TRANSFER OF TECHNOLOGY IN OIL PALM : LESSONS FROM THEMALAYSIAN EXPERIENCE

By

Jalani Sukaimi and Yusof Basiron Palm Oil Research Institute of Malaysia

(PORIM)

A b strac t

PORIM was established in 1979 with a m ission to support the well being o f the oil palm

industry in M alaysia in all aspects o f the activities through research, developm ent and

services. PORIM , therefore, conducts upstream (plantation), processing (milling, refining

and fractionation), downstream (food/non-food products and oleochem icals) and techno-

econom ic research.

PORIM is financed through a cess levy on palm and palm kernel oil production. The R& D and technology transfer program mes are therefore dictated by the needs o f its m ain client,

the oil palm industry. The other clients are the governm ent, consum ers and scientific

com m unity.

The approaches o f technology transfer has to be tailored, am ongst others, to the unique

requirem ents o f each client. The m ain client itse lf is com posed o f three different

categories and therefore has to be approached accordingly.

It is therefore pertinent for PORIM to have a close interaction w ith its client and this would

enhance the com m ercial utilisation o f technologies generated by PO RIM . It also acts as

feed-back m echanism s. PO RIM has high success rates in the generation o f technologies o f com m ercial value.

Experience suggests that the research m anagem ent m ust aggressively m arket their newly

created technologies through smart packaging and other forms o f technology transfer

m echanism s.

Technology transfer is regularly aim ed at enhancing clients’ (especially industry and

investors) aw areness on the availability o f com m ercialisable new technologies. V arious

approaches, guidelines and incentive system s are used to facilitate the com m ercial

utilisation o f technologies and research results.

Paper presented at the Asia Pacific Coconut Community (APCC) 33rd COCOTECH Meeting, Holiday Inn City Centre, Kuala Lumpur, Malaysia. 15-19 July 1996.

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1. INTRODUCTION

M alaysia has been the leading producer and exporter o f palm oil since 1974. The

oil palm area rose from 50,000 ha in 1960 to 2.5 m illion ha in 1995. The production

o f palm oil w as 90,000 tonnes in 1960 to 7.8 m illion tonnes in 1995 (Table 1). An

additional 1.03 m illion tonnes o f palm kernel oil w as produced last year. M alaysia

therefore, contributes about 51% o f the total w orld’s production o f palm oil. At the

same tim e M alaysia exports over 85% o f its production and this constitutes to about

25% o f the total w orld’s traded oils and fats. The industry contributed a significant

7% (equivalent to R M 12.99 billion) o f the GD P in 1995.

The rapid developm ent o f palm oil in the supply system is m ainly due to the

com petitiveness o f the crop that yields ten tim es higher than the other m ajor oil

crops. This m akes it m ore efficient w ith land utilization and cost o f production.

W ith the progress in research and developm ent, the oil palm is capable o f further

doubling its yield from the current level.

This seem s to suggest that palm oil w ill alw ays be readily available to satisfy the

export m arket o f oils and fats. It w ill be the m ost im portant source o f oils and fats

w ith in the next tw enty-five years, i.e., until 2020 w hich, by then, w ould require

alm ost double the current quantity o f w orld ’s consum ption o f oils and fats. Palm

oil w ill occupy about 25% o f total consum ption o f oils and fats to becom e the

largest consum ed oil in the w orld (Table 2).

In the context o f today ’s sem inar, this paper w ill elucidate the progress and future

d irection o f research developm ent strategies and relate the technology transfer o f

results and technologies developed for com m ercial utilization to ensure that the oil

palm industry w ould be able to retain its techno-econom ic com petitiveness and

sustainability.

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2. PRODUCTS OF OIL PALM

As an industry, the products generated can be broadly categorized into tw o m ain

com ponents. The first is the oil products and the second is the biom ass.

2.1 Palm Oil and Palm Kernel Oil

The main components that are being intensively utilized are the palm oil and

palm kernel oil. A fter m illing, refining and/or further processing, M alaysia

exports about 32 specialised, high technical quality, ready to be consum ed and

cost-effective palm oil and palm kernel oil products (Table 3). These products

are utilised or consumed in both edible and non-edible purposes. Contribution

o f these palm and palm kernel oils has been the m ainstay o f the M alaysian oil

palm industry. These oils constitute about 15% o f the total dry m atter o f about

44 tonnes/ha/yr produced by the oil palm (Corley, 1985).

