Malaysia says palm oil exports to EU down

(AFP) – Mar 8, 2011

KUALA LUMPUR — Activists who blame the palm oil industry for damaging Malaysia's environment have contributed to a drop in exports to the major European Union market, a minister said Tuesday.

Environmentalists say palm oil, which is widely used as biofuel and in processed food and toiletries, is grown on vast plantations leading to deforestation which threatens rare species such as orangutans and rhinos.

Malaysia's plantation industries and commodities minister Bernard Dompok said lobbyists had pressured EU companies who use palm oil in their products.

"As a result we have witnessed a drop in the quantity of palm oil consumed within the EU," he said at the opening of a three-day meeting attended by palm oil industry leaders in Kuala Lumpur.

China, Pakistan, the EU, India, United States, Egypt and Japan, accounted for 68 percent of Malaysian palm oil exports last year.

Dompok defended the industry, which is a major foreign exchange earner for the southeast Asian country.

"The NGOs (non-governmental organisations) do not fully understand what they are talking about. One of their rallying calls is that oil palms destroy orangutan habitats but orangutans are found in small areas on Borneo island."

"We are committed to preserve people, planet and profit. That is the order," said Dompok, adding that palm cultivation has not caused the "annihilation of orangutans" on Borneo.

Malaysia is one of the world's top two palm oil exporters and alongside Indonesia, accounts for 85 percent of global production.

The minister added that Malaysia's palm oil output in 2011 will grow modestly due to improved yields.

Early this year the La Nina climate phenomenon caused floods in Malaysia, affecting the harvest and quality of palm fruit produced from which the oil is extracted.

Dompok said one of the challenges the local palm oil industry faced was the availability of land, and hence "any increase in production has to be done through productivity".

Production of crude palm oil fell to 16.99 million tonnes in 2010 compared to 17.56 million in 2009, but is forecast to rise to 17.59 million this year.

Dompok said he favoured price stability for crude palm oil over high prices which could push consumers to use other commodities.

"I am interested in stability of prices in all the commodities. I would be happy where the price of crude palm oil stays beyond 3,000 ringgit per tonne ($990)," he said.

The most-active futures contract on the Malaysia Commodities Exchange averaged 3,725.80 ringgit so far this year.