Primary Industries Minister Teresa Kok has beaten a new path into the European Union in leading the fight to defend the Golden Crop. Over a 10-day trip in early May to London, Brussels, Berlin and Rome, she has made headway in explaining Malaysia’s stand on sustainable agriculture and existence of almost 58.4% forest cover.
The Italians, in particular, seem to have taken a more proactive approach and suggested the formation of an Italy-Malaysia Parliamentary friendship group. The objective is to invite Italian Parliamentarians on visits to Malaysia to better understand our Oil Palm cultivation practices and efforts which have been made to meet to sustainable Palm Oil certification.
It is also reassuring to know that there is admittance of lack of information on the part of the EU to the extent that the Italians are prepared to have an ongoing dialogue with Malaysia on issues related to Palm Oil.
Even the Vatican has jumped on the bandwagon with a proposal to obtain an evaluation report from the Academy of Science of the Vatican on Malaysia’s Red Palm Oil and its benefit towards bridging the shortfall of food supplies by the Vatican to the poor.
These views echo the comments of Frederic Laplanche, the French Ambassador to Malaysia, who acknowledged that although there is an association between Palm Oil and deforestation, processes are changing for the better and that the French remain open to trade.
Similarly, Spain had taken a very strong stance against the discrimination of Palm Oil, recognizing that its own biofuel industry will face negative repercussions.
In combination, this flow of information seems to suggest that the adaption of the EU’s Renewable Energy Directive (RED) may face some resistance, in part due to the fact that the proposed move does not adhere to the fair trade regulations in accordance to the World Trade Organisation.
Malaysia seems to be making positive in-roads in highlighting the adherence to sustainable practices in the Palm Oil industry. Whether this will be a situation of “too little, too late” or just the beginning of a concerted effort to move in the direction of adopting sustainable practices in the agricultural space can only be answered with clear, independent, unbiased monitoring by a recognized impartial body.
In the meantime, CPO prices seem to be reacting positively, with prices bouncing off a 6 month low with 3 month FCPO trading 1.3% higher at RM2,073 and spot prices up around 0.7% to RM2049 as at yesterday’s close.
Any and all positive news-flow may be mitigated by the continued decline in the Ringgit against the US dollar as the local currency continues to trend lower following the Malaysian Central Bank’s decision to cut interest rates by 25 basis points to 3% last week, causing the Ringgit to decline to RM4.17 to the US dollar.