2.2 Oil Palm Biomass

W hat are the other 85% o f the total dry m atter? These are the em pty fruit

bunches (EFB), fronds and trunks as well as o ther m inor com ponents such as

carotenes (pro-vitamin A), tocopherols and tocotrienols (vitam ins E), sugars

and others. Are these com ponents being utilised econom ically? The em pty

fruit bunches, fronds and trunks (after felling) are generally used as m ulch or

organic m anure to help in enriching and the am elioration thus im proving the

soil conditions as well as physical and chemical properties. They also help in

the prevention o f soil erosion. Technologies have been developed, both for

the biom ass (fibres from em pty fruit bunch, fronds and trunks) and other

m inor com ponents, to turn them into value-added products.

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3. PARADIGM SHIFT IN STRATEGY

N otw ithstanding the success over the last three decades, the oil palm industry

needs a shift in its strategy from one o f expansion tow ards a com petitive

orientation. Based on projection, M alaysian palm oil will continue to be the leader

bo th in upstream and dow nstream activities. H ow ever, there w ill be s tiff

com petition from other palm oil producing countries and other oils and fats. The

M alaysian oil palm industry could not afford to stagnate to rem ain as prim ary

and/or semi-processed raw m aterial producer. The industry needs to b e at quantum

leap ahead o f its competitors. PORIM has forwarded a three-pronged com petitive

strategy (Y usof and Jalani, 1995) encom passing the following:

Strategy 1 : High Income Strategy

High incom e generating capacity w ith the plantations having high productivity

and efficiency to enable the oil palm industry to earn com parable incom e like

the m anufacturing sector.

Strategy 2 : Downstream Value-Added Strategy

Intensification o f high value added products from palm oil and its products,

both by direct and the oleochem ical routes.

Strategy 3 : Zero-Waste Strategy

Creation o f zero-waste by balanced utilization o f b iom ass ‘w astes’ into value

added co-products to help generate high incom e and prevent pollu tion o f the

environm ent.

4. STRATEGY 1 : HIGH INCOME STRATEGY

To increase incom e in the plantation sector, PO RIM has introduced several

m easures including the introduction o f new m other palm s for seed production o f

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high-yielding planting materials known as PORIM Series 1, 2 and 3. PO RIM has

also advocated that the industry takes serious views about collection o f loose fruits

in order to im prove the oil extraction rate (OER). PO RIM has also designed

com puterized fertilizer application system s using ‘foliar d iagnosis’ and

‘environm ental da ta ’. And PORIM has in its collection over 40,000 germ plasm

m aterials which will be the basis o f future breeding program me to give the industry

better and higher yielding palm s. On another front, PO RIM has em barked on an

intensive program me in biotechnology as another route to achieve better planting

m aterials.

V arious farm m echanisation im plem ents have been introduced to reduce labour

requirem ents, im prove labour productivity and efficiency to lower the cost o f

production.

Davidson (1991) estimated that the cost o f production o f palm oil in M alaysia was

able to be reduced from US$ 746 to US$ 260 per tonne in the last three decades

through improvement o f labour productivity, agricultural yields, factory efficiency,

high oil content and fixed costs.

Crop and/or anim al integration w ith oil palm , especially w ith sm allholders have

been demonstrated to m axim ise the utilisation o f the land and able to boast-up the

incom e from the holdings.

5. STRATEGY 2 : DOWNSTREAM VALUE-ADDED

The industry will continue to be dependence on traditional uses both in the edible

and non edible segm ents. How ever increasingly the industry w ill need to m ove

from these traditional tracks onto novel tracks and therefore creating new strategic

business areas (SBA). This is seen as a necessary m ove to ensure its

com petitiveness.

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5.1 Food Products

It is estimated that 80% and 20% o f the palm oil are being used in edible and

non-edible purposes respectively. The m ain constituents in the edible

purposes are: frying/cooking oil, m argarines, shortenings, vanaspati and

confectionary fats.

In addition, the im provem ent o f traditional products, R and D has developed

and form ulated new products in order to m eet new dem and, to enter new

niches and also to enhance its competitiveness. Em ulsion-based pow dered and

convenient food products could easily utilise various palm oil and palm kernel

oil products. Som e o f these novel food products are ice-cream , non-dairy

cream ers, salad dressings, trans fatty acids free form ulations, palm -based

cheese, ‘santan’ (coconut m ilk) powder, m icro-encapsulated palm oil/olein

and red palm oil/olein.

5.2 Non-Food Products

As m entioned, the non-food application o f palm oil is only about 20% . The

area o f applications, however is significant due to high added value. The non ­

food uses o f palm oil can be divided into two categories, i.e., v ia direct o r via

oleochem ical route.

