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Malaysian palm oil exports to fall 10pc

KUALA LUMPUR: MALAYSIA’s palm oil exports for the year are expected to shrink 10 per cent from last year’s record high of RM80.4 billion, as palm oil prices had been on a downtrend as a result of Indonesian government’s restructuring of its palm oil taxes to woo more investments in its downstream activities.

“There will be a shortfall from last year’s since palm oil prices have fallen,” said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.

In the first nine months of this year, the Malaysian Palm Oil Board (MPOB) reported that the country had shipped out RM53.98 billion worth of palm oil products. 

Since October 2011, the Indonesian government had widened the export tax gap between crude palm oil (CPO) export and refined products drastically to boost refining capacity and downstream activities. As a result, crude palm oil and crude palm kernel oil prices had been on a downtrend.

The minister was speaking to reporters at the Palm Oil Trade Seminar (POTS) Kuala Lumpur organised by the Malaysian Palm Oil Council (MPOC) here yesterday. Also present at the press conference was MPOC chairman Datuk Lee Yeow Chor.

MPOB numbers also revealed that Malaysia’s palm oil stock level for September stood at 2.48 million tonnes. Dompok assured traders that they should not be too worried of overcapacity talks because the country has storage levels of up to five million tonnes.

On export trends, it is interesting to note that in the first nine months of this year, MPOB data showed that India bought 1.84 million tonnes of palm oil from Malaysia, 60 per cent more than last year’s 1.15 million tonnes.

Dompok acknowledged that the higher shipment of CPO to India is very much facilitated by policy changes by both the Indian and Malaysian government three months ago. 

Since July, India, which imports more than half of its total vegetable oil consumption of about 16 million tonnes a year, ended a six-year freeze on the base import price of refined palm olein, allowing easier imports of CPO. 

At the same time, in Malaysia, Dompok also raised the allocation for duty-free CPO exports by another two million tonnes bumping up the yearly quota to a record high of five million tonnes.

When met at the conference, India’s Solvent Extractors’ Association executive director Dr B.V. Mehta said: “My country imports 7.5 million tonnes of palm oil in a year from Indonesia and Malaysia. Out of that total, 6.5 million tonnes are in the form of CPO. “Currently, it’s definitely much cheaper to import CPO from Malaysia than Indonesia.”

Malaysia’s biggest palm oil client is China. As the largest vegetable oil consumer in the world, China’s palm oil usage makes up 15 per cent of global consumption. Palm oil is the second most consumed there after soyaoil.

In the last few years, China has started to import more soyabeans instead of soyaoil. This is because the Chinese government wants more crushing activities domestically and more soyameal to feed its pig, cattle, dairy and poultry farms.

In the first nine months of this year, China only bought 3.39 million tonnes of palm oil from Malaysia, 19 per cent less than last year’s 3.95 million tonnes. 

MPOC’s Lee commented that China had bought less palm oil as it had wanted to balance its vegetable oil import profile. “Apart from the negative impact of slower economic growth rate in China, the Chinese government is also looking to balance their imports of palm with that of soyaoil,” he said.

Smallholders to get lion’s share of allocation

KUALA LUMPUR: The government is allocating more than RM600 million for the palm oil sector under the 2013 Budget, a senior minister said. The bulk of it, or RM432 million, will go to independent smallholders to embark on new plantings and replanting of their unproductive oil palm trees.

“The RM400-odd million allocation is expected to benefit some 170,000 independent smallholders in the country. These are farmers who own 40 hectares or less …they are eligible for the replanting grant,” said Minister in the Prime Minister’s Department Datuk Seri Idris Jala, who is also chief executive of the Performance Management and Delivery Unit (Pemandu).

He added that the allocation works out to RM7,500 a hectare for oil palm land in Peninsular Malaysia and RM9,000 a hectare in Sabah and Sarawak. There is also the RM500 in subsistence allowance to farmers whose income is solely dependent on oil palms.

Idris was speaking to reporters at the Palm Oil Trade Seminar (POTS) Kuala Lumpur organised by the Malaysian Palm Oil Council (MPOC) here yesterday. 

As for new plantings, Idris said the incentive is only given to those who own up to 5ha in Peninsular Malaysia and a maximum of 7ha for those in Sabah and Sarawak.

He said the 2013 Budget also proposes just over RM200 million as a continuation of the government’s commitment to incentivise integrated plantation firms to move further downstream.

Of that total, RM127 million will be channelled for the development of oleochemical derivatives towards higher production of value added detergent, lubricants and bio-plastics. 

The remaining RM75 million will be used to incentivise further investment in pharmaceuticals and nutraceuticals such as premium cooking oils.

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