Archive for 2010

Masing: There's no land grab

This is written by my colleague Lian Cheng at Kuching bureau in Sarawak.

KUCHING: There is no way for the state government to grab the land of the natives, especially the Penans, when there are strict procedures that must be followed when developing Native Customary Rights (NCR) land to oil palm estates.

State Minister of Land Development Datuk Seri Dr James Masing said allegations of the state government grabbing NCR land was based on ignorance and arrogance.

"Ignorance, because they do not know that there are procedures involved. Arrogance, because they are making the assumption that Sarawak politicians are all crooked," said Masing at a press conference here.

"There is no way the government can grab land as alleged by international non-governmental organisations, should the land be genuinely NCR land. There are strict procedures, which include the signatures of every land owner. We seek the co-operation from every NCR land owner before we develop their land. If they disagree, we won’t go in.

Masing pointed out that anyone who wished to know about the land development concept in Sarawak is free to check with his ministry.

He was refuting allegations made by a Kansas-based human rights activist Robert E. Rutkowski, who wrote to Prime Minister Datuk Seri Najib Razak to inform the latter that "the hunter-gatherer Penan and other tribes are under threat from new plans to expand oil palm plantations massively in the Malaysian state of Sarawak".

"The Sarawak government has announced plans to double the area used for oil palm by 2020, using indigenous land which it says is 'mostly under-utilised and without titles'," said the letter dated 21 Dec 2010, copied to Chief Minister Tan Sri Abdul Taib Mahmud and United States Secretary of State Hillary Clinton.

Masing clarified it was indeed the government's plan to develop two million hectares of land but not only as oil palm plantations but also other crops, such as rubber. "By 2020, our target is to develop some two million hectares of land which belongs both to the state and the natives for plantation purposes. In our case, it will be oil palm and rubber," he said.

"I am not going to apologise for trying to develop unproductive land for land owners when we are trying our best to do it properly. If the land  remains  idle, then the owners will remain poor. Among the main objective to develop the NCR land is to eradicate poverty among the people in the rural area.

He added that while there were only 1.5 million hectares of NCR land in Sarawak, the accusation that the government intend to turn two million hectares of NCR land into an oil palm plantation was wrong.

"Of the 900,000ha of existing oil palm plantations, only 50,000ha are NCR land. There's another 200,000ha of NCR land identified for oil palm," said Masing, adding that the plan to develop land for cash crop plantations not only involved NCR land, but also other land types.

He then pointed out that according to the Land Law 1958, the natives could only claim the land as theirs if they cultivated on the land. "The Penans were not cultivators. However, the state government understands their needs, so they are allowed to hunt and roam freely in the areas they want, such as the catchment areas of Bakun and Murum, while other natives, such as Iban, do not have the privilege."

He said there were about 3,000 Penans who were still nomads, living in the Baram and Belaga areas. Others have joined the mainstream society. "There are only 3,000 nomadic Penans. And the total catchment area of Bakun Dam (including Murum Dam) is 69,000ha."

Sime sues ex-CEO Zubir & 4 others

This is written by my colleagues Irdiani Mohd Salleh, Zaidi Isham Ismail and Azlan Abu Bakar

KUALA LUMPUR: Sime Darby Bhd former group chief executive officer Datuk Seri Ahmad Zubir Murshid and two senior executives were slapped with another civil suit by the conglomerate, a day after it filed the first suit. 

This time, it was in relation to the Bakun dam project. 

The company and its three subsidiaries Sime Engineering Sdn Bhd, Sime Darby Holdings Bhd and Sime Darby Energy Sdn Bhd filed the suit at the High Court registry here today through Messrs Zaid Ibrahim & Co.

Besides Ahmad Zubir, former Sime Darby Energy Sdn Bhd vice president Datuk Mohd Shukri Baharom and chief financial officer Abdul Rahim Ismail were named as defendants in the suit. The plaintiffs are seeking at least RM92.2 million from the defendants.

Among the reliefs sought are:

* an order that the defendants make restitution of two amounts of RM74 million and RM16.5 million which were wrongly paid out in the Bakun project;

* an order that damages be assessed and be paid by the defendants for wrongly giving away plants to Sinohydro;

* an order that damages be assessed for all losses caused by the defendants and suffered by the plaintiffs in the Bakun project to be paid by each of the defendants;

* aggravated and exemplary damages to be paid by each defendant;

* alternatively, an order that damages be assessed on the basis that each defendant acted in breach of trust and fiduciary duty and an order that such payment be made;

* an order that Mohd Shukri and Ahmad Zubir make restitution of RM851,313.49 each; and

* interest and costs.


Sime Darby said the suit was filed in the interest of shareholders when in September 2009, the board of directors realised that there were cost overruns in four projects executed by the energy and utilities division including Bakun dam project. The Bakun dam, which is located in Sungai Balui, Sarawak, is the country's largest hydroelectric dam which can generate 2,400MW of electricity.

Yesterday, Sime Darby filed a suit against the three defendants and two other senior executives over their alleged roles in the massive RM1.7 billion losses suffered by its energy and utilities division this year.

Sime Darby is claiming at least RM338 million from the five, with almost half of that from Ahmad Zubir and Mohd Shukri. It is also seeking damages for losses caused by them in three projects and any aggravated or exemplary damages. The suit deals with three projects, namely the Bulhanine and Maydan Mahzam project with Qatar Petroleum, the Maersk Oil Qatar project and building of marine vessels for the Maersk Oil Qatar project.

Ahmad Zubir was asked to take a leave of absence in 13th May 2010 ahead of his employment term expiring 26th November 2010. In July 2010, Datuk Mohd Bakke Mohd Salleh was named acting president and group chief executive officer.

The suit is fixed for case management on 9th March 2011.

Sime Darby recorded RM1.7 billion in cost overruns for the three projects and the Bakun hydroelectric dam project earlier this year, causing it to allocate a RM2.1 billion provision.

The extra costs led Sime Darby to post losses in the third quarter to March 2010, its first quarterly loss since its mega merger with state-owned Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd in December 2007.

Losses dragged on to the fourth quarter ending in June 2010 but Sime Darby continued to be profitable for the full year and has bounced back with a first-quarter profit for fiscal year 2011.

KL Kepong to tighten grip on nitrile latex mart

Kuala Lumpur Kepong Bhd (KLK), which owns 19 per cent of Yule Catto & Co plc, is set to tighten its grip on the world’s supply of nitrile latex following the British firm’s €443 million (RM1.85 billion) purchase of Germany’s PolymerLatex Group.

Chemical maker Yule Catto, listed on the London Stock Exchange, is already the owner of the Synthomer Group’s polymers business. The PolymerLatex acquisition will bring together the world’s two biggest suppliers of butadiene or nitrile latex with a combined turnover of more than £1.2 billion and more than 2,000 employees.