The d irect route o f non-food products w ould be traditionally represented by

the utilisation palm oil/palm kernel oil as raw m aterials o f choice in soap

m anufacture. The new application w ould be epoxidisation o f palm oil into

polyols which then could be used in the production o f polyurethanes. The use

o f palm oil as fuel has been demonstrated from two angles, i.e., to m odify the

engine so that crude palm oil could be used, or to use derivatives o f palm oil

such as methyl esters in normal diesel engines as fuel. The use o f palm oil as

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fuel SHOULD NOT therefore be associated with lower quality oil that is unfit

for hum an consum ption.

The oleochem ical route w ould norm ally divided into basics and derivatives.

Palm oil could be proceed econom ically into five basic oleochem icals, i.e.,

fatty acids, fatty esters, fatty alcohol, fatty am ines and glycerol (Table 4).

These basics w ould be further processed into various high added value

derivatives such as soaps, detergents, surfactants, personal care products,

esterquats, pharm aceuticals, inks, lubricants, etc.

6. STRATEGY 3 : ZERO-WASTE

The ideal o f any industries is ‘zero-w aste’. I f this could be achieved, m uch o f

today’s have-and-any about pollution will be diminished. In the oil palm indsustry,

strategies have been form ulated to achieve this ideal by focussing on the biom ass

that is genereted in abundance daily.

As m entioned earlier, oil palm produces around 44 tonnes/ha/year o f total dry

m atter. There is trem endous potential for exploiting these biom ass (ligno-

cellulosic materials) from empty fruit bunches, fronds, trunks, fruit m esocarp and

shells. There is an abundant supply o f these m aterials, viz, a total o f 12.2 m illion

tonnes dry w eight o f oil palm fibre or ligno-cellulosic m aterials per year. In

addition to raw but processed fibres for export, high quality value-added products

from these renew able, eco-friendly m aterials could also be m anufactured.

The approach for this strategy is in the balanced utilization o f biom ass, i.e., the

am ount for conversion into value added products and the am ount to be put back

into the soil for amelioration, erosion prevention and other m anagem ent m easures

for the sustenance o f ecology.

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The oil palm industry has been able to m eet the Environm ental Q uality Acts and

the accom panying strict guidelines on the treatm ent o f PO M E (palm oil m ill

effluent) using ponding system, open tank digester and extended are ration system,

and close anaerobic digester system. The treated PO M E could be applied directly

to the plantation as organic fertilizer. Two new technologies were recently reduced

to further im provem ent the abatem ent o f pollution. A novel process em ploying

evaporation technology, Quick-Eva, which treats PO M E by distillate recycling,

thus reducing the w ater intake, treatm ent cost and no liquid effluent discharge. The

other is the ‘zero-burning’ approach during replanting.

7. INTERACTION WITH THE INDUSTRY

According to our experience thus far, the technologies that have successfully m ade

their w ay to the industry are those calssified as m arket pull, m ore so than

technology push and incremental im provem ents (innovations) are m ore m arketable

or acceptable than break-throughs. The reason for this is the industry can

appreciate the little improvements given to their existing operation line m uch better

than w hat a new processing/operation line can do.

Hence it is clear that a strong interaction between the researcher, the institution and

the industry m ust exist for com m ercial utilisation o f any research

results/inventions/innovations to take place sm oothly.

Fortunately for the M alaysian oil palm industry, there is a strong tradition o f

in teraction betw een the executing agencies, such as the M inistry o f Prim ary

Industries (M PI), Palm Oil Research Institute o f M alaysia (PO R IM ), Palm Oil

R egistration and Licensing A uthority (PO R LA ) and M alaysian Palm Oil

Prom otion Council (M PO PC ) w ith the oil palm industry, such as M alaysian Oil

Palm G row ers’ Council (M O PG C ), N ational A ssociation for Sm allholders

(NASH), Federation o f Palm Oil M illers A ssociation o f M alaysia (PO M A ), Palm

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Oil Refiners A ssociation o f M alaysia (PORAM ), M alaysian Edible Oil

M anufactures A ssociation (M EOM A), M alaysian O leochem ical M anufacturing

G roup (M O M G ), etc. The industry is well presented in the Boards o f PORIM ,

PO R LA and M PO PC and their respective sub-com m ittees. At the same time

PO RIM , PO RLA and M POPC participate in various sub-com m ittee set up by

various interest groups o f the industry.

