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INSIGHT-Fearing tobacco's fate, palm oil industry fights back

Published 21/08/2019, 06:10
© Reuters.  INSIGHT-Fearing tobacco's fate, palm oil industry fights back
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* EU bill on biofuels puts palm oil on backfoot

* Industry fears court of public opinion in West

* Malaysia hires powerful U.S. lobbyists

* Use plight of poor farmers to turn blame on West-documents

By A. Ananthalakshmi and Emily Chow

KUALA LUMPUR, Aug 21 (Reuters) - On the morning of Feb. 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 $60 billion 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 that

is consumed by billions of people.

Malaysia and Indonesia, which together produce about 85% of

the world's palm, had been largely passive in response,

comfortable in relying on the sustainability of demand for an

oil used for cooking and in items like soaps and shampoos, snack

foods, pizza, bread and biodiesel. Food accounts for nearly 70%

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 the law could spur calls for

regulation in its usage in food.

Malaysia has led the PR offensive since the EU began working

on the law, as it is far more reliant on exports than larger

rival Indonesia, and ships about 85% of its total palm oil

production 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 partly by a fee paid by

plantation companies based on palm oil production. MPOC's board

includes representatives from plantation companies, including

Sime Darby Plantation Bhd SIPL.KL , the world's biggest oil

palm planter by land, and IOI Corp IOIB.KL .

The representatives of the two companies did not respond to

requests for comment.

Its campaign is centred around small holder farmers, carried

out by platforms that say they represent farmers but are created

or run by PR firms hired by the MPOC, the strategy documents

dated Aug 6, 2018 and Feb 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 have

often claimed to be independent voices.

At least three PR firms hired by the MPOC are running these

campaigns, copies of their proposals seen by Reuters show. 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 (NYSE:MO) MO.N and the former Burmese

military junta, according to U.S. 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 e-mail.

The MPOC has not spoken publicly about the campaign. It told

Reuters that it uses various methods, including engagement of

PR 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

comment.

The other two firms running PR campaigns are: Kuala

Lumpur-based Invoke, run by Rafizi Ramli, a former Malaysian

lawmaker; and Unitas Communications, a PR 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 Feb.

26 copy of its proposal seen by Reuters.

Unitas, Rafizi and Invoke did not respond to calls and

emails for 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 the 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 $1 million.

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 PR companies did not comment on the

amounts and whether it was 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, the Malaysian ministry of

primary industries and palm oil companies. 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 it is a global coalition

of oil palm small farmer associations and other supporting

organisations, and that it speaks for more than 7 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 UK against British retailer Iceland when the

company said it would stop selling in-house products containing

palm oil. Iceland says it has ended the use of palm oil in such

products by the end of 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 – 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 NGOs, 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."

Malaysia and Indonesia key palm oil statistics png https://tmsnrt.rs/2MKroCk

Malaysia and Indonesia key palm oil statistics interactive https://tmsnrt.rs/2MLoX28

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