Archive for November, 2013

MPOB leverage on green, gene technologies

November 23, 2013 Leave a comment
KUALA LUMPUR: MALAYSIAN Palm Oil Board (MPOB) plans to leverage on green and gene technologies to achieve increased profit, environmental stewardship and social responsibility.

“The application of gene technologies in the study of oil palm breeding materials will lead to the identification of genes and accelerate the development of elite planting materials,” said MPOB director-general Datuk Dr Choo Yuen May.

“The genome contains the genetic blueprint for life and encodes the entire set of genes responsible for each and every trait,” Choo said in her plenary presentation at the recent MPOB International Palm Oil Congress (Pipoc) here yesterday.

Her presentation focused on MPOB’s genome research breakthrough and the discovery of its practical application, the SureSawit Shell Kit, which enables oil palm growers to identify their shell type with 100 per cent accuracy.

With conventional breeding, scientists must wait until they can measure the trait in mature trees before selecting high-performing individuals for the next breeding cycle, she said.

“But knowing which gene controls a desired trait, however, enables the selection of elite materials at the nursery stage through marker-assisted breeding, and it saves time, too.

“Genomics applied to oil palm will play a significant role in yield improvement, food security, the reduction of the rainforest footprint and serve as an indispensable tool for breeding,” she explained.

Choo said by 2050, when the world population has grown by a projected two billion to 9.1 billion, it will require a significant increase in food production over current levels. In the near future, exporting nations must significantly increase their production and exports.

Another concern is the increase in greenhouse gas (GHG) emissions resulting from the population growth and the reliance on fossil fuels.

“There is an urgent need for renewable fuels that can provide a sustainable solution to the world’s energy needs. Oil palm, properly managed, is an eco-friendly feedstock for biofuel,” she said.

Palm oil is the leading source of vegetable oils and the best candidate for meeting the world’s increasing need for food and renewable fuel as it yields 10 times more oil than soya bean, its closest competitor. 

“Oil palm is planted on only five per cent of land occupied by oil crops and yet it contributes to about 43 per cent of the world’s edible oils,” she said.

Fry: CPO prices may hit RM2,750

November 22, 2013 Leave a comment
KUALA LUMPUR: Crude palm oil (CPO) prices are expected to trade as high as RM2,750 a tonne early next year due to more palm oil-based biodiesel use, said LMC International Ltd chairman Dr James Fry.

“The price gap between crude petroleum and CPO favours more consumption of palm biodiesel,” he told the 1,000 delegates at Malaysian Palm Oil Board’s (MPOB) International Palm Oil Congress (PIPOC) 2013, here, yesterday. 

Since production of palm biodiesel is profitable, oil companies in Indonesia and Malaysia have started to mop up CPO from the market to blend with regular diesel. 

MPOB data shows that for the first 10 months of this year, biodiesel exports rose sevenfold to 140,676 tonnes from the same period a year ago. 

Fry reiterated his long-held view that palm oil prices would continue to be highly influenced by petroleum prices. 

Yesterday, Brent North Sea crude oil for January rose 18 cents to US$108.24 a barrel. At the same time, the third-month benchmark palm oil futures on the Malaysian Derivatives Market went up RM73 to close at RM2,653 per tonne.

“If Brent crude continues to trade at the current level, I don’t see wildly exciting changes in CPO prices. It may well rise in the months ahead to RM2,750 a tonne,” Fry said. 

On the prospects of CPO prices surpassing the RM3,000 a tonne-level, Fry replied: “Do bear in mind that there’s a limiting factor as there’s a major recovery in the supply of soft oils, like sunflower and rapeseed.” 

MPOB senior research officer Ramli Abdullah, in his presentation, said Malaysia’s CPO production is likely to expand two per cent to 19.1 million tonnes this year. 

“This is on the assumption of normal weather conditions, increased new plantings and more trees maturing and bearing more fruits,” he added. 

More specialty oleochemicals in the pipeline

November 22, 2013 Leave a comment
It’s not always the biggest nor the one with the deepest pocket that succeeds. Very often, those that adapt rapidly to changing business environment are the ones with staying power. Ooi Tee Ching writes on the industry’s specialty oleochemicals initiative.