Interaction w ith the industry will also bring additional advantages : to understand

the requirements o f the industry and to conduct research accodingly to fullfil these

requirem ents.

In this context, for exam ple, PO RIM form ed the PO RIM -Industry Interaction

Com m ittees o f various specialisations at the professional level where com m on

program m es and problem s are discussed together for mutual benefit. At the higher

scientific advisory level, the industry is well-represented at the Program m e

A dvisory Com m ittee, PAC (and Technical A dvisory Com m ittee) which advises

the Board.

8. TRADITIONAL TECHNOLOGY TRANSFER

D espite the long history o f oil palm growing and consum ption in A frica, the

industry came to be prominent in the world trade o f oils and fats only very recently.

D uring the ensuing years, m any breakthroughs w ere m ade in the fields o f the

science, technology and m anagem ent o f oil palm. These breakthroughs need to be

transfered to its clients, namely, the industry, governm ent, consum ers and the

community. W ithout going into details o f the theoretical aspects, an outline o f the

objectives o f technology developm ent and transfer are as follows: *

* to m axim ise the productivity o f the industry

* to encourage diversification o f products

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* to correct nutrition m is-conception

* to prom ote large, m edium and sm all industries

* to develop m arkets

* to ‘green’ the w orld , and

* to rew ard excellent efforts

The degree o f absorption and com m ercial utilisation o f technologies transfered

seem s to be greater by large plantation houses as com pared to those by

sm allholders. Large plantation houses are endow ed w ith good hum an,

scientific/technical and financial resources.

8.1 U p s tre a m

The national Agriculture Policy discourages the participation o f ‘independent’

sm allholders. Even though they have contributed and role to play in the

industry, they have low absorption capacity o f technologies due to lim ited

know ledge and source o f finance and non-econom ic size o f the farm.

Suboh and Tayeb (1994) have identified som e critical factors causing low

productivity am ongst the smallholders: *

* use o f non-genuine DxP planting m aterials and poor quality seedlings

* im proper land preparation and planting techniques

* sub-standard field m anagem ent level

* shallow know ledge/experience in the m anagem ent o f problem soils

* poor harvesting standards

* shallow knowledge on the influence o f clim ate and m anagem ent inputs

on crop perform ance.

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Realising the needs o f smallholders set up the Sm allholders Development and

Technology Transfer Unit w ith the m ission to develop the oil palm

sm allholders and relevant sectors o f the industry to be productive,

com m ercially oriented, progressive and dynamic through the transfer o f recent

and appropriate technologies.

The m ain thrust areas o f upstream technology transfer, both for plantation

houses/agencies and sm allholders, are:

* Training and Communication: courses, newsletters, printed m aterials,

radio/tv program m es, hotline and exhibitions

* Extension and Project Im plem entation: observation plots o f

crop/animal integration, demonstration plots, adaption o f problem atic

holdings/estates, extension research and dialogues/talks

* A dvisory and Consultancy: diagnose problem s, analysis and

appropriate recom m endations through advisory and consultancy.

8.2 Processing and Quality Assurance

As the industry contributes about 53% o f the total w orld palm oil production

and 25% o f the w orld’s traded oils and fats, it is pertinent that the industry

m ust m aintain and continuously im prove the quality o f the palm oil and its

products.

Continuous im provem ents have been m ade in the processing plants (m illing

and refining) both in the cost, products and quality.

Most o f the processing plants have gone sem i-autom ation, full autom ation or

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both. In order to m eet the high quality standards, PO RIM w ith the industry

has introduced M illing Certificate o f Com petency (M C O C ) and Refining

Certificate o f Com petency (RCOC). Processing plants are regularly checked

and those m eeting the high operating standards w ould be issued with the

certificate, valid for two years. Those w ho fail, m ust rectify until and unless

they m eet the specifications, the certificate w ill not be issued to them . The

consum ing clients value these certificates as strong quality assurance.

In addition to M COC and RCOC, PO RIM also provides standards o f various

products, analysis and test m ethods as well as courses and trainings.

8.3 Utilization/Downstream

As m entioned earlier, about 85% o f the M alaysian palm oil production are for

export. There are about 32 processed and sem i-processed palm oil products

in the ready to be consum ed forms w ith m inim al re-processing (Table 3).

These products are exported to m ore than 120 countries. Som e o f these

countries are new m arkets w ith little experience in the utilization o f palm oil

and its products. On the other hand, the establishm ent m arkets m ay w ant to

im prove and diversify their products, and therefore require technical inputs.

