibility.

Source: Heriawan, National Action Plan of Sustainable Palm Oil (2021). There was a discussion on whether intercropping or agroforestry would be more acceptable to big plantation companies, especially considering that these companies would likely be deterred from agroforestry practices as it may lower their oil palm production rate.

Source: Heriawan, National Action Plan of Sustainable Palm Oil (2021). There was a discussion on whether intercropping or agroforestry would be more acceptable to big plantation companies, especially considering that these companies would likely be deterred from agroforestry practices as it may lower their oil palm production rate.