The Palm Oil Industry in Malaysia: from Seed to Frying Pan

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THE PALM OIL INDUSTRY IN MALAYSIA
From Seed to Frying Pan

Prepared for WWF Switzerland by TEOH Cheng Hai, Hon. Advisor, Plantation Agriculture, WWF Malaysia, 49, Jalan SS 23/15. Taman SEA, 47400 Petaling Jaya, Selangor, Malaysia November 2002

The Palm Oil Industry in Malaysia: From Seed to Frying Pan

THE PALM OIL INDUSTRY IN MALAYSIA: From Seed to Frying Pan
Table of Contents Page Table of Contents Executive Summary List of Tables List of Figures List of Plates List of Abbreviations 1. Introduction 1.1. 1.2. 1.3. Background Objective and Scope Approach 1 1 2 ii v viii ix x xi

Part A: From Seed to Frying Pan 2. Introduction to the Palm Oil Industry 2.1. 2.2 2.3. 2.4 2.5 2.6 Historical Background The Oil Palm Characteristics of Palm Oil Food and Non-food Applications of Palm Oil World Production of Palm Oil Palm Oil Production in Malaysia 4 4 7 8 10 12

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The Palm Oil Industry in Malaysia: From Seed to Frying Pan

3.

Key Processes in the Production of Palm Oil 3.1. 3.2. 3.3. Production of Fresh Fruit Bunches (FFB) Production of Crude Palm Oil (CPO) and Palm Kernel Production of Refined Edible Palm Oil 16 20 22

4.

The Supply Chain of the Palm Oil Industry in Malaysia 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 Introduction Upstream Producers Downstream Producers Exporters/Importers Industry Organisations Government Agencies Other Players Customers Linkages Among Major Players in the Palm Oil Supply Chain Profiles and Performances of Major Plantation Companies 24 26 33 34 37 40 41 42 43 48 53 53 54

5. 6. 7. 8.

Conclusion Acknowledgements References Appendix Appendix I Appendix II NACRA Criteria – Environmental Reporting Award Published Environmental Policies of Plantation Companies

57 59

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The Palm Oil Industry in Malaysia: From Seed to Frying Pan

PART B: Profiles of Major Players in the Supply Chain of the Palm Oil Industry Plantation Companies COM.1 COM.2 COM.3 COM.4 COM.5 COM.6 COM.7 COM.8 COM.9 COM.10 COM.11 COM.12 Asiatic Development Berhad Austral Enterprise Sdn. Bhd. Golden Hope Plantations Berhad. Hap Seng Consolidated Berhad IOI Corporation Berhad Kuala Sidim Berhad Kulim Malaysia Berhad Kuala Lumpur Kepong Berhad Kumpulan Guthrie Berhad PPB Oil Palms Berhad Tradewinds (M) Berhad United Plantations Berhad 63 65 67 69 71 73 75 77 79 81 83 85

Industry Organisations ORG.1 ORG.2 ORG.3 ORG.4 ORG.5 ORG.6 ORG.7 Malaysian Palm Oil Association (MPOA) The East Malaysia Planters’ Association (EMPA) The Incorporated Society of Planters (ISP). Palm Oil Refiners Association of Malaysia(PORAM) The Malayan Oil Manufacturers Association (MEOMA) Malaysian Oleochemicals Manufacturers Group (MOMG) Malaysian Palm Oil Promotion Council (MPOPC) 88 92 94 97 100 103 106

Government Agencies GOV.1 GOV.2 GOV.3 GOV.4 GOV.5 Federal Land Development Authority (Felda) Malaysian Palm Oil Board (MPOB) Department of Environment (DOE) Malaysia Natural Resources Environment Board (NREB) Environment Conservation Department (ECD) 110 114 117 120 123

Other Players OP.1 The National Association of Smallholders (NASH) 127

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The Palm Oil Industry in Malaysia: From Seed to Frying Pan

Executive Summary
Growing global demand for edible oils and animal proteins in the last decade or two had resulted in a tremendous increase in the areas under oil crops cultivation, particularly of soybean and oil palm. In the last six years, the four main soybean growing countries comprising Brazil, Argentina, Bolivia and Paraguay recorded a 92% increase in production and 66% increase in planted area. World production of palm oil, the most widely traded edible oil, has also seen significant leaps in production and planted areas; production had almost doubled from 1990 to 2001, with Malaysia and Indonesia contributing to most of the increased production. The rapid expansion of both crops had resulted in the conversion of High Conservation Value Forests1 (HCVFs) in South America, including parts of the Amazon and...
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