The M alaysian oil palm industry, through PO R IM , provides free technical

advisory services to any clients who face problem s in the utilization o f palm

oil.

The industry also provides economic and m arket developm ent inputs, as well

as publications, technical sem inars/visit and exhibitions.

One o f the m ost popular and effective m ethods o f technology transfer to key

personnels (both public and private) involved in oils and fats from consum ing

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and potential consum ing countries is through the annual Palm Oil

Fam iliarization Program m e (POFP). The participants are either fully

sponsored by the G overnm ent o f M alaysia under the M alaysian Technical

Cooperation Program m e (M TCP) and PORIM or self-sponsored.

8.4 Correction of Misconception and Image Building

In the late 1980's there w ere cam paigns against the palm oil by A m erican

Soybean A ssociation (ASA). The sm ear cam paign m entioned that tropical

oils (especially palm oil) poisoned Am erica w ith saturated oils and raised the

cholesterol level in hum an, thus increasing the probability o f coronary

diseases.

That smear campaign jo lted the oil palm industry. There w ere about three to

four publications on the nutrition o f palm oil. It was a difficult task to counter

the sm ear cam paign.

N um erous steps w ere taken. Research on nutrition w as intensified and now

there are m ore than 100 projects costing m illions o f dollars carried out world

w ide. The results o f these projects w ere published in various form s. One

thing was com m on, i.e., all results w ere positively in favour to palm oil.

V arious N utrition A dvisory Com m ittees were set up for different regions to

help and form ulate scientific basis to counter the sm ear cam paign.

M PI, PO RIM , PO RLA and the oil palm industry as w hole m ade concerted

efforts to hold seminars, dialogues, forum s, lobbies, hearings, etc., in various

parts o f the world, especially USA.

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Finally , truth prevails: N egotiations w ere held w ith A SA and they finall)

called a truce!

One o f the results o f this smear campaign was the birth o f M PO PC w hose task

is to prom ote palm oil.

This w as a classical exam ple o f highly charged technology transfer for truth

and the w ell being o f the industry and for the benefit o f m ankind.

9. NEW APPROACHES IN TECHNOLOGY TRANSFER

9.1 New Approahces in R and D

The system o f R and D in the oil palm industry has since been im proved over

the years to build on the success o f the early experiences. M ore breakthroughs

have been achieved by both the public and private sectors. Research

program m es w ere developed in consultation w ith the industry. The usual

system o f consultation through advisory com m ittees provided the m eans to

address the industry’s needs and problem s, and research projects more

form ulated accordingly.

A n im portant goal in R and D is for it to be effective, i.e., leading to new

technology or new know ledge for the advancem ent and econom ic grow th of

the industry.

Effective research therefore m ust be industry or custom er driven. O ther terms

used are that research m ust be m arket or com m ercially driven (Y usof, 1995).

Efforts m ust be m ade for the comm ercial utilization o f research breakthroughs

and m ust facilitate to transfer these breakthroughs to proceed efficiently.

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There is therefore to redefine R and D to include the process o f undertaking

technology transfer and commercial utilization o f the results, in addition to the

traditional concept o f com pleting a research project in the usual way by

presenting papers, publishing and patenting the findings (Yusof, 1995). This

novel interpretation is indifference towards the traditional view that

researchers should focus on research and not on the task o f technology transfer

for com m ercial utilisation o f the research results. PO RIM view s that R and

D includes ‘developm ent’ and therefore m ust develop research results right

through to the com m ercial utilisation stage.

9.2 Packaging the Results for Commercialisation

Research institutions generally m ust have large collections o f com pleted

projects which are not taken up for com m ercial utilisation. It is partly due to

the old norm that projects are usually regarded as com pleted as soon as the

results have been published in the forms o f reports, papers or filed patents. It

is up to the ingenuity and alertness o f the industry to pick-up the technology

m entioned in the reports or papers.

W ith this procedure, only two or three technologies m anaged to transfer for

com m ercial applications in the first 12 years o f PO R IM ’s establishm ent.

Actually m any technologies have been taken up for com m ercial applications

without being recorded or m onitored, e.g., fertilizer application using

com puterised Foliar D iagnosis System (EDS), and/or Environm ental Data

System, bio-control using bam owl, m other palms, elite germplasm, margarine

and shortening form ulations, etc, etc. This is partly due to ‘traditional

interpretation’ o f com pleted projects and com m ercialisation.

W ith deliberate packaging o f technologies for com m ercialisation PO RIM has

been able to offer 40 additional technologies in the subsequent three years

until M ay 1996.