AT FIRST GLANCE, Matrix Oleochem Sdn Bhd may seem like any other ordinary company. But if you look a little closer, you’ll realise it is the only standalone specialty oleochemical player in Malaysia that is thriving on product innovation.

Founded by chemist Dr Tan Chee Hong 17 years ago, Matrix Oleochem is currently Malaysia’s biggest exporter of coco diethanolamide, an ingredient that is predominantly used as a thickening and foaming agent in shampoos, dish washing liquid and fabric softeners.

Matrix also makes another popular ingredient called cocoamido propyl betaine. This is widely used in the “no more tears” range of shower creams and shampoos for children.

Last year, the company exported 7,000 tonnes of specialty oleochemicals. “I think we should be able to export 40 per cent more this year,” he said.

In differentiating itself from the more well-known giants like IOI Oleo Group, KLK Oleo Group and Emery Oleochemicals (M) Sdn Bhd, Tan said, “I sell tubfuls of specialty chemicals while others sell truckloads of basic oleochemicals”.

“I make do with what I have. I don’t have deep pockets or financial backing from plantation giants but what I possess is talent and knowledge. I’m fortunate that the time and effort I’ve invested in making specialty chemicals is delivering good profit margins,” he added.

Businesses that are positioned higher up the palm oil value chain, like Matrix Oleochem, are essentially more service-oriented. 

Tan noted that when it comes to specialty oleochemicals, customers are not necessarily going to buy whatever products that are pushed to them. “They’ll want to see what the products can do for them. Ultimately, consumers will spend money for a more convenient or comfortable lifestyle,” Tan said. 

Indeed, there is an advertising axiom that illustrates this point succinctly: People don’t necessarily want a bar of soap all the time. What they want is clean hands. 

Therefore, manufacturers like Matrix should be able to offer more choices. The use of its ingredients should be versatile and can be incorporated in liquid handwash, hand sanitisers or even clean wipes.

“Customer needs and market trends are always changing. We need to remind ourselves that whatever we offered five years ago may not be relevant a year from now,” he said. “So, we really have to listen and customise accordingly.”

Tan’s business has thrived in leaps and bounds because he has always focused on product innovation and development of niche markets. “We’ve never competed head-on with the big players. In fact, we complement their businesses because they are suppliers of basic ingredients,” he said.

Recently, Italy’s Societa Chimica Lombarda Pte Ltd (also known as the Erca Group) decided to partner its chemical distributor Chemical Mate Technologies Sdn Bhd to manufacture specialty chemicals in Malaysia. Their 55:45 joint venture, called ICM Specialty Chemicals Sdn Bhd, is investing RM130 million to put up a specialty ester plant in Pulau Indah, Klang.

ICM managing director Kenneth Chang Boon Kit noted that Chemical Mate, established in 1995, has been distributing specialty oleochemicals. 

“We’ve been doing business with Erca Group, which is owned by the Seccomandi family for some time. As time goes by, they see a need to expand their chemical making business in Asia. So, it’s only natural that our distribution partnership is now strengthened to include that of manufacturing specialty oleochemicals,” he said.

Chang concurred with Tan that the rising disposable income in Asia is fuelling demand for more varieties of toiletries, detergents and even industrial cleaning chemicals.

“Twenty years ago, an average household in Asia might be satisfied with just a bar of soap. Now, there’s a wide range of haircare, skincare and even nail care products. This fuels the demand for more natural, halal, easily biodegradable and renewable ingredients such as palm-based oleochemicals,” he said.

Currently, Malaysia has 18 local oleochemical companies with a combined annual capacity of 2.6 million tonnes. 

Their plants make basic oleochemicals like fatty acids, fatty alcohols, esters and refined glycerine. These are then sold to specialty chemical manufacturers like Matrix Oleochem and Erca Group which then process them further and formulate them into toothpaste, soap, dishwashing liquid, laundry detergent, industrial lubricants and even food emulsifiers.

Since 2010, the government had called on the palm oil industry to move up the value chain under the Economic Transformation Programme.

