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Adding value key to further growth

Article - April 3, 2012
Turning cocoa into chocolate, and extracting Vitamin E from palm oil are examples of how Malaysia's thriving agricultural sector can progress
TAN SRI BERNARD GILUK DOMPOK, MINISTER FOR PLANTATION INDUSTRIES AND COMMODITIES, ENJOYS A LIGHT MOMENT AT THE MALAYSIAN COCOA AND CHOC
Palm oil has long been the backbone of Malaysia’s agricultural sector but it currently faces serious market challenges because of issues surrounding sustainability, carbon emissions involved in production practices and social aspects. A hugely popular cooking ingredient throughout Africa, South America and all over Asia, palm oil  is a highly saturated vegetable oil which contains no cholesterol.

The importance of palm oil to Malaysia cannot be overstated, with  export earnings amounting to RM62 billion, and over one million Malaysians employed in the industry. Malaysia has a planted area of 4.9 million hectares of palm trees and is currently the world’s largest exporter of palm oil and its second largest producer.

In 2010, Malaysia produced close to 17 million metric tons of palm oil and is exported to more than 100 countries globally. A transformation programme has been created for the Malaysian palm oil industry which aims to see a Gross National Income (GNI) of RM178 billion by the year 2020.

In order to achieve this target  eight Entry Point Projects (EPPs) have been implemented in both the upstream and downstream sectors. In the upstream sector, the EPPs focus on accelerating replanting, increasing palm fruit yield per hectare, improving oil extraction rate and streamlining labor productivity.

The EPPs for the downstream sector will focus on the production of biogas at the palm oil mills – a gas produced by the biological breakdown of organic matter which can be used as a biofuel. The Malaysian government, particularly Tan Sri Bernard Giluk Dompok, the Minister for Plantation Industries and Commodities, is also looking into technologies which would allow them to extract extremely valuable vitamins and minerals from their vast supply of palm oil.

The Minister recently announced, “We have 17.6 million tons of oil, and there is vitamin E in oil. More than 99% is oil, but there is that one percent. If we can get that, the oil becomes a by-product and the expensive vitamins will become an item that will bring in the money. That’s an example of a transformation program we would use to transform the economy. We will use the resources available to us become more diverse, more knowledge-based and less dependent on hard labor. That’s the challenge for us as a small nation.”

“We will use the resources available to us become more diverse, more knowledge-based and less dependent on hard labor. That’s the challenge for us as a small nation.”

Tan Sri Bernard Giluk Dompok,
Minister for Plantation Industries and Commodities

As well as palm oil, the cocoa industry has made progress. Currently, Malaysia is the fifth largest cocoa processor in the world: commercial production dates back to the 1950s, while processing began in the 1970s. Over the years, the planting sector has slowed, but the processing sector (turning the raw material into cocoa butter, powder and chocolate) has seen tremendous growth.

Malaysian cocoa products are now exported to over 80 countries – and one the characteristics of Malaysian cocoa butter is its high melting point, which makes it perfect for chocolate products destined for warm countries.

In recent years another food product has also shown great promise on the export market – pepper. At present pepper prices are soaring, boosted by the tight global supply as farmers hold back their stocks in anticipation of higher prices. Pepper is grown predominantly in the state of Sarawak, which accounts for around 95% of local production. Annual production is approximately 25,000 metric tons of which 90% is exported.

But whether it is palm oil, rubber, pepper or cocoa, with the help of the MPIC, Malaysia’s agricultural sector is flourishing as Tan Sri Bernard Giluk Dompok is keen to point out: “Malaysia is a nation that is part and parcel of the world economy. One of the reasons prices are going down is because of the economic crisis in Europe – we are affected by all this. We want to work with everybody and we look for greater co-operation from the rest of the world. We are very concerned with sustainable development and we are working towards ensuring that the three concerns of everyone in the world – people, planet, profit – are very important to us.”

Back in 1972 the Ministry of Primary Industries (as it was then known) was initially only responsible for the development of tin ore and rubber, the two main commodities back in those days. The Ministry’s role later expanded to include the development of other commodities such as palm oil, cocoa, forestry, minerals, pineapple and tobacco which also contributed to the country’s burgeoning economy.

Over forty years later the Ministry was restructured and renamed as the Ministry of Plantation Industries and Commodities (MPIC). Under the new structure, the Pepper Marketing Board, formerly under the ambit of the Ministry of Agriculture, was included in MPIC while matters relating to forestry, mineral and geosciences were transferred to the Ministry of Natural Resources and Environment.

Today, Malaysia’s Ministry of Plantation Industries and Commodities is responsible for the development of the plantation industries – namely palm oil, rubber, timber, cocoa, tobacco, kenaf, pepper and sago.

The main function of the Ministry is to formulate policies and strategies for the overall development of the plantation and commodity sectors, and to supervise departments and agencies under the ministry on financial management and implementation of development programs.

At present the MPIC is also exploring the development of new sources and areas for growth, including kenaf and jatropha cultivation which both have the potential to contribute towards the country’s rapidly growing economy.

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