Malaysia is fighting for its billion-dollar palm oil industry

There are concerns over an EU law that aims to curb deforestation by phasing out the oil from renewable fuel by 2030.

    The palm oil trade is a $60bn industry, with Malaysia and Indonesia together producing about 85 percent of world supplies of the product, which is used in goods including biodiesel, bread, snack foods and shampoo [Sanjit Das/Bloomberg]
    The palm oil trade is a $60bn industry, with Malaysia and Indonesia together producing about 85 percent of world supplies of the product, which is used in goods including biodiesel, bread, snack foods and shampoo [Sanjit Das/Bloomberg]

    On the morning of February 26, executives from a Washington consultancy presented a strategy paper to some of the most powerful officials in the Malaysian palm oil industry.

    The message: Don't allow environmental activists and Western governments to tarnish palm oil to the extent that it ends up a pariah product, like tobacco.

    The $60bn palm oil trade has been vilified by environmentalists because of the vast areas of tropical rainforest they say have been cleared to grow the commodity, which is consumed by billions of people.

    Malaysia and Indonesia, which together produce about 85 percent of the world's palm oil, had been largely passive in response. They had been comfortable relying on the sustainability of demand for an oil that is used for cooking and as an ingredient in items that include soaps, shampoos, snack foods, pizza, bread and biofuel. Food accounts for nearly 70 percent of global consumption of palm oil.

    But last year, Malaysia launched a global public relations and lobbying offensive to protect the reputation of its key export, particularly in Europe. Reuters has pieced together a picture of the sweeping effort from internal public relations strategy documents as well as interviews with dozens of palm oil industry participants.

    The European Union passed an act earlier this year to phase out palm oil from renewable fuel by 2030 due to deforestation concerns. While demand for palm oil used in EU biodiesel accounts for a fraction of global supply, palm oil producers in Malaysia and Indonesia worry that the law could spur calls for regulation of the oil's usage in food.

    Malaysia has led the public-relations offensive since the EU began working on the law, as it is far more reliant on exports than larger rival Indonesia. Malaysia ships about 85 percent of the palm oil it produces overseas annually.

    Malaysian Prime Minister Mahathir Mohamad has said the EU law was "grossly unfair" and was an attempt to protect alternative oils that Europe produced itself.

    The publicity campaign aimed at critics of palm oil has been coordinated by the Malaysian Palm Oil Council (MPOC), a state agency responsible for promoting palm oil and looking for trade opportunities for the product.

    The agency is funded at least in part by a fee paid by plantation companies based on palm oil production. MPOC's board includes representatives from plantation companies, including IOI Corp and Sime Darby Plantation Berhad, the world's largest oil palm planter in terms of the land that it uses.

    The representatives of the two companies did not respond to requests for comment.

    Malaysia's campaign is centred around smallholder farmers, carried out by platforms that say they represent farmers but actually created or run by public relations firms hired by the MPOC, the strategy documents dated August 6, 2018, and February 26, 2019, show.

    MPOC has also approved funding news sites, researchers, op-eds and former politicians to speak up for palm oil and undermine the EU law, the documents show.

    None of the groups or individuals identified in the proposals have been transparent about their funding, and they have often claimed to be independent voices.

    At least three public relations firms hired by the MPOC are running these campaigns, show copies of their proposals seen by Reuters. The MPOC approved all their proposals, according to two sources with direct knowledge of the matter.

    Lobbyist for tobacco, oil

    The main company involved in the strategy is the DCI Group, a Washington-based public relations firm that has previously developed campaigns for tobacco and oil multinationals. Its clients have included Altria and the former Burmese military government, according to United States public records and DCI itself.

    Asked by Reuters for comment on its strategy, DCI said it was engaged in the Malaysian campaign but did not give details.

    "We are proud to work with Malaysia's palm oil industry in its fight to defend the jobs and livelihoods of small farmers against unfair trade and environmental policies which perpetuate global poverty," said Justin Peterson, managing partner at DCI Group, in an email.

    The MPOC has not spoken publicly about the campaign. It told Reuters that it uses various methods, including engagement of public relations agencies and advisory firms, to pursue its objectives, but for competitive and client confidentiality reasons, it would not disclose details.

    "Industries and governments across the world engage in an array of efforts to defend their national interests. In MPOC's case, however, we ensure that all such activities are above board and are in accord with local rules and regulations governing such engagements," the MPOC said.

    The Malaysian ministry in charge of palm oil declined to comment.

    The other two firms operating public relations campaigns are Kuala Lumpur-based Invoke, which is run by Rafizi Ramli, a former Malaysian lawmaker, and Unitas Communications, a public relations firm with offices in London and Jeddah.