In a separate interview, the Prime Minister’s Department’s Performance Management & Delivery Unit (Pemandu) director for Palm Oil & Rubber NKEA & ETP Investment Ku Kok Peng noted that in heeding the government’s call to add value to the oleochemical industry, the three giants, namely IOI Oleo Group, KLK Oleo Group and Emery Oleochemicals (M) Sdn Bhd, are investing further downstream to make more specialty chemicals. 

Smaller entities include ICM Specialty Chemicals, Carotino, UniOleon and Ancom Crop Care.

Ku said the government’s role is to be an enabler to drive the industry to be more competitive. “We’re focusing on high-impact areas and the manufacture of specialty oleochemicals is one of them.”

Ku revealed that to date, the palm oil industry has committed RM1.36 billion investment in making more specialty oleochemicals. 

Of that total, the government, through the Malaysian Palm Oil Board, has committed RM223 million to incentivise this initiative to fruition.

To a query if Matrix feels threathened by the big boys’ move into specialty oleochemicals, Tan gave a wry smile and replied, “Innovation is finding a new use for the same product. We’ve diversified from detergent and personal care sector to include the construction industry.”

ICM’s Chang alluded that the market pie is growing. “It’s not like we’re competing head-on with other players because all of us have our niche clients. Our partner Erca Group has decades of experience in the synthesis of personal care and cosmetics formulations.”

CPO price trending up

November 20, 2013 Leave a comment
KUALA LUMPUR: CRUDE palm oil (CPO) price is expected to strengthen to RM2,600 per tonne in the next three months, Deputy Prime Minister Tan Sri Muhyiddin Yassin said.

CPO price stood at an average RM2,555 per tonne in the first 17 days of the month. 

Muhyiddin said there has been an increase in CPO price from RM2,221 in January to RM2,328 last month.

“CPO price is on a rising trend, and we hope it will continue to next year,” he said at a press conference after launching the Malaysian Palm Oil Board’s International Palm Oil Congress 2013 (PIPOC) yesterday.

In his keynote address, Muhyiddin urged industry players to generate growth in downstream activities, particularly in the food and health products as well as commercialisation of second-generation biofuels.

He said the government has undertaken efforts to ensure that CPO remains available to domestic industries to develop downstream activities and create value-added palm products.

“However, the expansion of our downstream activities has not occurred at a level envisaged by the government. 

“I am hopeful that industries present here today will consider reinvesting in downstream activities that value-add our palm oil sector.”

Malaysia and Indonesia are currently at the forefront of global palm oil production and exports. Last year, Malaysia’s export of palm oil amounted to RM73.3 billion.

Despite being a key contributor to the country’s economy, the palm oil industry continues to be hurled with criticisms from various parties abroad.

Muhyiddin said last year, for example, some French members of parliament proposed a Bill to increase the tax on palm oil from 100 (RM430) to 300 per tonne.

However, due to the farsightedness of the French government, the unsubstantiated proposal was rejected, he said.

He hopes that the ongoing free trade talks between Malaysia and the European Union will result in a more equitab;e solution.

“I am hopeful that government officials from both sides will work towards a trade-friendly solution to address the negative perceptions surrounding palm oil, on matters related to sustainability as well as nutritional claims,” he said.

The three-day PIPOC attracted 2,000 participants from 45 countries. It also features a trade exhibition with more than 270 booths displaying current technologies, state-of-the-art equipment and products related to the oil and fats industry.


Africa is growth catalyst for oil palms

KUALA LUMPUR: Oil palm planting can play a vital role in West Africa’s future as it has in Southeast Asia’s economic rise, Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron said.

“The African continent is expected to more than double its population by 2030 … if the world is going to address the growing issue of food security, a strategic move would be to plant more efficient oil crops like oil palm,” he told an international audience of some 1,000 at the Malaysian Palm Oil Board’s International Palm Oil Congress (PIPOC) 2013 here yesterday.

Yusof said United Nations’ Food & Agriculture Organisation had, time and again, issued reports that nearly a quarter of the world’s population live on less than US$2.00 a day and that one in eight people, particularly those living in developing nations, go to bed hungry.