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C urrently PO R IM has 38 patents (Badri and Jalani, 1996), a record for a

research institution in M alaysia, and 43 technologies on offer to the industry

for technology transfer licensing arrangem ents. W e have licensed out 36

(84% ) o f these technologies to the industry. Up to now , 13 o f the 36

technologies or 36% have been com m ercially exploited. The rem aining

licensed technologies are in various stages o f com m ercial production. M ost

o f these efforts were in the last three years w hen PO R IM started to redefine

the m eaning o f 'research' w here research com pletion m eans com m ercial

utilisation o f the research results.

Technologies generated from R and D m ay no t be 100% com pleted, but

potential receivers and investors could also be receptive o f these technologies

i f they were involved at an early stage in the project developm ent.

A lternatively is to allow them to utilise the pilot plant for com m ercial trials to

optim ise the operational procedures and operating costs. There is alw ays by

being able to package and sell the technology on the basis o f its good potential

and econom ic viability (Y usof, 1995).

9.3 Targeting the Technology Recipients

Ability to m arket and sell ideas o f new technologies by the researchers to the

prospective investors w ould be an asset. The right decision m akers such as

ch ie f executives, directors and advisors m ust know the availability of

com m ercialisable technologies and research results.

Availability o f sam ples and prototypes o f the products or technologies could

facilitate com m unication to create aw areness and interest o f the prospective

recipients.

A nother pow erful m eans o f convincing the m akers w ould be econom ic

feasibility studies on the viability o f the technologies as some would only start

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to listen i f the internal rate o f return (IRR) is very favourable. Selectively

right sizing o f the projects could be vital as big com panies are usually not

interested and vice versa. W hat it m eans here is that technqlogy transfer

should consider large corporations as well as small and m edium industries.

The available and potential projects should therefore be in the appropriate

packaging and m arketing process and be w idely advertised, including

com puter netw ork to increase exposure and awareness (Yusof, 1995).

9.4 Time Scale for Technology Adaption

R and D and then to pass on technologies for comm ercial utilization take time.

However in PORIM , it ranges from 1 year to 20 years depending the product

or technologies. The new or second generation o f planting m aterials (m other

palm s) o f recently introduced PORIM Series 1 and 2 took 18 years as it

involved projection o f germ plasm in Africa, characterisation, selection,

evaluation o f elite m other palm s and their progenies. It w ill take a further

seven to nine years before m illions o f com m ercial seeds could be sold to the

industry. The pick-up by the recipients w as fast, bu the long life cycle o f oil

palm required long gestation period for com m ercial production.

Another project on palm oil m ill effluent treatm ent needed only one year for

experim entation by adapting a known technology. The pick-up o f this

technology w as alm ost im m ediate. The lead tim es o f other projects are

som ew here in betw een two extrem es (Yusof, 1995).

Prom otion on the use o f a technology requires persistent efforts to ensure

successful commercialisation. For example, com m ercial utilisation o f rubber

wood took about 10 years before w ide spread com m ercialisation occurred.

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9.5 L icensing o f Technologies

Licensing arrangem ent could be an im portant strategy in the successful

com m ercialisation o f a technology. The licensing could be: open, lim ited or

exclusive (Badri et al.t 1993). Each has its own m erits and dem erits.

The open technology transfer is m eant for everybody interested. U sually this

does not involve any royalty paym ent, the m arket is b ig and the capital

investm ent is low and also for m arket developm ent in new m arket areas.

Examples for these are soap making, the preparation o f m argarines, shortening

and refining.

Som e technologies are transferred to a small num ber o f entrepreneurs: three

to eight depending on their complexity. I f it is too open, the entrepreneur m ay

not want to undertake the risk o f proving the technology and then see his rich

m arket be competed away by newcomers. For example, investors for red palm

oil refining technology w ould expect their investm ents to be recovered

through limitation in the num ber o f licensees as they can hope for better price

control w hen the product is finally m arketed (Yusof, 1995). B ut m ultiple

licensees is m eant for com petition to avoid undelligentness on any part o f the

licensees.

There are several technologies in PO RIM that have been transferred

exclusively to interested parties. M ost o f these technologies require large

capital investm ent, lim ited supply o f raw m aterials, require an extensive

m arket study, etc, and such as V itam in E project.

The royalty payable varies from 8% dow nw ards depending on the nature of

the project. The low rate is used as an inventive to help the entrepreneur to

succeed in the comm ercialisation process and probably to recover cost o f the

original R and D. The recovery o f original R and D cost is seldom achieved.

247

In the case o f PORIM this is already done through research cess from the*

industry.

9.6 Incen tive to th e R esearchers

To ensure the success o f the new R and D approach, researchers are

encouraged to take their research projects right through to the

com m ercialisation stage with some form o f rew ard arrangem ent. This is

alm ost o f an about turn o f the past where probably little attention w as given

to com m ercialisation o f the research results and probably littre training or

encouragem ent to handle the m arketing o f the technologies created (Yusof,

1995).

W ith proper policy, training and encouragem ent, the m arketing o f the new ly

created technologies m ay not be that difficult to carry out. In PO RIM ,

researchers can attach them selves as consultants to their projects w hich are

being commercialised. In addition, they are given a percentage o f the royalty

collected from contribution o f a research officer in the R and D project team

has to be determ ined in advanced so that the proportion o f royalty he finally

receives can be easily decided. These forms o f incentive reduce the tendency,

for the researcher to leave his organisation to com m ercialise his research

results as he can participate in the com m ercialisation process as a consultant

and be a recipient o f the royalty.

10. DISCUSSION AND CONCLUSION

R and D plays a very im portant role in the growth and success o f any industry,

including oil palm . The research program m es m ust be focussed on the

requirem ents to m eet the current and future o f the industry.

248

Research results in the form o f know ledge and technologies either adaption,

adoption, innovation and invention m ust be transferred to the industry.

Technology transfer in the traditional m ay has contributed to developm ent, growth

and sustainability o f the industry. This will continue its role now and in the future.

However, to m eet new challenges in the future traditional technology transfer m ay

not be enough. Additional approach needs to be established. In the case o f oil

palm , this dim ension has been added.

The researchers and the organisation develop capability to com m ercialise their

projects. Appropriate Policies, guidance and incentives m ust be form ulated. This

is evident that w ith low em phasis on com m ercialisation the US universities

produced 5% the technologies created o f com m ercial value (Guinta, 1995),

com pared to 30% com m ercialisation through paper strategies as illustrated by

British Technology Group (Nathan, 1995) and 84% by PO RIM w ith redefined R

and D to include com m ercialisation.

There is a need for proper packaging o f research findings irrespective whether they

are big or small for transfer to the industry. Aggressive m arketing to the potential

recipients is also a requirem ent as they need to be inform ed on the availability o f

new technologies.

It is hoped that w ith an additional approach, there should be m ajor savings from

great amount o f wasted efforts in the past and the industry w ould benefit from the

introductions o f com m ercialisable technologies.

11. REFERENCES

Badri M, Salmiah A hm ad and Y usof Basiron (1993). M echanism o f technology

transfer and com m ercialisation : PO RIM experience. Paper presented at the

249

Sem inar on Resource M anagem ent and Investm ent O pportunities in

Agriculture Sector, Awana, Genting, Pahang, Malaysia. 9-10 Novem ber 1993.

B adn M and BS Jalani (1996). M anaging intellectual property for profit -

Experience o f a public sector research organisation: PORIM . Paper presented

at the W orkshop on Awareness and Understanding o f Patents. INTAN, Bukit

Kiara, Kuala Lum pur, M alaysia. 27-29 M arch 1996.

Chow CS (1992). Long term forecast o f the oil palm productions in Indonesia and

som e analysis o f the relative position o f world palm oil production in total

world supply o f oils and fats. Paper presented at the Sem inar on M alaysia and

Indonesia Palm Oil Industry: Rival or Partner. PO RIM , Bangi, Selangor,

M alaysia. 5 Septem ber 1992.

Corley RHV (1985). Y ield potentials o f plantation crops. Paper presented at the

19th International Potash Institute Colloquium , Bangkok, Thailand. 25-27

N ovem ber 1985. pp 18.

D avidson L (1991). M anagem ent for efficient cost-effective and productive oil

palm plantations. Proceeding o f 1991 PO RIM International Palm Oil

Conference: Progress Prospects & Challenges Tow ards the 21st Century.

K uala Lum pur H ilton, M alaysia. 9-14 Septem ber 1991. p 153-167.

Guinta FJ (1995). Assessing latest technologies from the US. Paper presented at

Sourcing o f Technology W orkshop, PW TC, K uala Lum pur, M alaysia. 2-4

M ay 1995.

N athan S (1995). M aking m oney from inventions. Chem istry and Industry No.

11, June 1995. p 404.

