Pressing Matters: Reinventing Palm Oil Milling Through Innovation, Sustainability, and Talent

ISP INTERNATIONAL PALM OIL MILLERS CONFERENCE 2026 (IPOMC26)

24 - 25 April 2026, Royale Chulan Hotel Kuala Lumpur

Keynote Address by M. R. Chandran KMN, FISP, FBIM, FMOSTA, FMIM

1.  Introduction: The Mill at a Crossroads

I must confess, it has been nearly two decades since I last delivered a keynote focused specifically on milling and processing. Much has changed since then. But what has changed most profoundly is not the machinery. It is what the market now expects from a palm oil mill.

Twenty years ago, our metrics were simple: throughput, oil extraction rate (OER), and cost per tonne. Milling excellence was measured by how fast we could process fruit, how much oil we could squeeze out, and how cheaply we could do it. These metrics remain important. But today, they are no longer sufficient. The mandate has transformed.

Before I outline what has changed and what still needs to change, let me say something that is sometimes forgotten in the heat of regulatory debate. Palm oil feeds the world. It accounts for roughly 40% of all globally traded vegetable oils, and it does so at a yield efficiency no other crop can match. For billions of people across Asia, Africa, and beyond, and particularly those who cannot afford expensive alternatives, palm oil is not a lifestyle choice. It is a nutritional staple. The industry we are gathered here to discuss is not a marginal commodity trade. It is a food security pillar of global significance. That is precisely why the standards we apply to our mills, our supply chains, and our people must be of the highest order. We do not reform this industry to appease critics. We do it because the people who depend on our product deserve nothing less.

In 2026, a palm oil mill is no longer judged solely as a fresh fruit bunch processing facility. It has become the critical nexus of profit, sustainability, and global credibility for our entire industry. It is the checkpoint where the world decides whether our value chain passes or fails.

The mill that survives the next decade will not be the one with the lowest cost per tonne today. It will be the one that has reinvented itself as an integrated, intelligent, and indispensable bio-refinery. True excellence now requires a "Total Mill Optimization" mindset where energy, water, and by-products are part of a connected system rather than isolated silos.

The question for each of us is simple but uncomfortable: Are we building that mill? Or are we waiting for regulation to build it for us?

2.  From Extraction Rate to Total Mill Optimisation

For years, operational excellence meant squeezing another 0.1% oil extraction rate (OER). We celebrated when we hit 22%. This is no longer enough. As I mentioned, true excellence now means Total Mill Optimisation - a connected system where the silos between departments are a luxury we can no longer afford.

Consider Energy: Are you just capturing biogas to check a compliance box? Or are you optimising it for maximum power and heat recovery, turning a regulatory cost into a leading profit stream? The question is no longer whether you have a biogas pond; it is whether you are running out of things to do with the energy you capture.

Consider Water: Is your palm oil mill effluent treatment just about meeting discharge limits? Or is it part of a closed-loop system that cuts freshwater intake? Every litre of freshwater you don't use is a litre you don't pay for.

●      As an example, Musim Mas Group in Sumatra  has demonstrated improvements in mill water management through enhanced POME treatment and water-use monitoring. The company tracks water-use intensity with a target below 1.2 m³ per metric tonne of fresh fruit bunches (FFB) processed, achieving 1.12 m³/MT FFB in 2023, and applies the Water Footprint methodology to assess water risks and improve efficiency.

●       To put that figure in perspective: the MPOB industry benchmark for freshwater consumption in Malaysian mills sits at approximately 1.5 to 2.0 m³ per MT FFB processed. Musim Mas is already well below that average. The gap between the best performers and the sector average is not a footnote. It is an enormous, largely unrealised efficiency opportunity spanning our 446 mills.Consider By-Products: Are empty fruit bunches a disposal problem, or are they feedstock for advanced bio-products?

In other words, the modern mill must operate as a connected ecosystem. I repeat - the era of departmental silos is over. The era of system integration has begun.

