Ladies and Gentlemen,
- I am very pleased to be here to open this event, and would like to congratulate the ISP on the occasion of its centenary. This conference, the ninth that has been put on by the Society, promises two days of thought-provoking insights and lively debate from the many distinguished speakers, senior industry figures, numerous planters, and interested observers. All of you are gathered here to discuss the future of the important plantation sector, and to consider the transformations that it may need to undergo to meet the challenges of the future.
- While the members of the ISP plant a range of crops, among them, the oil palm is by far the most valuable to the country in economic terms, contributing significantly in taxes, export earnings, and employment. At the same time, the sector has been subject to considerable criticism for some time, over the negative environmental impacts of the large-scale forest conversion that is associated with its expansion, through carbon emissions and biodiversity loss.
- Commendable progress on sustainability has been made as a result of this attention, however unwelcome it may be. Further efforts are still required, however. This is necessary not just to respond to external criticism or market restrictions, but is imperative in itself. This is in order to limit any further contribution from deforestation to the global environmental emergency that we are collectively facing, the urgency of which is now increasingly being recognized. So an effective strategy for resolving this issue must lie right at the heart of any process of charting the future course of the sector.
- Further progress on sustainability will also rest on efforts to boost productivity in the sector, through the application of new technologies, and other innovations. Achieving greater efficiency
in food production more broadly – beyond only palm oil – is a critical element of responding to the global environmental crisis. This will of course itself create major additional challenges, from rising temperatures, reduced availability of water, depleted soils and many others. The development of effective means to address these wider sustainability and environmental challenges must thus also be put at the centre of the discussions taking place here on the future of the sector.
- I want to focus my remarks today on how the palm oil sector can meet these challenges, through advances in productivity and efficiency, as well as by further limiting its negative impacts. This is likely to require far-reaching changes, but these may now be inevitable anyway, given the challenges that are faced. Business as usual cannot continue any longer. However, the potential returns to this transformation – in both environmental and economic terms – should more than adequately compensate for the risks that must now be taken.
- Over the past few decades, palm oil has become a major global crop, and a key element of the global food system. This system already contributes disproportionately to the global environmental crisis, and predicted population growth will only make this worse.  In order to feed the ever-rising population – expected to reach around 9.8 billion by 2050 – ever-growing production of meat and other proteins, of staple grains, and of vegetable oils, will be required. While consumption of all foods will increase in absolute terms, that of preferred proteins and oils will rise even faster as more people are able to afford them.
- From an economic perspective, this growth in the demand for food, including palm oil, may seem to present an exciting opportunity. But without significant changes to the current system, the environmental consequences will be dire. These include rising emissions of methane from livestock, and of carbon from land-use change for expanding agricultural production, and from transportation. They also include further damage to soil and water ecosystems from pesticide, herbicide and fertilizer use, and continued bio-diversity loss, of animals, insects and plants.
- More sustainable ways to meet the growing global demand for food must clearly be developed. This will entail the more intensive and less-damaging use of existing resources, as well as greater efficiency in all areas of production, distribution and consumption. Just as in other sectors, new technologies and other innovations will play a key role in driving these changes in the agricultural sector. This transformation, to echo the theme of the conference, will be led by people, who will develop the processes and policies that will drive the sector forward successfully in this challenging context.
- So what are the implications for the palm oil sector ? As many of us here are well aware, oil palm is already far more sustainable than many other crops, in various ways. With an average yield per hectare of eight times that of soybeans, and four times that of rapeseed, oil palm is the most land-efficient vegetable oil by some margin. Its production also requires far less pesticide than other vegetable oils, while fertilizer application is reduced by the widespread use of mulching. And considerable efforts have been made in the sector to limit deforestation and carbon emissions. Primary and secondary rainforests are now being better protected, and development on peat is being eliminated altogether.
- These actions go well beyond those being taken in some other sectors, something that reflects the relatively early development of certification schemes in this sector. Despite some deficiencies, these mechanisms have contributed to the reduction of negative environmental impacts; the dissemination of best agricultural practices – such as mulching; and to the implementation of more social safeguards as well.
- These certification schemes continue to evolve, with the principles and criteria of the RSPO further strengthened through their recent review, and membership of the MSPO now becoming compulsory. Once its more limited requirements have been fully implemented, companies and smallholders alike will be better prepared to move towards meeting the more stringent RSPO requirements. Sufficient support, especially for smallholders, will help to facilitate this process. It is also vital to make sure that these mechanisms really do work in practice to regulate the sector effectively, in order to ensure its accountability.
- Although the sector is thus making good progress towards greater sustainability through these means, more can and must be done. This includes by boosting productivity through the application of new technologies and other innovations. This approach holds much promise in economic as well as environmental terms – whether from genetic breakthroughs; the discovery of new processing methods or uses; or the achievement of greater efficiency in existing production and distribution processes.
- Innovation and technology has of course played a key role in the extraordinary rise of the oil palm. From being a minor tropical tree crop only a few short decades ago, it has become a globally significant crop, used in everything from processed food to personal care products to bio-fuel, quite apart from as a cooking oil. Much of this growth has occurred since the early 1980s, with the development of oil palm tissue culture techniques, and the successful introduction of the pollinating weevil to Southeast Asia from its native home in West Africa. History records very few successful introductions of this kind – consider the disaster caused by importing cane toads into Australia or, closer to home, the unfortunate introduction of crows to Klang over a century ago. This exceptional case of the weevil resulted in substantial savings compared to the cost of artificial pollination.
