Home > Uncategorized > Palm oil exports set to hit all-time high of RM80b

Palm oil exports set to hit all-time high of RM80b

KUALA LUMPUR: Malaysia’s palm oil exports for this year is set to hit an all-time record of RM80 billion, thanks to higher average palm oil prices and sustained demand for the edible oil from emerging economies.

In the first 10 months, the Malaysian Palm Oil Board (MPOB) reported that the country had shipped out RM66.78 billion worth of palm oil products. “This was buoyed by crude palm oil (CPO) price averaging above RM3,000 per tonne,” MPOB chairman Datuk Seri Shahrir Samad said.

The current record was achieved in 2008 when palm oil shipment topped RM65 billion. CPO price averaged at RM2,800 per tonne then. 

Malaysia’s biggest palm oil client is China. During his second official visit to Malaysia in April 2011, China Premier Wen Jiabao promised Prime Minister Datuk Seri Najib Razak that his country will continue to buy big quantities of Malaysian palm oil. As the largest vegetable oil consumer in the world, China makes up 15 per cent of global palm oil consumption. Palm oil is the second most consumed there, after soyaoil.

In the last few years, Shahrir noted that China has started to import more soyabeans instead of soyaoil. This is because the Chinese government wants more crushing activities domestically and more soya meal to feed its pig, cattle, dairy and poultry farms. “Although we see this situation prevailing, we’re not too worried. China has a big appetite for palm oil,” he said. 

Shahrir was speaking to reporters after the opening of the Palm Oil International Congress (Pipoc 2011) by Plantation Industry and Commodities Minister Tan Sri Bernard Dompok here yesterday.

In the first 10 months of this year, China bought 3.34 million tonnes of palm oil, about 13.5 per cent more than the same period last year. 

“Also, India has bought 1.35 million tonnes, 33.6 per cent more from the same 10 months of last year,” Shahrir added.

With economic activity in the US still flat-lining, Christine Lagarde, head of the International Monetary Fund, last week warned that Europe’s debt crisis risked plunging the global economy into a “lost decade”. Despite such gloomy global economic prospects, Dompok remains hopeful that Malaysia’s commodity exports like palm oil and rubber will continue to help spur our nation’s economy to expand by a further 6 per cent, as estimated by Bank Negara.

On another matter, all licensed seed producers have announced that starting 2012, they will raise the price of oil palm seeds by 30 per cent to RM2.35 each from the current RM1.85. They attributed the price hike to burgeoning labour cost. 

Since September 2011, oil palm plantation firms have been paying a minimum wage of RM650 per month to plantation workers, with an additional productivity-linked RM200 incentive. It is estimated that this 10 per cent wage hike for employees is costing the industry an additional RM300 million per year.  The arrears of wages and ex-gratia payment translate into an additional RM364 million.

On the whole, the implementation of the new wage and extra remuneration is inflating oil palm planting and palm oil production costs in Malaysia. 

The Home Ministry, too, has increased overall foreign worker levy by RM50, meaning employers in the plantation industry need to pay a higher levy of RM590 per worker.

In view of these inflationary pressures on the oil palm industry, Dompok was asked if the government is looking to raise the replanting budget for smallholders. He said: “I think, for the time-being, RM7,000 per hectare will suffice.”

Early this year, the government had estimated that from 2011 to 2013, some RM3 billion would go to smallholders to replant 375,000 hectares. There are 161,000 independent smallholders in Malaysia. With 600,000 hectares, they account for 12.8 per cent of the country’s planted area.

Independent smallholders with 40 hectares or less are entitled to a one-off replanting payment of RM7,000 per hectare. In addition, monthly payments of RM500, for two years, will be accorded to each household that solely depends on oil palm planting.

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