Palm oil exports set for another record year

MALAYSIA'S palm oil exports may achieve another record year like 2008’s all time high of RM65 billion, thanks to higher average palm oil prices and improving global demand.

So far in January 2011, palm oil futures prices is averaging at RM3,500 per tonne, higher than last year's RM2,700 per tonne.

“I don’t foresee any sudden plunge in the market. If prices remain buoyant, I think it is achievable,” Plantation Minister Tan Sri Bernard Dompok told reporters at an industry dialogue in Putrajaya yesterday

Prices are set to stay firm as the current limited global supply is due to continue for the rest of 2011 with Indonesia imposing higher export duties on its palm oil shipments. Also, as more rapeseed, soybean and corn oil are burnt as renewable energy in Europe, the US and Latin America, more palm oil is needed to make margarine, mayonnaise, cheese spread and chocolate.

In 2008, Malaysia produced 17.7 million tonnes and the following year, it dipped to 17.6 million tonnes. In 2010, it plunged to 17 million tonnes. This means Malaysia's palm oil output had declined for two straight years, while Indonesia had seen rising production. This year, however, Dompok thinks palm oil output can rise again to 2009's level of 17.6 million tonnes as more oil palms mature and bear more fruits.

The minister also announced that the current foreign labour constraint will soon be resolved. The labour shortage have severely affected palm oil output and therefore billions of ringgit in export opportunities. “The labour issue will not be a problem anymore. The Sabah state government has given the green light to allow the plantation industry to hire more foreign workers from other nations like Bangladesh. I know we face competition with Indonesia for skilled workers to harvest the oil palm fresh fruit bunches.”

The Malaysian Palm Oil Association raised the issue of unwarranted imposition of quarantine controls of oil palm planting materials by Sabah’s Department of Agriculture that has caused much grievance to oil palm seed producers. Effective 1st January 2011, the Sabah state government had subjected the entry of oil palm planting materials to be certified free of the Philippines' coconut cadang-cadang viroid (CCCVd) disease by Universiti Putra Malaysia's laboratory.

While Dompok sees the logic that the quarantine controls do not serve a purpose, he said, “we’ve to respect the decision of Sabah state government. It is their prerogative.”

The minister then revealed that the Palm Oil Refinery Association of Malaysia (PORAM) had appealed to his ministry to ask Europe to waive import duty on processed palm oil. Dompok assured PORAM that he would forward to Finance Ministry of the need for more efficient trading by approving export quota on crude palm oil earlier.

The Malaysian Biodiesel Association vice president U.R. Unnithan, who was also present at the dialogue, said members are facing non-tariff trade barriers in the export market and as a result are facing bankruptcy. He then appealed to the government to implement the mandate to blend 5 per cent biodiesel into the domestic diesel supply on a nationwide basis rather than just the central region.

“If the B5 mandate were to just apply in the central region of Peninsula Malaysia, it would only take up 139,000 tonnes per year as opposed to 500,000 tonnes per year if done nationwide,” he said.

To this Dompok replied, “We have to treat this matter cautiously because at current world oil prices, we’re looking at a subsidy of RM20 million a month for biodiesel. That is taxpayers’ money going to subsidy.”

3 Responses to Palm oil exports set for another record year

  1. The plight of the domestic biodiesel industry remains in question. Limbo? Govt back pedaling on this issue? Will it be palm-based? What is our alternative energy plan - real plans and not just hot air (pardon the pun) - going forward till 2020?

  2. Somebody said that the biodiesel industry is doing the Michael Jackson "Moon Walk". The sector appears to be moving forward but actually ,it is moving backwards. It can only be forced to move forward by giving subsidy as it is done in EU and US. But who is going to give that subsidy? The consumers? the government?the feedstock producers? at present it is the biodiesel plant itself is paying the toll .....

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