Challenges  and  Opportunities  for  

 Halal  Palm  Oil  Products  

 

THE  latest  World  Halal  Forum  (WHF)  was  held  on  April  4  and  5,  2011,  at  the  Kuala  Lumpur  Convention   Centre   and   themed   “The   Power   of   Values   in   Global   Markets”.     The   main  objective  of  WHF   is   to  provide  a   focal  point   for   the  global  Halal   industry.   Industry  players  can   share   their   knowledge   and   expertise   in   the   Halal   industry   with   regards   to   its  development,  challenges  and  opportunities.  

 

Two  main  issues  were  highlighted  during  the  recent  WHF.  The  first  was  the  emergence  of  a  Halal   accreditation   infrastructure.   As   accreditation   is   imperative   for   the   global  harmonisation  of   the  Halal  assurance  system  and   to  attain  a  higher  degree  of   recognition  among   certification   bodies   (CBs)   around   the  world,   a   global   body,   the   International   Halal  Integrity  Alliance  (IHI  Alliance),  has  been  formed.  IHI  Alliance  will  collabrate  with  CBs  around  the  world.   It  has  already  managed   to  get   several  CBs   into   the   team,   including   those   from  Bosnia,   India,   Italy,   Germany,   the   Netherlands,   Spain   and   the   United   Kingdom.   The   first  stage  of  setting  up  Halal  certification  standards  is  now  in  the  preliminary  review  process.    

 

IHI  Alliance   is  also  working   together  with   the   Islamic  Chamber  of  Commerce  and   Industry  (ICCI)   to   develop   a   comprehensive   Global   Halal   Programme   and   come   out   with   Halal  guideline  modules.   Currently,   they   have   published   four  modules,   which   are   for   Logistics,  Food   Services,  Animal  Welfare   and   Slaughtering  &  Processing.   It   is   expected   that   another  three  modules  will  be  published  soon,  covering  Animal  Feed,  Laboratory  Testing  &  Analysis  and  Cosmetics  &  Personal  Care.  

 

The  second  issue  highlighted  during  the  forum  was  the  convergence  of  the  Halal  sector  with  Islamic   Finance.   This   is   important   as   a   Halal   product   must   come   from   Halal   sources   and  these  include  financial  sources  such  as  loans,  Sukuk  and  other  investment  instruments.  This  will  create  another  challenge  to  the  sector  in  having  adequate  Halal  financial  resources  and  at  the  same  time,  create  opportunities  for  the  financial  sector.  

 

In  2010,  46.2  million  metric   tonnes  of  palm  oil  were  consumed  worldwide,  making  up  the  largest  share  at  33.2%  of  the  total  edible  oils  and  fats  consumed  globally.  Of  the  total,  36.8  

million   metric   tonnes   were   produced   by   Malaysia   and   Indonesia.   Much   of   the   palm   oil  imported  by   a   country   undergoes   further   processing   as   food   and  non-­‐food  end  products.  Halal  certification  would  then  come  from  both  parties;  Malaysia  as  the  exporter  of  the  raw  material  and  the  importers  as  producers  of  the  end  products.  

 

Challenges  

The   scope   for   Halal   products   is   very   wide.   Halal   certification   does   not   cover   the   end  products  alone  but  includes  raw  materials,  sources  of  finance,  processing,  environment  and  other   elements   that   go   into   producing   the   end   products.   These   procedures   bring   about  more   activities   in   the   business   and   manufacturing   processes   and   increase   the   cost   of  production.  Once  the  end  product  is  offered  to  the  market,  the  price  will  have  to  be  higher  –  or   the   producer   will   suffer   a   loss   in   profit   margins   if   the   price   is   not   maintained   at   a  competitive  range.  The  hope  now  is  therefore  on  globally  recognised  Halal  branding  to  add  value  to  the  product  and  therefore,  preference  from  consumers.  

 

The   recognition   and   reliability   of   the   Halal   logo   printed   on   the   product   is   another   issue.  Creating   awareness   and   promotions   are   sorely   needed,   especially   for   imported   products  where  the  Halal  certification  body  is  not  known  to  or  recognised  by  local  consumers.    

 

Opportunities  

Opportunities   for   Halal   products   are   wide   and   numerous.   Certified   Halal   products   will  certainly  enjoy  a  competitive  advantage  in  areas  where  Muslim  population  ishigh,  and  will  be   recognised   as   products   of   a   higher   quality   because   of   the   stringent   quality   controls  imposed  on  production  by  the  certification  authorities.  

 

Such  a   situation   can   clearly  be   seen   in  markets  where   Islamic   financial   instruments,  Halal  hubs   and  markets   for   Halal   food   products   are   fast   expanding.   For   the   record,   2.1  million  metric  tonnes  of  Malaysian  palm  oil  products  were  last  year  exported  to  the  Middle  East,  a  region  where  the  population   is  predominantly  Muslim  and  which   is  a  booming  market   for  Halal  products.  

 

 

 

Conclusion  

Introducing  Halal   palm  oil   products   to   the  world   is   potentially   an   important   growth   area.    Even  though  the  development  of  the  International  Halal  Integrity  Alliance  initiative  is  still  at  an   early   stage,   there   are   specific   areas   that   palm  oil   products   can   take   advantage   of,   for  example  by  using  the  “Halal  Hub  to  Halal  Hub”  procedure  for  the  export  of  products.  This  could   provide   advantages   over   other   vegetable   oil   products   in   terms   of   entering   foreign  markets  and  brand  quality.  The  introduction  of  Halal  palm  oil  products  by  working  together  with  IHI  Alliance  and  JAKIM  (Malaysia)  in  countries  with  high  Muslim  populations  needs  be  explored  further.    

 

By:  

Mohamad  Suhaili