3. The Circular Economy: Turning Waste to Wealth

 1,000 megawatts: That is the potential energy generation from methane capture across Malaysia's 446 mills, assuming an average capacity of 60 tonnes per hour. One thousand megawatts - enough to power a medium-sized city - sitting in our waste ponds, largely unharnessed.

Only about 30% of Malaysian mills are equipped with methane capture systems. Why? Because many mills are too remote for grid connectivity, making electricity generation financially unattractive. But this framing misses the larger opportunity. Instead of asking, "Can I sell electricity to the grid? - ask, "Can I replace purchased diesel in my own boilers and transportation vehicles?"

●      At TSH Bio-Energy in Sabah, captured methane is now used to fuel the mill's steam boilers, displacing kernel shells. Those displaced shells are then sold into the biomass export market. The result? Two revenue streams from one waste stream. TSH's Kunak complex features a 14MW biomass cogeneration plant and a 4MW biogas power plant, with the biomass plant being the first in Malaysia to connect to the national grid under a Renewable Energy Power Purchase Agreement

This shift from waste management to carbon avoidance allows us to fulfill ESG requirements while unlocking new revenue streams.

Methane emissions deserve particular attention. Unmanaged methane is becoming one of the palm oil industry’s most significant and avoidable climate liabilities. Malaysia has joined the Global Methane Pledge launched at COP26, which aims to reduce global methane emissions by at least 30% by 2030, and the palm oil sector must play a central role in that effort. Methane is a highly potent greenhouse gas - about 27 times more powerful than carbon dioxide over 100 years, and over 80 times more powerful over 20 years. Reducing methane emissions therefore delivers one of the fastest ways to slow near-term global warming.

Capturing methane from palm oil mill effluent and converting it into biogas is not just regulatory compliance. It reduces emissions, generates renewable energy for mill operations, and can create additional value through emerging carbon markets in regional hubs such as Singapore.  And these carbon markets now have stronger legal foundations than ever before. At COP29 in November 2024, the international community finalised the rules under Article 6.4 of the Paris Agreement, establishing a credible multilateral carbon trading mechanism. For palm oil mills with verified methane capture projects, this opens a genuine pathway to generate and sell internationally recognised carbon credits, not just as a compliance gesture, but as a bankable revenue stream. Mills that act now will be positioned to benefit first.However, it is important to be precise about where these opportunities apply. The carbon credit revenue stream will be most relevant for existing mills that retrofit methane capture systems.

For new mills, however, methane capture is now a licensing requirement. As such, these projects would not meet the "additionality" criterion required for carbon crediting under international standards. Mills that act now, specifically existing mills that implement capture before it becomes mandatory will be positioned to benefit first.

4. The Sustainability Imperative: From Compliance to Leadership

 Global markets no longer purchase palm oil based solely on price and quality. Increasingly, they assess how that oil is produced. Environmental, social, and governance expectations are no longer peripheral issues. They are rapidly becoming the industry's licence to operate. The era when mills could treat compliance as episodic or cosmetic is over. Audits are moving from declared practices to verifiable performance. Digitalisation, sensors, mass balance, and traceability systems are becoming unavoidable. 

Nowhere is this more concrete than in the EU Deforestation Regulation, which is now live for large operators. Under the EUDR, every shipment of palm oil and palm-derived products entering Europe must be accompanied by geolocation data for the plots on which it was grown, due diligence statements, and supply chain documentation confirming the commodity was not produced on deforested land after December 2020. For mills, this means becoming a traceability node and not just a processing facility. Mills that cannot provide plot-level data from their FFB suppliers will find their buyers walking away, not because of price or quality, but because the paperwork is missing. The mill of the future must be as literate in data governance as it is in processing efficiency.

5. Food Safety Mandate: The Mill as a Food Factory

Let me address something that has troubled me. There was a time when some voices in industry insisted that CPO was not food so that it could be exempted from basic food safety standards like HACCP. Such assertions were not only scientifically unfounded.  They were strategically self-defeating.