Palm oil is the powerhouse in the oils and fats market and is a suitable crop for farmers in tropical developing countries. The oil palm is native to the continent and thrives in West Africa’s moist climate. It is a high-calorie, nutritious product that will be a key component of any anti-hunger effort.

The yield from oil palms is seven times higher than rapeseeds a hectare and 10 times that of soyabeans.

Currently, oil palms are cultivated in Southeast Asia, Papua New Guinea, Central and West Africa and Latin America, all of which are developing countries in the humid tropics. The trees are planted by some 10 million farmers across the equatorial belt. 

At the same time, it feeds billions of people in China, India and other developing nations.

Yusof also highlighted some of the benefits of agriculture-led development that can accrue to smallholders in West Africa. He said Malaysia set the global standard in this area when it implemented its innovative Federal Land Development Authority (Felda) programme to ensure that smallholders share equitably in the rising prosperity that comes with plantation agriculture.

This path-breaking Malaysian programme has inspired Liberia’s Outgrowers Scheme undertaken by Sime Darby Bhd, an effort to support Liberia’s small farmers.

“Palm oil is a major revenue earner for Malaysia. It can provide sustainable and green opportunities for other developing countries,” Yusof said.

He went on to highlight that the insight, technology and hard-won business savviness of Malaysian palm oil investors will help kick-start West Africa’s nascent palm oil industry.

“Palm oil production respects and adopts the three principles of sustainability – people, planet and profits. Investment in oil palm cultivation must continue because palm oil addresses food security and the need for trans fat free food items at affordable pricing,” he said.

KLK makes foray into Liberia

November 8, 2013 Leave a comment
KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK), one of Malaysia’s top five plantation companies, will venture into Liberia to expand its oil palm land beyond Malaysia, Indonesia and Papua New Guinea.

KLK, yesterday, said it had sealed a cash deal with Singapore’s Biopalm Energy Ltd to buy a 50 per cent stake in Liberian Palm Developments Ltd (LPD) for US$17.4 million (RM55.3 million) and a 20.1 per cent stake in Equatorial Palm Oil Plc for US$3.2 million, both from Singaporean stock exchange-listed Biopalm Energy Ltd.

KLK will also take on LPD’s US$608,000 loan from Biopalm Energy. The remaining 50 per cent stake in LPD is held by Equatorial, which is listed on the London Stock Exchange’s Alternative Investment Market. 

“The acquisition is in line with KLK’s strategy to expand its plantation landbank outside Malaysia and Indonesia for geographical diversification into the West African nation where there is a net deficit of edible oils.

“LPD’s concession land is also agronomically suitable and located within 50km of deep-water ports,” KLK said in its filing to Bursa Malaysia.

The proposed acquisitions will be financed by KLK’s internally generated funds and is set to be completed in two weeks.

LPD’s subsidiaries hold two 50-year concessions with 45 years remaining awarded by the Liberian government to rehabilitate and develop 25,547ha oil palm plantations, of which 3,750ha have been planted. A further 61,111ha have been earmarked for future joint expansion.

Creme de la creme of oil palm seeds

November 8, 2013 Leave a comment
When it comes to planting oil palms, the old adage that ‘cheap things are no good and good things are not cheap’ holds true. Applied Agricultural Resources Sdn Bhd, a forerunner in oil palm breeding, tells OOI TEE CHING the effort and time that goes to producing high-quality seeds.

TO the uninitiated, Tan Cheng Chua’s job of selling oil palm seeds to farmers may seem redundant. After all, why should farmers spend extra money to buy designer seeds when they can collect them from existing fields?

The answer lies in genetics. Seeds gathered from existing oil palm fields, according to the natural laws of heredity, will not yield as many fruits as the parent trees. 

The way in which dominant traits of select oil palm trees are passed from one generation to the next is closely studied by breeders at Applied Agricultural Resources Sdn Bhd (AAR).

Seed producer AAR advises more than 350,000ha of oil palm and rubber estates in Malaysia and Indonesia. It is an equal joint venture between Boustead Holdings Bhd and Kuala Lumpur Kepong Bhd (KLK).