- Other characteristics of palm oil, and palm kernel oil, have also contributed to the rise of the sector, including their saturated fat content and heat resistance. These qualities have facilitated the use of the two oils in the manufacture of a wide range of food and other products. This expansion of the commercial applications of the crop has been driven by advances in bio-technology and bio-chemistry, with a key role played by fractionation processes. The very ubiquity of palm oil that is so lamented by its critics in fact reflects the ingenuity and dedication of the Malaysian and other scientists who have led this process of invention.
- But although investment in research and development has continued, there have been far fewer breakthroughs in recent years. Yields have been more or less stagnant for decades. The considerable efforts being put into the development of genetic characteristics to facilitate harvesting, such as slower growth for example, have yet to come to fruition. Recent advances in genetic engineering do hold great potential for this area, however. The gene-editing technique CRISPR is already being successfully applied to other crops, such as the creation of genetically-decaffeinated coffee.
- Even in the absence of any major leap forward, there are many other sources of improved productivity that can be tapped within existing technological boundaries. The potential can be seen in the large gap between the average yield of around 20 metric tonnes per hectare per year, and what is deemed possible by industry plant breeders, of 35 or even 40 tonnes. More attention should be given to the question of how these much higher yields can be achieved throughout the sector. Smallholders will again require particular attention and support.
- Further improvements in estate management practices can help to boost productivity and therefore sustainability, as can higher extraction rates. The use of only the best quality, and non-contaminated, planting materials is another crucial element, and again something that must be applied throughout the sector. This alone can make such a difference to yield that early replanting to improve the overall tree stock may even be justified. The early replacement of rubber trees with higher–yielding varieties – both during the colonial period and following the end of the Second World War – paid off quickly. The certification schemes can contribute to the dissemination and implementation of these best practices.
- Boosting productivity will also require a more efficient balance to be achieved between labour and machinery usage. As well as relative costs, this must take into account the ongoing hiring constraints, and address the losses of as much of 10-20% of production that are caused each year by labour shortages. Mechanization has its own challenges of course, with motorized harvesting cutters not workable in all terrains, for example, or beyond a certain height. This is again despite the considerable efforts that have been made to improve these tools.
- These factors have contributed to the continued reliance on existing technologies, with refining and milling processes both unchanged for decades. The reasons for this apparent resistance to change, as well as the very real constraints that are faced, should be further explored, along with the policy implications. A more favorable regulatory environment could help to encourage a bolder approach. This could include simplified patenting procedures, or tax incentives for piloting new technologies. 
- The relatively slow pace of change may reflect a broader trend in the agricultural sector. Apart from a few exceptions, the application of the recent wave of technological advances associated with the Fourth Industrial Revolution is significantly lagging in this sector. One study found that the number of entrepreneurs developing agricultural businesses based on cutting edge technologies is just one twentieth of those in the health care sector, and with only one tenth of the investment.
- There are some exciting developments in agriculture, however. These include the use of sensors and the Internet of Things to achieve far greater precision in the application of chemicals. Along with the use of drones for delivery, this promises to have a revolutionary impact on the efficiency of chemical usage. This is good news for the environment and for the bottom line. But more and bolder innovation in the sector – with institutional support where necessary to overcome market failures – is clearly needed.
- Recent advances in the area of remote sensing do have the potential to have a transformative impact in the palm oil sector. On the one hand, the growing use of LiDAR mapping is enabling a far more precise understanding to be developed of the landscape than in the past.  This contributes to more efficient planning and operation of plantations and any associated protected areas. At the same time, the more widespread availability of ‘last generation’ satellite imagery is enabling far more accurate monitoring of land-use change than was possible previously. This allows responsible companies to demonstrate clearly their compliance with their no deforestation commitments, while ‘rogue’ companies can more easily be identified and shamed.
Ladies and Gentlemen,
- Rather than respond defensively to critics, representatives and supporters of the oil palm sector should instead reach out and provide the much more nuanced account of its sustainability record and practices that is, in fact, the case. This should emphasize the progress that has already been made by the sector towards limiting negative impacts, and the continued and strengthened efforts. It should also focus on the importance of boosting further the productivity, and therefore sustainability, of what is already a leading crop in this regard.
- The potential contribution of technological advance to both these aspects of sustainability is amply illustrated by the example of remote sensing technologies, which strengthen environmental monitoring and boost efficiency. Other new technologies will prove equally transformative, and innovation in the sector should be encouraged and supported as much as possible, in order to exploit the full potential of the current wave of technological advance. Innovative approaches will also be necessary to meet the growing environmental challenges that will likely be faced.
- Ultimately, it will be you, the people in the sector, who will play the central role in driving the changes to policies and processes that will be required as the palm oil and plantation sectors chart their course into an uncertain future. As you embark on this difficult journey, I urge you to make innovation and sustainability your twin goals. It is very encouraging in this regard to see that increased attention is being given to sustainability issues in the agenda and concerns of this and other conferences. On this note, I now declare the conference open.
 Chandran, M.R., “Malaysian Palm Oil Industry : Business as Usual…. Not an Option Anymore’, 14th ISP National Seminar July 2018
 World Economic Forum and McKinsey (January 2018) ‘Innovation with a Purpose : The role of technology innovation in accelerating food systems transformation’
 Chandran, ibid.
 Chandran, ibid.
 WEF and McKinsey, ibid
In the News: