Branding Malaysian palm oil

Errol Oh, The Star 4 Jul 09;

PALM oil is palm oil, right? As it is a commodity, should it matter who produces it or where it comes from? Is there such a thing as branding for a commodity? If you ask the Malaysian Palm Oil Council (MPOC), the answers would probably be “Not necessarily”, “Yes” and “Yes”.

The Malaysian palm oil industry wants the world to recognise that palm oil from Malaysia represents sturdy features such as quality, sustainable practices, speed of delivery, and research and development. And this will be supported by a brand name – Malaysia Palm.

MPOC chairman Datuk Lee Yeow Chor says the council aims to develop the branding and image of Malaysian palm oil as a strategy to differentiate the oil from other commodities in the global edible oils and fats market.

“We will emphasise the good quality backed by R&D and the fulfilment of sustainability criteria. We will be using publicity material to link Malaysia-produced palm oil to these positive attributes,” he adds.

This is has been done before with other agricultural commodities, and with lasting results, in some cases. One example is the longtime use of the Woolmark logo to help the marketing of wool products. Another is the Got Milk? advertising campaign in the United States, which features famous people sporting milk moustaches.

The Malaysian palm oil industry has always maintained that palm oil is a good product, but clearly, it needs to be promoted more strongly. Lee says this is not because the various stakeholders here have not put in the effort.

“It’s just that we need to be a bit more innovative in employing new strategies and using more financial resources in order to promote palm oil, whose worldwide revenue has expanded by more than four times in the last 10 years to RM65bil last year,” he adds.

“If you use as a gauge that a commercial enterprise typically spends 1% of its turnover on marketing, that would mean the industry spending RM650mil on marketing and promotions. Of course, we’re spending far less than that.”

The Malaysia Palm plan is among the marketing and promotional measures that the MPOC will undertake in the coming months to boost Malaysian palm oil’s market expansion.

These efforts are increasingly necessary following developments in recent years that have altered the industry landscape.

For one thing, the rising concern over climate change, deforestation and other environmental issues, has turned oil palm cultivation in Indonesia and Malaysia into a target for activists and politicians because the industry has been accused of contributing to the planet’s woes.

In addition, the surge in crude oil prices has pushed palm oil into the biofuel arena, thus adding another dimension to the dynamics of the edible oils market.

These changes meant that the palm oil players have to deal with new stakeholders and new perceptions. The international environmental non-government organisations (NGOs) are strident voices in the lobby against the opening of plantations, particularly in Borneo and Sumatra.

The overseas media have covered the NGOs’ campaigns and in many instances, have adopted editorial stances in support of the NGOs. This, in turn, has influenced and will continue to sway the public and politicians in matters such as energy policy and the consumption of products containing palm oil.

Healing the damage caused by naysayers is nothing new to the Malaysian palm oil industry. In fact, the MPOC was formed in the early 1990s to thwart a smear campaign in the US, driven by soybean growers, that portrayed palm oil as bad for the heart.

The battle is different this time, and it calls for tactics not normally employed in Malaysia. The MPOC intends to do its own lobbying.

“It is found to be effective in certain countries. So we will do that, and in doing so, we will not just rely on our internal resources. We will have to outsource more and employ specialists in these areas that are new to us,” Lee explains.

“We believe there is a lot of misinformation out there about palm oil, which has not been corrected effectively. We believe palm oil has a credible story to tell. Whatever lobbying that will be done will be fact-based and well-researched, using various channels effectively.”

At the same time, the council will rely more on direct engagement with stakeholders. It has travelled to Europe to meet the NGOs, and it has organised seminars and brainstorming sessions with the NGOs and the media. It has also invited stakeholders to visit plantations in Malaysia.

Lee points out, “You’d be surprised that a lot of the NGOs have not seen what’s happening here. They make a lot of allegations against palm oil, and a lot of it is hearsay.

“That’s why we have to sponsor good research. We have done this in the past, but now, we want to do it through respected organisations in the US and Europe, so that there’s a credible message and it goes to the right forums.”

The idea is to commission more market-oriented studies on nutrition, science and the environment that are more accessible and easier to digest.

Lee acknowledges that it likely that some of the smaller plantation players and smallholders do not employ sustainable practices when clearing land and cultivating oil palm.

He argues, “In this kind of agricultural industry involving so many players, there are bound to be some black sheep. But we should not discredit the whole industry when the majority observe good agricultural practices.”

Lee, who is IOI Corp Bhd executive director, was appointed MPOC chairman earlier this year, replacing Datuk Seri Lee Oi Hian of Kuala Lumpur Kepong Bhd, who had stepped down after chairing the council’s board of trustees for 13 years.

The current MPOC chairman believes that the council should be “a Malaysian-based global organisation”.

“It has to be seen to be present and effective in all the countries that import palm oil. It has to be interacting with stakeholders at various levels in each of those countries,” he explains.

He adds that there is room to diversify palm oil’s export base, considering that the top five importers of Malaysian palm oil – China, Europe, Pakistan, India and the US – account for slightly more than 65% of the total export.