In an interview with Business Times, AAR head of agricultural products Tan said seed choice is crucial in oil palm planting. 

“Oil palm planting is actually a very capital-intensive venture. My job is to ensure farmers get to reap the best returns on their investments. That’s because once you sink the seeds into the ground, they will most likely stay there for the next 25 years,” he said.

In his line of work, Tan had, on several occasions, cautioned newcomers to the industry that planting of oil palm seeds gathered from existing estates suffer from low yields, no matter how many bags of fertiliser are applied to the trees.

The oil palm sector, as one of the biggest foreign exchange earners for Malaysia, is one that is heavily invested with research money. For more than 50 years, scientists have been looking at ways to breed oil palm trees that produce good harvest.

As early as in the 1960s, crop scientists introduced the hybrid called the Dura X Pisifera (DXP) because this species is able to bear very big fruit bunches. Many oil palm planters affectionately refer to the DXP hybrid as “the Dolly Parton type” because like its namesake, it yields voluptuous fruit bunches.

In the 1980s, some tree breeders realised that one of the problems of big bunches is that the inner fruitlets do not have space to develop fully. In smaller bunches, however, the inner fruitlets have a greater chance to develop and ripen more evenly. Therefore, for the same weight, smaller bunches yield more oil.

“Bigger is not always better,” Tan said.

That was when AAR breeders focused on producing trees that are of dwarf stature for easy harvesting and high oil yield in the fruit bunches.

Compared with the Dolly Parton standard, Tan highlighted that the dwarf-like AA Hybrida 1S has more, albeit smaller, fruit bunches. It also has higher oil yields. 

AAR sells these designer seeds at RM2.70 each, a premium to the price of the average Dolly Parton variant. 

At prime fruit-bearing age, AAR’s semi-clonal seedlings, grown under good management and environment, are capable of producing more than 30 tonnes of fresh fruit bunches with over 23 per cent oil extraction rate. That works out to be about seven tonnes of oil per hectare in a year, almost two times higher than the country’s average yield.

“The AA Hybrida 1S is ‘the cream of the cream’ as it can yield 20 per cent more oil than the previous-generation Dolly Partons,” Tan said, adding “our semi-clonal seed production technology ensures consistent quality in every seed we produce”.

AAR had started breeding the hybrids on experimental plots in the last three decades. Indeed, tree breeding is a meticulous and time-consuming labour of love. 

To speed up the process, AAR leverages on tissue culture to quickly grow large amounts of uniform, disease-free plant tissue.

Tan said the most widely recognised benefit of tissue culture is high uniformity in the resultant clones. Thus, tissue culture is an ideal method to bump up supply of elite clones.

Over in Ijok, Selangor, AAR owns the world’s largest and most progressive oil palm tissue culture laboratory. Tissue culturists carry out cloning where shoots of the chosen oil palm trees are spliced, cultured and grown in test tubes. These shoots grow up to be identical to the “parent” tree.

The advantages of tree cloning are clear, Tan said. “It is much easier to manage and harvest oil palms if the trees behave uniformly”. 

Today, AAR’s facility at Tuan Mee estate is capable of churning out 1.5 million clonal palms per year. Tan said his company makes use of its tissue culture expertise to multiply its elite mother palms to produce the AA Hybrida 1S which they have been selling to the farmers for over five years now. 

His team of breeders is now working on the AA Hybrida 2 that will see a further 25 per cent improvement in oil yield. It is scheduled to be launched in 2015.

Also present at the interview was AAR plant breeder Wong Choo Kien. 

It is often stated that clonal plantations reduce genetic diversity. In response, Wong said this is a generalised view, which need not always be true. 

“Near clonal plantations actually provide a tool to choose genetic diversity at will. On the other hand, when a seedling material is used, the genetic diversity is essentially left to chance,” he said.

When asked on the outlook for the medium term, Wong noted AAR’s palm breeding plan is to produce elite planting materials using marker assisted genome-wide selected palms. This, he said, will lead to a speedier and more precise prediction of superior parents for seed production.