Palm oil is a major edible oil globally, accounting for roughly 40% of traded vegetable oils. It is in your cooking oil, your margarine, your chocolate, your instant noodles. The idea that our industry should dodge food safety standards was never acceptable then, and it is even less acceptable now. Food safety is not a regulatory burden to evade. It is a baseline requirement for market access, consumer trust, and long-term value creation.

6. The 3-MCPD and Glycidyl Esters Challenge

These are the most pressing contaminants for palm oil, formed primarily during high-temperature deodorisation during refining. 3-MCPD is classified as a possible human carcinogen. Glycidol, released from glycidyl esters, is a probable human carcinogen. Palm oil ranks highest in contaminant levels within the Oils and Fats group 

 - 3-MCPD (from esters): 2,912 µg/kg

- Glycidol (from esters): 3,955 µg/kg

We can no longer afford to treat 3-MCPDE as a downstream problem. The chemistry that leads to these contaminants often begins the moment a fresh fruit bunch is bruised or delayed in processing, meaning that effective mitigation must start much earlier in the supply chain.

A staged, upstream approach is essential. At the plantation level, this means both reducing chloride levels in fresh fruit bunches through careful fertiliser choice and implementing careful harvesting and handling practices to avoid bruising. Then, at the mill stage, washing crude palm oil before it undergoes refining can significantly reduce the potential for 3-MCPDE formation. By intervening at these early stages, we can address the root causes of contamination rather than struggling to manage it at the end of the line.

7. EU Regulatory Limits for 3-MCPDE and Glycidyl Esters

The European Union has established maximum levels for 3-MCPDE and glycidyl esters in vegetable oils and fats, creating a regulatory framework that has significant implications for global trade.

For 3-MCPDE, the limits are divided into two groups:

●      Group 1 includes oils such as rapeseed, sunflower, soybean, maize, olive, coconut, and palm kernel oil, which must not exceed 1.25 mg/kg.

●      Group 2 applies to palm oil and pomace olive oil, with a higher limit of 2.5 mg/kg.

This two-tier classification effectively distinguishes palm oil from several other vegetable oils that are generally better able to meet the stricter Group 1 threshold of 1.25 ppm. As a result, palm oil risks being perceived in international markets as a comparatively higher-risk commodity, with potential implications for buyer confidence and long-term market access.

The issue becomes particularly significant in sensitive applications such as infant foods and formula, where regulatory limits are set at much lower levels to protect vulnerable consumers. Because palm oil falls under Group 2, it will face greater difficulty competing in this important and growing segment, where oils capable of consistently meeting the more stringent Group 1 standards are likely to be preferred.

For glycidyl esters (GE), the regulatory maximum level is 1 mg/kg (1 ppm), expressed as glycidol, reflecting their recognised toxicological concern.

These regulatory distinctions underscore the urgency of addressing contaminant formation at its source. By intervening early - from plantation practices through to milling, the industry can work toward meeting these standards and safeguarding palm oil's position in global trade.

8. The Next Frontier in Palm Oil Contaminants: Mineral Oil Hydrocarbons (MOH)

The regulatory landscape for palm oil is rapidly evolving, and the industry must now turn its attention to another challenge: Mineral Oil Hydrocarbons (MOH). Unlike 3-MCPDE and GE, which form during processing, MOH enters palm oil from external sources - lubricants, hydraulic fluids, harvesting machinery, and even food contact materials like recycled paperboard. MOH comprises two main classes with different toxicological profiles :

●      Mineral Oil Aromatic Hydrocarbons (MOAH): This fraction is the primary regulatory concern. MOAH are suspected of being genotoxic and carcinogenic .

●      Mineral Oil Saturated Hydrocarbons (MOSH): While certain MOSH compounds can accumulate in human tissues, the European Food Safety Authority (EFSA) concluded in its September 2023 opinion that current dietary exposure to MOSH does not pose a health concern for the general population. Consequently, the regulatory focus has shifted almost entirely to MOAH.

