• Bloomberg reported that Indonesia plans to draft a forest fire prevention map for 2020F. The government will identify the villages to be prioritised for land clearing assistance in the road map. The government will also provide technology assistance so that the people can clear the land without using fires. In addition, the government will evaluate the readiness of plantation and forestry companies’ equipment to address forest fires. The evaluation will be carried out from November to December 2019.
• In another development, Bloomberg said that Indonesia is formulating regulations that will allow the government to rescind permits of unplanted concessions. The government is seeking advice from experts to provide a strong legal base. The government will turn land that still has good tree coverage into forest areas to help reduce gas emission.

• Bloomberg also reported that Indonesia’s biodiesel usage is forecast to surge by 45% to 9.6mil kiloliters (8.4mil tonnes) in 2020F underpinned by the implementation of the B30 biodiesel policy. Biodiesel usage is estimated to be 6.6mil kiloliters (5.7mil tonnes) in 2019E. Palm biodiesel usage amounted to 4.49mil kiloliters (3.9mil tonnes) in 9M2019.

• The Guardian of the UK found that Tesco, M &S and several other UK supermarkets admit that they cannot guarantee that soybean from deforested areas are not in their supply chain despite commitments to phase out their use. An investigation has revealed that Tesco, Asda, Morrisons and M & S all buy products from UK farmers using animal feed that includes soybean from Argentina. About 14% of Argentina’s soybean areas are in the north, where deforestation has taken out huge areas of the Gran Chaco forest.

• Reuters reported that the US government has unveiled a plan to boost US biofuels consumption next year to help struggling farmers. The plan would require an unspecified increase in the amount of ethanol that oil refiners must add to their fuel in 2020F. The EPA (Environmental Protection Agency) said that the rules, which will be finalised after a period of comment, would ensure that more than 15 billion gallons of conventional ethanol would be blended in 2020F.

• The Edge Financial Daily cited EU Ambassador and Head of Delegation to Malaysia Maria Castillo Fernandez as saying that Malaysia’s trade advantages with the EU could decline in the future as negotiations on a free trade agreement (FTA) has been suspended. Malaysian officials have cited the EU’s treatment of palm oil as a factor in the suspension of the FTA negotiations. The EU official said that it would be a shame if the issue of palm oil jeopardises the Malaysia-EU trade relationship as palm oil only contributed 4.4% of total Malaysia-EU trade in 2018. About 1.4% out of the 4.4% share of the EU-Malaysia palm oil trade is for biodiesel. Malaysia’s trade with the EU comprises mainly engineering and electronic products.

Source: AmInvest Research - 14 Oct 2019