Synthomer’s unit in Malaysia runs a 130,000-tonne per year nitrile plant in Kluang, Johor. On the other hand, PolymerLatex operates a 100,000-tonne a year nitrile latex plant in Pasir Gudang, Johor.

Nitrile latex is used mainly to make synthetic rubber gloves.

KLK director Datuk Lee Hau Hian said the purchase will strengthen Yule Catto’s core business. “It will allow Yule Catto to achieve cost synergy in research and product development,” Lee told Business Times yesterday.

Asked if a bigger sized Yule Catto could lead to price-fixing of nitrile latex, Lee said: “No, it will not because it takes two to make a deal. Both Yule Catto and nitrile glove makers must be happy in order for the industry to grow”.

Hartalega Holdings Bhd managing director Kuan Kam Hon said Yule Catto’s acquisition is a good thing for the former. “I don’t think there’ll be any issue of price-fixing because there is no monopoly. The market is becoming bigger and we see new players from South Korea and Taiwan,” he said when contacted yesterday.

“When we source for nitrile latex, it’s not a decision based solely on price. Technical support is very important,” Kuan added. Hartalega is the world’s largest nitrile glovemaker and biggest consumer of nitrile latex in Malaysia.

Yule Catto is issuing rights shares to fund the PolymerLatex purchase. Its investors are offered four new shares for each three they currently own at 116 pence.

KLK, in a filing to Bursa Malaysia on Tuesday, said it will take up all its rights. This means the company will pay RM209.8 million for its portion.

Yule Catto chief executive Adrian Whitfield reportedly said the enlarged group could compete more effectively in a consolidating emulsion polymer market. He expected the deal, which is scheduled to complete by the second quarter of 2011, to achieve £20 million (RM98.8 million) in cost savings.

Palm oil and reduced global warming

Tan Sri Dr Yusof Basiron, the CEO of the Malaysian Palm Oil Council wrote this article.

AT a recent forum organised by the Palm Oil Refiners Association of Malaysia (PORAM) in Kuala Lumpur, it was revealed that there was no moral case for Western Environmental NGO (WENGO) campaigns against palm oil.

Data indicates that the agricultural land occupied by the world palm oil industry is miniscule (1.56 per cent) compared with the total land allocated to growing grains and oilseeds.

Oil palm is the main agricultural crop of major producer countries such as Malaysia and Indonesia, where it occupies 13 per cent and five per cent of their land area, respectively.

Assuming that developing countries are allowed to use part of their land area for agriculture and plant the most profitable crops to provide employment, produce food and generate income, the data shows that there is no excessive over-exploitation of forests due to planting oil palm as a cash crop.

Nationally, both countries retain much higher percentages of forest as compared with developed countries.

If WENGOs claim that global warming is caused by loss of forests due to oil palm cultivation, it would be useful to know that oil palm share of world agricultural land is only 0.22 per cent. 

The share of loss of carbon stock (deforestation) caused by oil palm compared with total global agriculture is thus assumed to be 0.22 per cent. It is, therefore, morally unacceptable for WENGOs to demand palm oil-producing countries to reduce their share of agriculture, which accounts for merely 0.22 per cent of the world's agricultural area.

Even the total greenhouse gas (GHG) emission of global agriculture of 17 per cent is considered small compared with the burning of fossil fuel, which contributes 57 per cent of GHG emission. The carbon footprint of oil palm cultivation globally is, therefore, 0.22 per cent times 17 per cent of the total or 0.0374 per cent of global GHG emissions. This has no bearing on global warming, hence making it immoral to blame oil palm as a significant contributor to global warming.

Many other economic activities are responsible for the vast amount of GHG emission. These activities are accepted as part of the economic growth processes needed to sustain the world economy. Efforts to reduce GHG emissions should be directed at these economic activities as they are the main cause of GHG emission.

Curtailing the expansion of oil palm on the basis of its impact on global warming is, therefore, scientifically unjustified as the contribution is only 0.0374 per cent of global GHG emission.

If the loss of biodiversity is used as an argument to discourage oil palm cultivation, then ample forest is being conserved. The United Nations convention only requires 10 per cent of the country's land area to be kept as forest for conserving biodiversity, and Malaysia has far exceeded this by committing 50 per cent.

Despite the lack of convincing evidence to pin down the palm oil industry against global warming or biodiversity loss, both producer countries have given full cooperation to comply with the needs of stakeholders and WENGOs to produce palm oil sustainably. They have fully embraced the Roundtable on Sustainable Palm Oil (RSPO) to enable palm oil to be certified to meet sustainability principles and criteria.

The Indonesians have signed an agreement with Norway for a moratorium on deforestation while the Malaysian government has repeatedly announced its assurance of maintaining at least 50 per cent of its land area as permanent forest. Deforestation thus appears to be a non-issue.

To ensure a level playing field, it is timely that a similar certification for sustainability be required for other oils produced by various countries worldwide. Otherwise, it will be a clear reflection of the oil palm industry being victimised by being asked to comply to certification needs for sustainability when no scientific justification exists to allow the world to benefit from global warming mitigation or improved biodiversity.

Without premiums given to RSPO certified palm oil, it becomes a big burden for oil palm farmers to bear the added cost of certification when their rivals producing soyabean or rapeseed are not certified for sustainability.

Certifying the other (low yielding and land inefficient) oilseed crops for sustainability would at least contribute to a greater amount of carbon emission reduction compared with oil palm, even though the quantum of saving is still small compared with the carbon footprint of fossil fuel and other agricultural activities.

All evidence clearly shows that there is no moral ground for WENGOs to campaign against palm oil.

Unless the WENGOs can quantify and show that there are clear benefits relating to global warming or biodiversity improvements, or economic premiums for sustainable certified palm oil, then it is only a matter of time before producers realise that WENGOs only impose the no deforestation condition on palm oil but do not bother to do likewise on other low yielding crops which occupy vast areas of land.

Southern Acids Q2 net profit surges 19-fold

Southern Acids (M) Bhd's net profit for the second quarter ended October 2010 jumped 19-fold to RM7.92 million from RM408,000 a year ago.

Chairman Tan Sri Low Boon Eng said its outlook for the rest of the financial year should be bright. This is given that palm oil prices are likely to remain buoyant at over RM3,000 a tonne as global demand for vegetable oils exceeds supply.

He attributed the group's solid interim results to more sales of oil palm fresh fruit bunches at higher prices and improved performance at its Sri Kota Specialist Medical Centre in Klang.

Southern Acids, via PT Mustika Agro Sari and PT Wanasari Nusantara, has 7,870ha of oil palm plantations in Riau, Indonesia. Chief executive Leong Kian Ming said: "For this quarter, we milled 35,476 tonnes of fresh fruit bunches, 18 per cent more than 30,174 tonnes a year ago.

"Also, our average crude palm oil selling price was RM2,518 a tonne, much higher than RM2,136 a year ealier."

Leong and Low were speaking at a briefing on the company's quarterly results in Klang yesterday. Palm oil prices had been trending upwards in the last five months. Yesterday, palm oil futures on the Malaysian Derivatives Market climbed RM35 to close at RM3,633 a tonne.

Southern Acids operates a 100,000-tonne-a-year oleochemicals plant in Kapar, Klang, via Pofachem (M) Sdn Bhd. Low said the company wanted to upgrade and double its capacity. "The oleochemicals market is doing good. We want to expand," he added.

Another contributing factor for Southern Acids' second quarter results is the absence of foreign exchange losses, which it had incurred previously. "We do not enter into target redemption forward contracts anymore. That was in the past. We now just do the normal hedging," Low said.

Southern Acids' 232-bed Sri Kota Specialist Medical Centre in Klang made a RM1.02 million net profit in the second quarter. This was a turnaround from the RM1.17 million loss a year ago. "We've managed to turn the hospital around and it is now operating at 60 per cent occupancy. We want to tap into medical tourism to improve the rate to 90 per cent," Low said.

Indonesia gov calls for palm oil industry road map

This was written by Desi Nurhayati and published in Jakarta Post yesterday.


The government has called on stakeholders in the country’s growing palm oil sector to set up a road map to ensure that oil palm plantations will not only help economic growth but promote environmental sustainability.

Speaking during an international conference on palm oil in Nusa Dua, Bali, Friday, Trade Minister Mari Elka Pangestu said that such a business road map was important to determine the right direction to take for the country’s oil palm sector.

“All stakeholders have a responsibility to find a balance between economic growth and social progress with aspects related to environmental sustainability.

"Growth could stall if we don’t have a comprehensive approach,” the minister said in a speech at the sixth Indonesian Palm Oil Conference.

She said there had been tremendous growth in the contribution of the palm oil sector to the country’s GDP within the last five years.

Exports of crude palm oil (CPO) and its related products have shown remarkable growth over the past five years. The exports, which totaled only US$4 billion in 2004, had increased to almost US$15 billion at present, with an average growth of 36 per cent per annum. Production also doubled during the 5-year period, with an average growth of 10 per cent a year.

Mari acknowledged the need to promote environmental sustainability on the country’s oil palm plantations, which have often been criticized for their negative impacts on the environment.

But she said that such a sustainability scheme should not impose undue burden on the supply chain of production, starting from farming all the way to trading, especially for smallholders that account for about 40 per cent of palm oil production in Indonesia.

“I encourage all of us to sit down and work out a road map together. It has to be done collectively so that the results are good for all parties,” she said.

Global dependence on palm oil will continue to rise over the next decade, as predicted by Thomas Mielke of Oil World. “About 76 to 77 million tons of palm oil would be required in 2020, with an annual average growth of 3 million tons. Indonesia will have an annual growth rate of 1.9 million tons,” Mielke said in his presentation at the conference.

He said palm oil prices would remain high next year and would reach a peak between January and April, as the current price already reached RM3,500 (US$1,112). “January and April will still be very tight, fuelling prices by RM200 to RM300 from the current level. There will be sizably better production prospects from May 2011 onward.”

Mielke predicted that Indonesia would be able to produce 40.5 million tons of palm oil in 2020, almost double the 2010 production of 21.8 million tons. Malaysia is expected to produce 22.8 million tons in 2020 from 17.52 million tons this year.

Global output is predicted to be up by three to 3.1 million tons in 2011, with Indonesia’s output to increase by 2.1 million and Malaysia’s by 0.7 million tons, he added.

'World Bank straying from core purpose'

WASHINGTON-based World Growth (WG), a pro-development non-government group, said the World Bank is straying from its core purpose of poverty alleviation as it adopts narrowly-defined sustainability rules before it lends money for oil palm planting.

This is despite the fact that Malaysia and Indonesia are being represented in the World Bank and that Prime Minister Datuk Seri Najib Razak heads the Southeast Asian constituency in the bank's governing board.

When contacted by Business Times, WG chairman Alan Oxley noted that it would be natural for the World Bank's president, Robert Zoellick, to consult the governors, which include Najib and Indonesian president Susilo Bambang Yudhoyono, over palm oil funding given how important it is for the countries' drive to alleviate poverty.

Indonesia and Malaysia are the world's top producers of palm oil.

It seemed that World Bank staff listen more to donors and environmental activists rather than developing countries. Its private-sector lender, International Finance Corp (IFC), stopped funding the palm oil industry in 2009 after complaints from environmental and human rights non-governmental organisations prompted a review of its lending practices.

IFC's director of global manufacturing, agribusiness and services Atul Mehta reportedly said part of the World Bank's new strategy involves supporting the Roundtable on Sustainable Palm Oil (RSPO), of which it is a member.

Atul said if palm oil clients violate commitments to keep forests standing and engage with local communities, the IFC can refuse loans.

Last month, lawmakers in the US wrote to the World Bank president stating their concerns over the bank's "no land conversion policy and suspension of palm oil funding". 

Congressmen John Shadegg and Scott Garrett said the sustainability criteria will limit farmers in developing nations to benefit from private and public investment and undermine the World Bank's core mission of raising living standards.

In a document made available to Business Times the congressmen said, "the World Bank's reconsideration of its pro-agriculture policies is worrisome given the proven economic success of this development model".

When asked to comment, Oxley concurred with the congressmen that the World Bank should not overreach its priorities to set environmental standards, especially when it impacts its core mission, the jobs of millions and food offerings to billions.

"Zoellick's decision on the freeze of palm oil funding is a gross overreaction to a minor workplace infraction. Furthermore, this decision will lock in RSPO-style regulations and requirements on World Bank lending," he said.

"Why is the World Bank stepping into a role of an environmental regulator and enforcer instead of staying committed to its primary mission of poverty alleviation?" Oxley questioned.

From 'Dolly Parton' bunches to smaller, oil-laden ones

For the last 40 years, Malaysia has tried a variety of ways to mechanise the harvest of oil palm fruits as the industry works to improve efficiency in the face of a worsening manpower shortage. 

Todate, the mechanisation of fruit evacuation remained largely unsuccessful. As a result, the industry has been working on the trees - to make them easier to harvest and to have more oil.

In the small town of Paloh, Johor, scientists have produced the next set of trees that could significantly improve the industry further. Not only are these trees easier to harvest, they will also have a fifth more oil from the current batch.

Buyers are coming from as far as Sarawak.

"I like what I see. It is easier to harvest and handle. The most important thing is, it will give me higher oil yield," said one planter during a recent seed-buying mission to Applied Agricultural Resources Sdn Bhd (AAR)'s oil palm seed garden in Paloh.

Malaysia is now the world's second largest palm oil producer after Indonesia. But data from the Malaysian Palm Oil Board is showing a worrying trend: palm oil output is likely to stagnate at 17.6 million tonnes for the third straight year in 2010.

Assuming this amount of oil is gathered across 4.9 million hectares, this year's yield will only total 3.6 tonnes per hectare in a year. Many planters say this is due to a severe shortage of harvesters.

While the search for the best mechanisation system continues, Malaysian crop scientists are making headway in raising tree productivity.

In the past, as oil palm trees grew taller and taller, planters use very long poles to harvest the fruit bunches. This got many crop scientists thinking. Why not breed shorter palms that bear very big fruit bunches?

So in the 1960s, crop scientists introduced the hybrid called the Dura X Pisifera (DXP) as the standard planting material. As time goes by, many in the industry affectionately referred to the DXP hybrid as "the Dolly Parton type" because the trees are shorter and produce big fruit bunches.

Fifty years on, Malaysia's oil palm landscape is mostly populated with Dolly Parton trees.

In an interview with Business Times, seed producer AAR is giving a sliver of hope for the industry. AAR research director Dr Kee Khan Kiang introduced the higher oil yielding semi-clonal hybrid called "AA Hybrida I".

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

"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," he said.

It then became apparent - bigger is not always better.

Seed selection is crucial in oil palm planting because those who use seeds gathered from existing estates suffer from low yields no matter how many bags of fertiliser are applied to the trees.

Kee confirmed that the AA Hybrida I is "the cream of the cream" and can yield 20 per cent more oil than the previous generation of DXP seeds.

His team of scientists adopted the semi-clonal strategy to step up seed production while maintaining key qualities like the dwarf stature of the tree and high oil yield in the fruit bunches.

"Our semi-clonal seed production technology ensures clients get consistent quality in every seed they buy from AAR," Kee said. "And the good thing is, for now, we're not charging a premium."

During the tour around the Paloh seed garden, planters from Sarawak witnessed firsthand how AAR scientists match-make oil palm trees, working daily to perfect Malaysia's top cash crop with the latest breeding technology.

Another compelling feature of the AA Hybrida I is that its dwarf stature means more trees can be planted. It allows for a higher density of 148 trees in one hectare compared with the current standard of 136.

A smallholder, owning 1,000 hectares in Betong, Sarawak, noted the higher productivity per harvester in planting the AA Hybrida I. "This is good. When the palms start to bear fruit, I don't need to hire as many harvesters like others and yet I can get more oil per hectare."

AAR head of crop improvement Tan Cheng Chua concurred that at prime fruit bearing age, the AA Hybrida I, under good management and environment, is capable of producing 40 tonnes of fresh fruit bunches with 24 per cent oil extraction rate. That works out to be more than nine tonnes of oil per hectare in a year or 2.5 times higher than the country's average yield.

AAR, an equal joint venture between Boustead Plantations Bhd and Kuala Lumpur Kepong Bhd, had started selling the AA Hybrida I two years ago. The company is now working on the AA Hybrida II that will see a further 25 per cent improvement in oil yield. It is scheduled to be launched in 2015.

Oil palm estate in Sarawak

I came across this short film on youtube. It was filmed in Sarawak by 26-year-old Steven Yap and his childhood friend Tay Zhi Qiang (the actor). The film-makers tell a touching story of a son reminiscing over his father's legacy -- an oil palm estate.

Those who are not familiar with oil palm plantations tend to look at satelite pictures and assume it a sterile field of mono-crop. But to the people who live in the oil palm estates, there's a fulfilling life of sunshine, rain, gentle breeze, tears, laughter and love.

Most of all, the oil palm estate is home to more than 300,000 families of small farmers in Malaysia.

Oil palm planters seek tax waiver

Oil palm planters in Sarawak are appealing to the government for a waiver of the windfall tax on crude palm oil (CPO).

Oil palm planters in Peninsular Malaysia had been paying windfall tax when CPO prices went beyond RM2,500 per tonne in the cash market. Planters in Sabah and Sarawak will soon pay the windfall tax as the average monthly cash price surpasses RM3,000 per tonne.

Yesterday, CPO futures on the Bursa Malaysia derivatives market closed RM82 higher at RM3,273 per tonne.

In a statement released yesterday, Sarawak Oil Palm Plantation Owners Association (Soppoa) chairman Datuk Abdul Hamed Sepawi said it is unfair to levy a windfall tax on CPO, a commodity which is subjected to many factors in the international market beyond planters' control.

"In the normal boom-and-bust cycle of commodity trading, a sudden jump in price is not considered a windfall," he said.

He then explained the profitability of oil palm plantations depends on the age and productivity of oil palm trees.

"It takes 10 to 12 years before a new estate can recoup its initial investment. So, a newly-planted estate would still be losing money even if palm oil prices surpass RM3,000 per tonne," he said.

Hamed said the formulation of the windfall tax is flawed because it is based on the CPO selling price instead of actual profits. "How can we pay windfall tax when we have not even made any profits?" he asked.

Palm oil is already the world's most heavily-taxed vegetable oil, with oil palm planters having to pay 25 per cent corporate tax, cess amounting to RM13 per tonne of CPO, as well as 7.5 per cent and 5 per cent sales tax in Sabah and Sarawak respectively. Also, there are varying import duties in countries that buy palm oil.

When compared to businesses in other sectors that just pay 25 per cent of corporate tax, oil palm planters have had to pay more.

When all the cess and taxes are added up, planters in Peninsular Malaysia pay an effective tax rate of 26 per cent.

In Sabah and Sarawak, it is even more punishing. For every RM1 an oil palm planter in Sabah earns, he is paying 40 sen in total cess and taxes, while in Sarawak, the amount is 37 sen.

The truth about oil palms and carbon sinks

FORESTS are often called “the lungs of the world” — huge carbon sinks absorbing carbon dioxide emitted by the industrialised world, and producing the oxygen we need to breathe.

At the same time, agriculture is seen as “polluting” in the sense that land clearing and development release greenhouse gas into the atmosphere, contributing to global warming.

Environmental organisations such as Greenpeace, Friends of the Earth and Wetlands International as well as their local affiliates take this view further by lobbying for a moratorium on planting oil palm on peat soil and the imposition of greenhouse gas criteria on palm oil exports.

In 2007, Wetlands and the Netherlands-based consultancy Alterra issued a report titled PEAT-CO2 assessment of CO2 emissions from drained peatlands in southeast Asia alleging the region’s peatlands are going up in smoke, emitting tonnes of carbon dioxide and causing global warming.

Kuching-based Tropical Peat Research Laboratory (TPRL) director Dr Lulie Melling argues that if such a claim is true, then millions of Sarawakians would have choked to death.

In reality, Sarawak’s oil palm plantations have been sequestering carbon dioxide and generating oxygen that goes back into the atmosphere while creating carbon sinks and stocks.

“People tend to forget that oil palms are trees and that they absorb carbon dioxide in the air, only to release oxygen and in the same process, convert solar energy into biomass,” says Melling in an interview in Kuching.

“Trees are trees, they function the same whether they are part of the forest or plantations.

“Since tree plantations are perennial, they are more efficient carbon sequesters than seasonal oilseeds like soy, rapeseed and sunflower. Oil palms can feed on year-round tropical sun and rainfall to create biomass, i.e. carbon stock, without any soil disturbance compared with seasonal oilseeds.”

When peer-reviewed studies by soil scientists were adduced at the Roundtable on Sustainable Palm Oil (RSPO) meetings, it became evident that reports containing alarmist predictions were founded on calculations riddled with statistical bias and lacking in real evidence.

Last year, Brinkmann Consultancy’s recommendation to include greenhouse gas emission from peatland as a criterion for RSPO certification was rejected. TPRL’s findings had, in part, showed soil respiration at oil palm estates planted in peat had lower greenhouse gas emissions than that of untouched peatland.

This is one instance where soil research allows you to differentiate facts from mistaken assumptions about planting crops on peat soil. Good soil management, be it peat or mineral-based, is the basis for sustainable food production.

Melling says that many of the current assumptions about tropical peatland were based on the understanding of temperate peatland research.

“Tropical peat is different from temperate peat. First and foremost, tropical peat is mainly woody material, whereas temperate peat is made up of spaghnum and sedges.”

The woody nature of tropical peat means there is higher lignin content. Lignin, being a more “recalcitrant” carbon than labile carbon of cellulose materials in temperate peat, highly influences the peat decomposition rate.

Furthermore, the acidic condition of tropical peat inhibits microbial population, indirectly slowing the breakdown rate and therefore greenhouse gas emissions. Heavy and frequent rainfall in Sarawak, which helps to maintain moisture content in the peat soil, also decelerates decomposition and carbon dioxide emission.

Melling goes on to explain that unlike the northern hemisphere where temperate peatland is developed for energy and horticulture, oil palm plantations in the tropical countries only use the peatland as a planting medium.

On current understanding that drainage of peatland for agriculture leads to large carbon losses from oxidation, Melling says it is “not entirely correct”. “Peat subsidence is also due to compaction, consolidation and shrinkage.

“Water management and compaction is a prerequisite to any agriculture development on tropical peatland. Consolidation of the peat increases bulk density and capillary rise, resulting in higher water-filled pore space of the peat. This leads to a more anaerobic condition, which results in a lower decomposition rate and less carbon dioxide emission.”

Over the years, Melling has found that people, who are ill-informed, jealous or have vested interests, tend to get offended when she speaks out on issues. At such highly-charged meetings, it helps to stick to a simple rule: “I just do my job; I don’t try to do someone else’s job, and I don’t let anyone else do my job.”

She takes a sip of tea and leans back on her office swivel chair.

“When I say I do my job, it also means I do not do someone else’s job. This is because scientists are not in the business of saving the world, nor are we vegetable oil salesmen. Science is about the process, not the purpose.” 

On not letting anyone else try to do her job, Melling attributes it to the highly politicised topic of climate change, especially on greenhouse gas emissions.

In many international conferences on tropical peatland management and greenhouse gas, she has witnessed how some activists and politicians, skilful at straw man arguments, were quick to label people they disagree with as “taking sides with greedy oil palm tycoons who do not care about the environment” and are “likely to condone widespread forest destruction”.

While most local scientists become silent when debates heat up and arguments get louder, Melling rises to the occasion.

Soon after she presents her data, it becomes apparent that the critics’ claims are full of speculations. 

Until today, these environmental activists and politicians continue to claim expertise in tropical peat despite having never waded into Sarawak’s itch-inducing and acidic peat swamps.

As early as 1995, Melling has been studying tropical peat. Despite escalating citations of her peer-reviewed research papers, she remains humble and says there is still much to learn.

Recently, Melling and her team at TPRL set out to verify whether a national park, logged-over forest and oil palm plantation absorb more greenhouse gas than they emit. 

Three 40m-tall Eddy Covariance towers were set up in an oil palm plantation in Sibu, a logged-over forest and Maludam National Park in Betong division.


They have built-in lightning protection and the sensors are fully powered by solar panels. 

These instruments measure carbon flux and concentration, wind, moisture, sunshine hours, rainfall, humidity, soil moisture and water table.

When asked to comment on Malaysia’s aspiration to become a knowledge-based economy, Melling says the government needs to allocate more funds for peat soil research. 

“Through Science, farmers are able to carry out sustainable agriculture that satisfies both the economic and environmental needs of food production.”

Replanting to boost yields

THE government's new replanting scheme will target 365,000ha of oil palms older than 25 years as the world's No. 2 palm oil producer tries to lift flagging output, a top Malaysian industry official said.

Industry regulator Malaysian Palm Oil Board's (MPOB) new chairman, Datuk Seri Shahrir Samad, said the scheme would take two to three years to complete and that the government had allocated RM297 million under the 2011 Budget.

The scheme is the latest initiative to boost yields in the country, which has fallen behind top producer Indonesia in terms of output. An earlier industry-funded scheme to replant 200,000ha in 2008 in a bid to boost slumping prices was almost completed this year.

"I think we can easily achieve 17.5 million tonnes (in 2011) even with this new replanting scheme as there will be more young oil palms coming into maturity," Shahrir said in his first interview with the foreign media as MPOB chairman.

Shahrir's forecast was 4.9 per cent lower than the government's production target of 18.4 million tonnes for next year, and roughly the same as his projection of 17.5 million tonnes for this year. "I don't think there will be a drop in production even after the erratic weather this year. The younger trees are quite resilient," he said.

Early this year, El Nino-driven hotter weather dried up yields and lifted the Malaysian benchmark palm oil prices, which have gained almost 15 per cent so far this year. The weather condition was quickly followed by La Nina, which brings more rains and floods to southeast Asia that can complicate harvesting and transport of the palm fruits.

Malaysia exports almost 90 per cent of its output. Last year, Malaysia derived RM37 billion from crude palm oil exports and RM13 billion for refined products and oleochemicals.

Shahrir said the government would allocate up to RM127 million to further develop the refining and oleochemical industries, with aid mostly targeted at Sime Darby Bhd , IOI Corp Bhd and Kuala Lumpur Kepong Bhd (KLK) - the top three palm oil companies in the country.

The MPOB is proposing mandatory green standards to ensure palm oil does not come from estates that expand by felling forests and marginalising local communities, Shahrir said. The MPOB has had a code of practice for palm oil firms to halt environment pollution since 2007, which firms such as IJM Plantations Bhd, Genting Plantations Bhd and KLK have adopted.

"The code is similar to the RSPO's principles and criteria," Shahrir said, referring to the industry-driven Roundtable on Sustainable Palm Oil that has produced a certification system whose participants have to commit to to preserve the environment.

"The industry has asked that we keep this code voluntary like the RSPO, but we are also in discussions with the government on starting an audit body to look at the industry, to ensure that the standards are met," Shahrir said ahead of the RSPO conference in Jakarta, next week. --- Reuters

IOI boss: More foreign workers needed

The government should allow plantation companies to hire more foreign workers to harvest oil palm so as not to crimp the country's palm oil export earnings, a top industry executive said.

Malaysia's palm oil output is expected to stagnate at 17.6 million tonnes for the third straight year, according to industry observers.

The Malaysian Palm Oil Association, Malaysian Estate Owners Association and Sarawak Oil Palm Plantation Owners Association have been complaining of acute shortage of harvesters for the past three years. They blamed it for the lower palm oil output and export opportunity loss of some RM10 billion a year.

IOI Corp Bhd executive chairman Tan Sri Lee Shin Cheng yesterday reiterated the call for the government to be more flexible in permitting plantation companies to hire skilled harvesters from Indonesia.

"The trees are fruiting, but there's acute shortage of harvesters and this is affecting the country's palm oil export earnings.

"The industry has been finding ways to mechanise for the last 40 years and the reality is it is difficult to mechanise. If it were that easy, we would have done it a long time ago," Lee said.

He was speaking to reporters after IOI's shareholder meeting in Putrajaya. Also present was his son, Datuk Lee Yeow Chor, who is IOI's executive director.

The older Lee sees palm oil prices rising further, possibly topping RM3,400 a tonne by the first quarter of next year, as global consumption exceeds supply. "Global palm oil consumption is going up, even in developed nations like the US, Europe and Japan. It is not just in China and India," he said.

Lee also sees CPO prices trending higher if the current floods in Asia worsen. "The current RM3,000 per tonne level does not take into account the prospects of La Nina. If you did, then the RM3,300 to RM3,400 level is not a dream but a reality." Yesterday, palm oil futures on Bursa Malaysia Derivatives fell RM24 to close at RM3,061 a tonne.

Four months ago, Indonesia signed a US$1 billion (RM3 billion) climate deal with Norway, under which it agreed to impose a two-year ban on new permits to clear forests. While the Indonesian government has not defined which type or location of forests come under the moratorium, it was reported that oil palm expansion could continue on some six million hectares of degraded and abandoned agricultural land across the country.

Yeow Chor said IOI will continue to invest in Indonesia. "The moratorium is said to limit new concessions, not existing permits," he remarked.  On IOI's capital expenditure, he said the group had allocated RM150 million for new plantings and replanting of oil palms.

Some RM30 million has also been set aside for a potential 30:70 joint venture with China's Zhong Seng Oil & Grains Co Ltd to set up a refinery in Kuantan.

I'll show you how to use your holes

Women in male-dominated professions often have to work twice as hard to attain equal standing. Soil researcher Dr Lulie Melling is one such feisty lady who is willing to wallow in peat swamps, all for the sake of science.

THE MATING CALL of frogs filled the darkened seminar room in Finland. The sound came from the laptop of a Malaysian soil scientist, there to introduce the wonders of tropical peat to her peers in Europe.

Just as Kuching-based Tropical Peat Research Laboratory director Dr Lulie Melling moved into another slide to show the brackish water at peat swamps, someone in the crowd joked that women scientists would most likely scream at the prospect of roughing it out in the deep swamp peats.

Unfazed, Lulie smiled and told the predominantly male audience: "In my hole, the men will scream first".

A master of double entendre, she explained to the sniggering crowd that many women scientists in Sarawak have, without hesitation, waded into swamp peats to collect samples while male engineers stepped back cringing, their arms folded.

As proof, Lulie showed photos of herself in inky-black pits. She recalled shivering from the cold and putting up with the itch that comes from being submerged in the mildly acidic grime when collecting samples.

There were times when peat muck gripped her shoe soles so solidly that she had to be hoisted out by several people. She showed another photo of herself covered in a heavy layer of black silt up to her neck.

Lulie was in the Finnish city of Jyvaskyla five months ago, bidding to host the International Peat Congress in 2016 (IPC2016) in Kuching, Sarawak. Having won the bid, Lulie said Malaysia can now leverage on this opportunity to draw the international peat scientist community to Kuching to gain a better insight on tropical peat development and conservation.

In an interview with New Sunday Times, Lulie said her quest to study tropical peat started in 1995. She was puzzled by the sago trees' stunted growth in Mukah, Sarawak. At that time, nobody really knew or cared about what she was doing in the peat swamps. But all that changed when soil science became increasingly linked to the highly-politicised topic of climate change.

As the Internet became flooded with news reports and blog postings claiming that oil palm planting on tropical peat soil contributed to pollution and global warming, the search for credible soil studies also intensified.

Lulie pressed on with her research and in 2005, made an unusual discovery.

Her test results showed greenhouse gas emission from the peat soil planted with oil palm trees was less than that in untouched forest peatland. Her findings caught the attention of other researchers. Since then, citations of her research papers have gone up 10-fold in the last five years. Despite the international recognition, Lulie said there was still much to learn.

Apart from being technologically savvy, soil scientists needed to be physically fit to embark on remote excursions into mosquito-ridden swamps.

Lulie and her team often have to hike through slushy terrain to collect samples and data in the scorching sun and torrential rain.

With heavy scientific equipment in their knapsacks, they sometimes have to forgo tents and sleeping bags. As dusk sets in, they source wood scraps from their surroundings to build temporary shelters and toilets.

But Lulie and her team attest that what was most painful and frustrating was the time away from family and friends.

"Success in most professional careers requires long hours. Long gone are 9am to 5pm days. If you are not present at least 60 hours a week, then you are slacking," she said. She paused for a while to gaze at a photograph of her family on her office desk. "I'm very grateful my husband and son are very understanding."

A dedicated government officer, Lulie also organises soil science seminars for farmers throughout Southeast Asia. Her easygoing and jovial nature helps bridge the gap between scientists and rural folk.

Lulie first learnt that humour worked to her advantage when she organised a soil science seminar titled "Big hole, small hole & KY jelly" in 2007. It was a hit among local oil palm planters and even got the attention of more than a handful of chief executives of multi-billion dollar plantation companies from Singapore and Indonesia.

Scientists from Indonesia, the Philippines, Thailand, Japan, Fiji, Iran, and the United Kingdom flew in to learn that when peat soil is compressed by heavy machinery, oil palm roots are able to take stronger hold of the soil and feed on water and nutrients more efficiently.

A British professor came away from the field trip surprised that soil scientists in Malaysia were just as conscientious as in Europe on the need for sustainable peat development.

Lulie's second seminar, in 2008, also sensationally titled "I'll show you how to use your holes" was even more popular. Close to 700 participants learnt how to manage the water table and nutrient supplements in a variety of tropical peat fields.

Just as she is well-liked by rural farmers, Lulie is increasingly seen a role model among secondary schoolgirls in Sarawak. Her advice to young women who want to pursue a career in science: "Don't be afraid to venture into uncharted territories. There's no point re-inventing the wheel.

"Having scientists who are willing to venture out of the status quo is what drives significant discoveries," she said.

Fields of Gold: Lifting the Veil on Europe's Farm Subsidies

For the past 50 years European farmers have benefited from an exceptional set of protection and subsidies via the Common Agricultural Policy (CAP). From 1995 to 2010, the cumulative budget expenditures for European farmers have been of the order of €600 billion.

But the current debt crisis Europe face could spur tranformation of the CAP. Last month, the 27 EU agricultural ministers started a debate on the structure and the level of subsidies farmers should get from the EU budget during 2014-2020.

Although the EU has gradually reduced subsidies to farmers in recent years, at an average of €55 billion a year or 42 per cent of the CAP's budget, it remains the world's largest agricultural support scheme.

Oilseed farmers in the EU, rivals of oil palm farmers in Malaysia and Indonesia, are big recipients of CAP subsidies. The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.

Among financial institutions and food giants, classified as "farmers" (because they are landowners) and receiving direct subsidy amounting to hundreds of million euros under the CAP are Rabobank, ING Bank, HSBC Bank, Nestle, Unilever, Danone and Friesland Foods.

The Queen of England also qualified for £473,500 in farm aid in 2008 for Sandringham Farms, her 20,000 acre retreat and home to four generations of British monarchs since 1862.

Below is a 6-minute documentary by Jack Thurston, co-founder of http://www.farmsubsidy.org/ , led by a grouping of European journalists, bent on identifying and tracking the amount of subsidies amount going to "farmers".

Billion-dollar trade war fuels vegetable oil politics

THE US$40 billion (RM124.4 billion) global palm oil trade makes up almost 60 per cent of the world's vegetable oils market. The bigger the palm oil industry becomes, the easier it is a target for smear campaigns by rivals via political means.

This is evident as Malaysia and Indonesia capture more market share in the vegetable oils trade, faster than rivals in Europe and North America, oil palm planters have had to endure false allegations of massive deforestation and lies about orangutan killings from western environmental non-governmental organisations (WENGOs).

Every year, Malaysia earns around US$20 billion (RM62.2 billion) and Indonesia US$15 billion (RM46.65 billion), from selling 32 million tonnes of palm oil all over the world, data from industry regulators of both countries revealed.

Oil World, a trade journal, confirmed that last year, Malaysia and Indonesia shipped out the bulk of 36.8 million tonnes of palm oil or 58 per cent of the 63.5 million tonnes of vegetable oils traded globally.

Soyabean, rapeseed and sunflower oils, however, commanded 26 per cent of market share.

Oil World's data show that while the vegetable oils market had doubled in size since 1990, people around the world have chosen palm oil over other oils. Among 17 major vegetable oils traded in the world, palm oil consumption exceeded soft oils like soyabean, rapeseed and sunflower.

Oil World stated that in the last two decades, global palm oil consumption expanded three times. Rapeseed oil purchase, however, only increased by 2.5 times and soyabean oil's popularity just doubled.

While global palm oil usage increased, so has the smear campaigns on oil palm planting.

In recent months, Australian zoos initiated a "Don't palm us off" campaign claiming oil palm plantings in Malaysia and Indonesia caused forest destruction of the equivalent of 300 soccer fields every hour and decimation of over 1,000 orangutans a year. Zoo visitors were told to petition to the Food Standards of Australia and New Zealand to label palm oil on all food products.

When asked to comment, Sarawak Land Development Minister Datuk Seri Dr James Jemut Masing said: "It's not true, we do not kill and eat orangutans. It is a taboo to do that.

"Sarawak thrives on eco-tourism, it is in our interests to protect our national treasures. I spent 10 days and nine nights trekking at Lanjak Entimau National Park. There were many orangutans swinging from tree to tree."

He said orangutans are not found throughout the state. These primates are only found in the Lanjak Entimau Wildlife Sanctuary, Maludam and Batang Ai National Parks. No development can take place in these three zones since they are already gazetted as totally protected.

"Therefore, it is not possible for oil palm plantations to encroach into virgin forests," he told Business Times in an interview in Kuching.

On top of that, Malaysia's environmental laws and Malaysian Palm Oil Board regulations designate oil palms to be planted on degraded land that had been subjected to extensive shifting cultivation and logged-over forest.

Oil palm cultivation has actually transformed many rural villagers' lives. "It is through planting of oil palm trees and selling of fresh fruit bunches that smallholders can save enough money for their children to further their tertiary education and become successful professionals. We have palm oil exports to thank for this," he said.

Estates in Malaysia plant oil palm, rubber and cocoa trees to produce cooking oil, margarine, rubber gloves and cocoa butter for global trade. This is part of the same early-stage growth pattern adopted by every major developed economy in the world, from North America to Europe.

"Now, the very same people who have already achieved developed status, cite fear that such development in Asia will exacerbate ecological degradation and global warming. The European Union (EU) argue against tropical forest conversion for oil palm and rubber tree planting," Masing noted.

In pushing for a halt in oil palm plantation expansion in Malaysia and Indonesia, European lawmakers and WENGOs had repeatedly said clearing of tropical forests harms biodiversity and emits carbon dioxide into the atmosphere, worsening global climate change.

"Many people believe Greenpeace, Friends of the Earth and Wetlands International are protectors of the world's forests but ... let me ask you ... are they bringing their own governments to justice for clear-cutting temperate forests?

"Are they lobbying for reforestation of deciduous forests in their own countries? Are these activists completely altruistic and selfless in their devotion to the world's forest, wildlife and indigenous people?" Masing asked.

He then adduced reports of Sarawak government spending RM10 million every year to care for and protect orangutans.

While WENGOs campaigned passionately for the fate of orangutans, until today, they had not contributed any money for the rehabilitation of orangutans and the upkeep of their sanctuaries at Maludam, Lanjak Entimau and Batang Ai. "I wish they'd walk their talk."

By criticising the virtues of oil palm planting and ignoring the evidence that economic development leads to better environmental protection, Masing said it is questionable whether these WENGOs' true commitment is to the environment or to erection of trade barriers to benefit European rapeseed farmers who are already heavily-subsidised by the EU government.

He then cited findings at www.farmsubsidy.org, run by a European journalists grouping that tracks the EU Common Agricultural Policy (CAP) beneficiaries.

For the past 50 years, European farmers had benefited from an exceptional set of protection and subsidies. From 1995 to 2010, the cumulative budget expenditures for European farmers had been in order of more than €600 billion (RM2.5 trillion).

The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.

Although the EU has gradually reduced subsidies to farmers in recent years, at an average of €55 billion (RM238.15 billion) a year or 42 per cent of the CAP's budget, it remains the world's largest agricultural support scheme.

On top of that, there are also export subsidies for EU-based food multinationals like Unilever, Nestle and Danone. Last year, the EU spent about €350 million (RM1.5 billion) on export subsidies.

Masing then argued that the EU government's covert use of taxpayer funds to facilitate environment activists to lobby against the growth of oil palm plantations, in the name of "saving rainforests", is a blatant violation of international norms and Malaysia's sovereignty.

"We see these activists holding demonstrations claiming to save rainforests. But are there independent audits to determine the effects of these WENGOs policies and practices on the orangutans and my fellow Bumiputeras they claim to be helping?"

"Who are better placed to speak on behalf of the poor, voiceless and marginalised? The WENGOs and their local affiliates self-proclaiming to be stakeholders or our elected Members of Parliament?" he asked.

He described the WENGOs as whistleblowers, judge and jury, all rolled into one - a stark contrast to check and balance that elected Parliamentarians face.

Masing then referred to the European Commission website at http://ec.europa.eu/environment/funding/intro_en.htm, which revealed the Directorate-General for the Environment had, in the last 10 years, handed out over €66 million (RM285 million) to green NGOs.

In 1998, the EU funding to these NGOs was just over €2 million (RM8.66 million) but last year, the amount nearly topped €9 million (RM350 million). These fundings were advanced by European corporates and labour unions in an effort to protect domestic rapeseed oil farming which, in turn, receive massive CAP subsidies, Masing noted.

KL Kepong to expand landbank

KUALA Lumpur Kepong Bhd (KLK) is expanding its oil palm landbank in Indonesia by another 7,177ha. Currently, the group's oil palm planted area in Malaysia and Indonesia totals 170,000ha.

Its unit KL-Kepong Plantation Holdings Sdn Bhd is buying 95 per cent of PT. Bumi Makmur Sejahtera Jaya (PT BMS) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.

Since KLK has engaged a high conservation value study on the land and is carrying out a legal and financial due diligence, the deal is likely to materialise in the first quarter of 2012.

PT BMS now holds two Certificates of Izin Lokasi for land measuring 2,336.62ha in Desa Mentawak and Desa Air Kelik, Kecamatan Kepala Kampit, Belitung Timur, and another 4,840ha in Desa Lilangan, Desa Limbongan, Desa Jangkar Asam and Desa Gantung, Kecamatan Gantung, Belitung Timur.

These land are adjacent to KLK Group's existing plantations in Belitung.

Palm oil vitamin E can fight obesity

This was published in http://www.naturalproductsinsider.com/ yesterday.

SINGAPORE — Natural tocotrienols offers more health benefits than alpha-tocopherol, the common form of vitamin E.

In a study titled "Gamma Delta Tocotrienols Reduce Hepatic Triglyceride Synthesis and VLDL Secretion" published in October 2010 issue of Journal of Atherosclerosis and Thrombosis, scientists found gamma and delta tocotrienols, derived naturally from palm oil, are potent in lowering triglyceride levels by 28 percent in the blood of human subjects after two months of supplementation.

In addition, tocotrienol-treated subjects in the double blind, placebo-controlled human trial showed decreasing trends in average weight, body fat mass, body fat percentage and waist measurement.

The study, hence, points to the potential of tocotrienols as a natural remedy in fighting obesity.

This study demonstrated that gamma and delta tocotrienols work to lower triglyceride levels, by directly suppressing genes that enable triglyceride production (SREBP1/2, DGAT2 and APOB100), suggesting that tocotrienols are able to directly regulate triglyceride synthesis in the body. At the same time, this down-regulation also translates into a reduction in the level of triglyceride transport lipoproteins (VLDL and chylomicron), which distribute fats around the body.

The study supports its in vitro research findings, by demonstrating the triglyceride-lowering effect of tocotrienols in both mice models and human clinical studies.

Moreover, the study also showed that tocotrienols may inhibit the development of atherosclerosis, a medical condition in which fatty plaque, resulting from oxidation of LDL-cholesterol (also known as "bad" cholesterol), builds up inside the arteries. It was found that gamma tocotrienol can enhance the removal of LDL-cholesterol from the blood, by inducing the expression of LDL receptors. This is a key step in achieving healthy blood lipid levels.

This research study, which involved a collaboration between scientists at Davos Life Science (Singapore), researchers at Malaysian Palm Oil Board and Phytopharma Co. Ltd. (Japan), involved 20 human subjects with borderline hypercholesterolemia and was conducted in Takara Clinic in Japan. The subjects were not receiving any cholesterol-lowering medications at baseline.

"Our studies show that tocotrienols have the potential for the prevention or treatment of metabolic syndrome. This research contributes further evidence that natural tocotrienols is a far more powerful form of vitamin E with unique health-related benefits not shared by alpha-tocopherol, the common form of vitamin E," said Arthur Ling, chief executive officer of Davos Life Science Singapore, a company specializing in the research and development and production of tocotrienols.

Tocotrienols, which are members of the vitamin E family, are effective in lowering the levels of triglyceride, a form of fat in the blood. High levels of triglyceride are closely linked to an increased risk of cardiovascular and metabolic diseases. An elevated triglyceride level is one of the risk factors for the identification of metabolic syndrome, which is linked to an increase risk of cardiovascular disease, diabetes and stroke.

"Other studies have shown triglyceride-lowering effects of eicosapentaenoic acid (EPA), a polyunsaturated fatty acid found in oily fish, which is approved by Japan's Ministry of Health as a treatment for hyperlipidemia," said Dr. Daniel Yap, head for Tocotrienol R&D, Davos Life Science.

“This study reveals that tocotrienols have a more significant serum triglyceride-lowering effect than EPA. More importantly, tocotrienol did not have any observable side effects, suggesting that it could become a natural remedy to lower triglycerides effectively."