While binding EU limits for MOAH are expected to be adopted in 2026 and apply from 2027, the time to act is now . Currently, the EU operates under an interim enforcement regime. Member States enforce common "limits of quantification" (LOQs) under Article 14 of the General Food Law, which deems food with high MOAH levels unsafe . For edible oils and fats (containing >50% fat), the critical LOQ is 2 mg/kg .

9. Impact of MOAH  on Malaysian Palm Oil

Waiting for the 2027 deadline would be a costly mistake. The stringent monitoring of MOAH is already a reality, and the consequences are being felt in the present. Data from the EU's Rapid Alert System for Food and Feed (RASFF) shows that Malaysian palm oil consignments are already being rejected or flagged at EU borders due to MOAH concentrations exceeding the interim LOQs .

The industry must act with urgency. Proactive measures such as rigorous supplier audits, the use of food-grade lubricants, and systematic testing for contamination at critical control points are essential. In this regard, it is important to recognise the research conducted by MPOB on palm-based biolubricants, including food-grade formulations that can reduce the risk of MOH contamination in food products while offering a more environmentally sustainable alternative to conventional mineral-oil lubricants. By the time new regulations are formally implemented in 2026, compliant supply chains will need to be firmly in place. For the palm oil sector, ensuring a MOAH-free product is no longer a future aspiration. It is an immediate requirement for maintaining access to key international markets.

10. SIRIM Standards Lag Behind on Critical Contaminants

The current SIRIM standards for palm oil do not include limits for 3-MCPDE, GE, or MOAH. On MOAH, global regulators including the EU are still deliberating appropriate limits, and Malaysia should monitor these developments closely. However, the same justification cannot be made for 3-MCPDE and GE.

These contaminants have been a recognised concern for over a decade. The EU has already established limits for both in palm oil, reflecting their status as processing-induced contaminants with potential health risks. Yet Malaysia's own national standards remain silent on the issue. This is no longer a question of awaiting global consensus - it is a failure to keep pace with basic food safety expectations in key export markets. SIRIM must be proactive and update its standards accordingly.

I would like to suggest that this conference make a concrete recommendation: that ISP, PORAM and MPOA jointly submit a formal petition to SIRIM calling for an urgent review of palm oil contaminant standards, with a defined timeline for incorporating 3-MCPDE and GE limits that align with key export market requirements. We have the technical expertise in this room. We have the industry standing. What has been missing is the collective will to turn diagnosis into action. Let this be the conference where that changes.

11. Repeated Extensions of 3-MCPDE Licensing: A Question of Commitment and Credibility

MPOB originally mandated compliance for 3-MCPDE by January 2023. Following industry pressure, this was postponed to January 2026. Now, MPOB has introduced the possibility of case-by-case extensions for refineries that are "in the process" of upgrading, allowing additional time for companies that can show evidence of progress, such as obtaining quotations or clearing land.

While flexibility may accommodate genuine cases, the cumulative effect of these delays is worrying. If after three years from 2023 to 2026 some companies are still at the planning stage, it suggests the initial deadline was not treated with sufficient urgency. Offering further extensions, even selectively, risks creating a perception that compliance can be indefinitely postponed. I want to be clear: this is not a criticism of MPOB's intentions, nor of the genuine effort many companies have made to comply. It is a systemic observation. When timelines slip repeatedly, the signal sent to the market, to our buyers in Europe, to retailers whose reputations depend on their supply chains, is one of equivocation. Malaysia's credibility as a responsible producer is not built on our intentions alone. It is built on what we can demonstrate. And right now, the gap between our stated commitments and the pace of verified implementation is a vulnerability we cannot afford.

Food safety compromises threaten consumer health and ultimately diminish the value of the entire oil palm industry. For Malaysia to maintain its position as a trusted global supplier, MPOB must ensure that deadlines are meaningful and enforcement is consistent. Without firm implementation, hard-won progress in sustainability and quality could be undermined.

12. From Reactive to Predictive: Why Smart Mills Are the Industry's Future

The transformation of palm oil milling is no longer a distant prospect. It is an urgent necessity. Sensors, automation systems, and real-time data platforms offer mills the opportunity to evolve from reactive operations, where problems are addressed after the fact, to predictive intelligence, where issues are anticipated and prevented before they occur.

We can no longer afford to wait for a lab report to tell us, three days after production, that a batch is contaminated. By then, the product is already in the tank and the financial loss incurred. Innovation today means integrating AI-driven sensors that monitor key quality parameters and thermal conditions in real time, providing instant visibility throughout the extraction process. The industry is already witnessing what this future looks like:

●      Malaysia's first AI-driven smart palm oil mill was launched in November 2024, transforming a 41-year-old facility, Minsawi Industries Kuala Kangsar Sdn Bhd, into a showcase of Industry 4.0 innovation. The mill now integrates advanced sensors, AI-powered CCTV cameras for tracking fresh fruit bunch volumes, and predictive maintenance algorithms that collectively reduce labour dependency while optimising overall efficiency .

●      A digital twin - a virtual model of the mill that mirrors physical operations, allows engineers to simulate operational changes before implementing them on the ground This is not science fiction. SD Guthrie has begun exploring digital twin modelling and process automation in its milling operations to simulate process adjustments and optimise performance before changes are implemented in the physical plant 

●      FGV Holdings has implemented the Palm Oil Mill Integrated System (POMIS), an automated platform that integrates sensors and data systems to monitor mill operations in real time. By 2021, the system had been deployed in 66 of the company’s 67 mills, enabling centralised monitoring of sterilisation, boiler controls, motors, and steam temperature while improving operational efficiency and reducing fuel fibre consumption

These technologies also enable full traceability from plantation to product, an increasingly critical requirement for regulatory frameworks such as the EU Deforestation Regulation (EUDR). When every kilogram of palm oil can be digitally linked back to its source, compliance becomes not a burden but a competitive advantage.

To the sceptics who say these technologies are too expensive, I ask you to calculate the cost of a rejected shipment at Rotterdam. I ask you to calculate the cost of losing a tier-one global buyer. It is the insurance policy for our industry's continued market access and survival. We must innovate, or we will be regulated out of existence.

13. The Risk of Uneven Progress

We have mills that rival the best in the world. Those of you joining the post-conference tour will see this first-hand at Minsawi Industries in Kuala Kangsar, and I encourage you not to miss it. But we must also acknowledge a growing risk: uneven progress. The best mills are world-class; the weakest mills are becoming systemic liabilities. When a subset of mills lags behind, the entire industry pays the price. Reputational risk is collective. Market access is collective. Regulatory scrutiny is collective. Industry excellence, therefore, cannot be defined by a few high performers. It must be anchored in strong minimum standards and consistent performance across the sector.

14. The Biomass Opportunity

Malaysia generates over 100 million tonnes of oil palm biomass annually - a vast, renewable resource that remains critically underutilised. Instead of driving green growth, most of this biomass is treated as low-value waste, left to decay or burned in ways that offer little economic or environmental return.

This is a missed opportunity of significant scale. With the right investment and commitment, these residues could be converted into high-value bio-based products - from sustainable aviation fuel and bio-fertilisers to biochar and renewable energy. A truly circular economy would cascade value from every part of the palm, creating new revenue streams while reducing environmental impact.

Yet adoption remains slow. Despite the government's National Biomass Action Plan (NBAP) 2023–2030, progress toward its goals has been hindered by fragmented implementation, limited incentives, and a persistent mindset that treats biomass as a disposal problem rather than a resource opportunity.

The question for the industry is no longer whether biomass holds value, but how long we can afford to waste it.