    Invoke runs its campaign through the "Planters United" platform, which describes itself as a non-governmental organisation made up of smallholder farmers, according to a February 26 copy of its proposal seen by Reuters.

    Unitas, Rafizi and Invoke did not respond to calls and emails requesting comment.

    EU lawmakers declined to talk about lobbying by the palm oil industry, but environmental group Greenpeace said the lobbying by Malaysia had resulted in an EU law relating to biodiesel being diluted.

    Officials at the European Parliament were not available for comment, and Reuters was unable to independently confirm this.

    Reasoning won't work

    According to documents reviewed by Reuters, DCI's campaign pitch to the MPOC this year sought a budget of over $1m. The MPOC approved the budget after negotiating the price slightly down, the two sources said.

    MPOC also approved a 2019 budget of around $120,000 for Invoke and $200,000 for Unitas, the sources said.

    MPOC and the three public relations companies did not comment on the amounts or whether they were approved.

    Reuters has seen a copy of an eight-page public affairs proposal distributed by DCI at the February 26 meeting with at least a dozen officials from MPOC, palm oil companies and the Malaysian Ministry of Primary Industries. The proposal said: "The eco-colonialists have turned to a scorched earth approach of junk science and faulty logic: they label palm oil as the new tobacco."

    "Attempting to reason with these opponents, through dialogue or scientific research will not stop their attacks and will not advance Malaysia's position."

    The document did not name the "eco-colonialists", but in previous paragraphs, it refers to the EU.

    Farmers should be the "primary messengers" globally of the campaign against critics of palm oil, DCI said in a previous proposal to MPOC, in August 2018.

    "Small farmers are Malaysia's most powerful weapon against Europe and the NGOs," it said.

    DCI has been running or coordinating grassroots campaigns through front groups such as Farmers Unite, DCI's campaign proposals from August 2018 and February 2019 show.

    Farmers Unite says on its website that it is a global coalition of oil palm small farmer associations and other supporting organisations, and that it speaks for more than seven million oil palm smallholders across the world.

    It did not respond to requests for comment.

    Farmers Unite took out full-page advertisements last December in the United Kingdom against British retailer Iceland when the company said it would stop selling in-house products containing palm oil. Iceland says it finished using palm oil in such products in 2018.

    Iceland declined to comment on the Farmers Unite campaign.

    In August 2018, DCI pitched to the MPOC the creation of an African platform with the help of Nigerian think-tank the Initiative for Public Policy Analysis (IPPA), saying "recruiting support from African allies is necessary to put maximum pressure on your opponents".

    "These are weak spots for EU NGOs and politicians [as] they fear accusations of neo-colonialism and discrimination," the proposal said.

    In its next presentation in February 2019, DCI asked for a budget of $10,000 per month for Farmers Unite, which it described as a project of IPPA. IPPA has previously opposed tougher legislation against tobacco products in Nigeria, citing the negative impact on farmers and investment.

    IPPA said, "where we raise our money and get support is immaterial".

    In its August 2018 proposal, DCI also set out a strategy to use a group called Faces of Palm Oil, which says it represents 650,000 farmers in Malaysia, in the campaign.

    "Faces of Palm Oil will once again serve as the campaign hub; and small farmers should be the primary messengers in Malaysia, European and international media," DCI said in the proposal.

    Faces of Palm Oil has been the most vocal farmers' group on social media, criticising nongovernmental organisations, EU lawmakers, and journalists, based on its social media feed and environmental groups tracking palm oil. It says on its website it is a joint project of three major farmers' groups and other bodies.

    Faces of Palm Oil did not respond to a request for comment.

    MPOC did not comment on the funding of the farmers' groups.

    Paid op-eds

    DCI has also sought to influence opinion through paying for news articles, columns and research, according to the documents seen by Reuters.

    This year, for example, DCI asked the MPOC to provide a budget of $11,000 a month to a newsletter called Palm Oil Monitor, according to the February proposal. The newsletter has been publishing news stories and behind-the-scenes information on the negotiations of the EU law, scooping mainstream media on the contents of Mahathir's strongly-worded letters to European leaders. The plan was accepted, the two sources said.

    Khalil Hegarty, one of the two authors of Palm Oil Monitor, told Reuters in an emailed statement that the newsletter "benefited from support from various sources (including industry sources)". He declined to provide specifics.

    Hegarty said, "we don't lobby, and any insinuation that Palm Oil Monitor is a part of some grand lobbying effort would be inaccurate."

    SOURCE: Reuters news agency