250

Suboh Ism ail and M Tayeb D olm at (1994). Identification o f oil palm

sm allholders’ problem s and the need for effective technology transfer. Paper

presented at PO RIM A nnual Research Sem inar, PO RIM , Bangi, Selangor,

M alaysia. 27 A ugust 1994.

Y usof Basiron (1995). Com m ercialisation o f R and D results in the palm oil

industry. Plenary address for M alaysian Science and Technology Congress

1995 (M STC ‘95) at U niversiti M alaya, K uala Lum pur, M alaysia. 22-25

A ugust 1995.

Y u so f B asiron and BS Jalani (1995). The oil palm and its products:

C om petitiveness and opportunities in the 21st century. Paper presented at

M IER 1995 National Outlook Conference, Kuala Lum pur Hilton International,

K uala Lum pur, M alaysia. 5-6 D ecem ber 1995.

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Table 1 : World Production of Palm Oil (Million Tonnes)

Y ear M alaysia In d o n esia A fricas A m ericas O th e rs T o ta l

1980 2.58 0.69 0.80 0.14 0.34 4.55

1985 4.13 1.21 0.66 0.29 0.53 6.83

1990 6.09 2.41 1.14 0.49 0.80 10.94

1995 7.80 4.73 1.45 0.64 0.96 15.39

2000 8.75 7.46 1.86 0.78 1.10 19.95

2005 9.90 9.89 2.34 0.89 1.22 24.24

(Source : Adapted from Chow, 1992)

T ab le 2 : W o rld C on su m p tio n o f O ils an d F a ts (M illion T onnes)

Y ear PO PK O Soya Sun R ape O th e rs T o ta l

1980 4.57 0.61 12.70 4.98 3.99 29.26 56.11

1985 6.58 0.84 13.77 6.54 5.85 33.74 67.32

1990 10.96 1.34 16.08 7.88 8.18 35.99 80.43

1995 14.77 1.89 19.42 9.70 11.54 38.14 95.46

2000 20.14 2.59 22.40 11.79 15.37 40.46 112.75

2005 26.55 3.44 25.47 14.17 19.89 42.49 132.01

(Source : A dapted from Chow , 1992)

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Table 3 : Malaysian Export of Palm Oil Products

BPO

BPL

BPS

CK G OIL

CPKO

CPL

CPO

CPS

D B L OLEIN -

N BPO

NBPL

KBPS

NPO

N PL

NPS

N BD PO

HP FA

N B D PL

N B D P S

OLEO

PAO

PFAD

PK

PK O

PKC

POPPK O

PPO

R B D P O

R B D P L

R B D P S

RBD H PO

Bleached Palm Oil

B leached Palm Olein

B leached Palm Stearin

Cooking Oil

Crude Palm Kernel Oil

Crude Palm Olein

Crude Palm Oil

Crude Palm Stearin

D ouble Olein

N eutralised, B leached Palm Oil

N eutralised, B leached Palm O lein

N eutralised, B leached Palm Stearin

N eutralised Palm Oil

N eutralised Palm Olein

N eutralised Palm Stearin

N eutralised, Bleached, D eodorized Paim Oil

H ydrogenated Palm Fatty Acid

N eutralised, Bleached, D eodorized Palm Olein

N eutralised, Bleached, D eodorized Palm Stearin

Palm Oil & Palm Kernel O leochem ical

Palm A cid Oil

Palm Fatty Acid D istillate

Palm Kernel

Palm K enel Oil

Palm K enel CakePalm Oil

Processed Palm K enel Oil

Processed Palm Oil

Refined, Bleached, D eodorized Palm Oil

Refined, B leached, D eodorized Palm Olein

Refined, Bleached, D eodorized Palm Stearin

Refined, Bleached, D eodorized H ydrogenated Palm Oil

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Table 4 : Production of Basic Oleochemicals

CountryBasic

Oleochemicals 1990 1995 2000*

M alaysia Fatty Acids 135 000 523 000 560 000

Fatty Esters 73 000 233 000* 110 000Fatty A lcohols 30 000 115 000 350 000

Fatty N itrogens - 10 000 60 000Glycerol 24 200 80 000 120 000

Total 262 200 961 000 1 200 000

W orld Fatty Acids 2 130 000 2 383 000 2 593 000

Fatty Esters 450 000 544 000 624 000

Fatty A lc o h o ls ' 855 000 1 168 000 1 575 000Fatty N itrogens 425 000 487 000 526 000Glycerol 557 000 682 000 780 000

Total 4 417 000 5 264 000 6 098 000

* Inclusive Fatty M ethyl Esters

+ Forecast

254