KUCHING: An economist has called on the European Union (EU), industry leaders and consumers worldwide to recognise the Malaysian Sustainable Palm Oil Certification Scheme (MSPO) as a major driver in sustainable and free trade policy.
Centre for Market Education (CME) economist Carmelo Ferlito, made the call after Malaysia embarked on a trade mission to the European Union in Belgium and United Kingdom (UK), led by Deputy Prime Minister and Minister of Plantation and Commodities, Datuk Seri Fadillah Yusof recently.
The trade mission was a direct response to the EU’s recent implementation of stringent anti-deforestation rules (EUDR), aimed at preventing deforestation resulting from agricultural activities.
“If the EU genuinely aims to address deforestation concerns and ensure the sustainability of palm oil, it should actively seek to accept, endorse, and promote the MSPO as a recognised contributor to environmental sustainability throughout the industry,” Ferlito told New Sarawak Tribune.
He pointed out that the implementation of the EUDR may have adverse effects on fair and free trade since it specifically targets agricultural commodity products.
According to him, this could potentially impact millions of smallholder farmers in developing nations and disrupt global supply chains.
In 2022, the EU accounted for 9.4 per cent of Malaysia’s total palm oil exports, which amounted to 1.47 million tonnes.
Ferlito said that the MSPO is considered an equitable and practical certification scheme capable of enhancing sustainability practices across the entire palm oil production value chain.
“The MSPO is inclusive by nature as it aims to involve smallholder farmers and hold them accountable for their actions and farming practices,” he explained, adding that oil palm cultivation provides income for over seven million smallholder farmers globally, and in Malaysia, smallholders contribute 40 per cent of the total palm oil plantation areas.
“As we all know, palm oil is the biggest contributor to the country’s gross domestic product (GDP) under the agriculture sector.
“Even in Sarawak, oil palm is the biggest contributor, contributing 68 per cent of the state’s GDP under the agriculture sector in the year 2021,” said Ferlito.
As of December 2022, the total area of oil palm plantations in Sarawak reached 1.62 million hectares. Of this, 85 per cent or 1.37 million hectares were owned by the estate sector, while independent smallholders owned the remaining land.
While sharing similar objectives with certification schemes like the Roundtable on Sustainable Palm Oil (RSPO), he said the MSPO’s unique focus lies in addressing the specific needs and challenges faced by smallholder farmers.
“One significant advantage of MSPO certification is its significantly lower cost, making it more accessible to smallholder farmers who rely on palm oil for their livelihoods,” added Ferlito.
“If the certification process is expensive, cost-sensitive smallholder farmers with limited financial resources may choose to forgo certification altogether. This would deprive them of the opportunity to improve their operations in a sustainable manner and potentially hinder their access to international markets.”
Due to the combination of lower costs and the mandatory nature of MSPO certification, he said that an impressive 96 per cent of all palm oil farming in Malaysia has received MSPO certification.
In his view, this indicates that nearly all companies and smallholders in Malaysia are involved in the production and sale of Fresh Fruit Bunches (FFB) from environmentally and socially responsible plantations.
Ferlito highlighted that the MSPO is a mandatory organisation that enforces comprehensive and stringent rules and standards for all participants. The certification scheme requires independent assessments of environmental and social impacts prior to land conversion and replanting. It strictly prohibits the use of forced or trafficked labour, as well as child labour.
“The MSPO certificate is valid for five years and includes annual surveillance audits. Additionally, the certification scheme undergoes a review every five years through a consultative approach involving multiple stakeholders to ensure its relevance and alignment with industry best practices,” Ferlito added.
He also mentioned that the MSPO is not intended to compete with or replace existing certification schemes.
Instead, he believes that sustainable palm oil can be further strengthened by greater participation from every player in the supply chain, including nurseries, smallholders, large plantations, mills and refineries.
“To achieve this, policymakers worldwide must adopt a progressive approach by accepting and promoting an inclusive, localised and comprehensive certification scheme like MSPO that can drive tangible change. Ultimately, it comes down to a matter of supply and demand,” Ferlito added.