15. The Opportunity: A Spectrum of Circular Pathways

 

From Waste to Worth: High-Value Biomass Valorisation

Biomass Stream	Circular Product	Economic & Environmental Impact
Empty Fruit Bunches (EFB), Oil Palm Fronds (OPF), Oil Palm Trunks (OPT)	Bioplastics, Biocomposites, Biosugars, Sustainable Aviation Fuel (SAF)	Reduces fossil fuel dependency; creates exportable high-value goods; supports national SAF targets
Palm Kernel Shells (PKS)	Graphite, Graphene, Biochar, Activated Carbon, Bio-oil, Light Aggregate for Construction, Pollutant Sensors, Filler for Polymer Composites	Green alternative for electronics and advanced materials; carbon credit generation through biochar sequestration; high-value bio-oil from pyrolysis (up to 59% yield) ; sustainable construction materials; environmental monitoring applications
Palm Oil Mill Effluent (POME)	Phenolic Bioactives (Antioxidants), Bio-CNG, Sustainable Aviation Fuel (SAF)	High-value nutraceuticals alongside clean energy; supports circular economy goals
Palm Kernel Cake (PKC)	Enhanced Animal Feed (e.g., enzyme-treated poultry feed)	Improves food security; reduces reliance on imported feed

The sustainable aviation fuel (SAF) opportunity is particularly significant. With Singapore mandating 1% SAF by 2027 and Malaysia targeting nearly 1 million tonnes of SAF production annually by 2028, demand for palm-based feedstocks will surge . Crucially, the government is considering restricting exports of palm oil residues once large-scale SAF production ramps up, prioritising domestic supply.

 These are ambitious targets, and it is right to be excited by them. But we should be clear-eyed about what is still required. The refinery capacity, feedstock logistics, and technology readiness to reach one million tonnes of SAF output by 2028 represent a significant challenge. The opportunity is real; the timeline will be demanding. Mills and plantations that begin positioning their biomass streams now, building the supply chain relationships and feedstock documentation that SAF producers will require, will be the ones that capture the upside when demand accelerates.

16. Human Capital: The Missing Conversation

The mill of the future requires talent that understands not just machinery, but data systems, environmental compliance, and sustainability frameworks. Skills gaps, weak succession planning, and a failure to attract younger workers are critical vulnerabilities. Automation without human capital development creates new risks rather than solutions.

The talent mismatch is structural. Universities produce graduates who remain under-employed, while the industry signals unmet needs in data analytics, robotics, and engineering. Curricula are academically sound but rarely expose students to operational realities. Structured immersion and co-designed programs are needed - not internships as box-ticking exercises.

Perception compounds the problem. Younger, digitally fluent generations rarely see palm oil as a career of choice. Field work is stigmatised; the industry's technological transformation remains invisible to those who could lead it. This must change.

We must rebrand, retrain, and re-inspire. The role of a mill technician is evolving into a blend of mechatronics - the integration of mechanical engineering, electronics, and computer control—alongside data science and process optimisation. Companies like SD Guthrie are already preparing for this shift, anticipating the need for robotics technicians and remote operators who control equipment from centralised operation centres. We need:

●      Partnerships with technical universities to build curricula aligned with industry needs

●      Genuine investment in training - not budgets first to be trimmed when pressure mounts

Our resilience depends not on machinery alone, but on the skills of those who command it.

17. Conclusion: A Call to Integrated Action

Reinventing milling excellence is not about choosing between profit, planet, or people. It is about fusing them into a single, unstoppable strategy. That phrase, reinventing milling excellence, is the theme ISP has chosen for this conference, and it is well chosen. Because reinvention is not renovation. It is not patching what is old. It is a fundamental rethinking of what a palm oil mill is, what it produces, what it proves, and what it owes to the people and the planet it serves. The pressing matters I have described today, from water efficiency to carbon markets, from food safety contaminants to digital traceability, from SIRIM standards to human capital, are not separate problems. They are a single challenge: the challenge of reinvention.

The choice is clear: Lead the transition, or be forced by regulation and markets. Let this conference be our turning point. Let us move from talking about modules in isolation to building the integrated engine of the future. The future of the palm oil industry will be shaped not by those who resist change but by those who redefine excellence.

Thank you for you patience - and for staying engaged with me over the past 40 minutes.

MRC/16.04.2026