Oil palm expansion plan continues

KUALA LUMPUR: OIL palm planters in Sarawak are looking to plant up more of their agricultural landbank as palm oil prices have started to trade higher than RM2,700 per tonne this past month.

Last Friday, the third month palm oil futures on Bursa Malaysia Derivative closed at RM2,796 per tonne. Planters welcome the prospects of higher exports, having braved through dismal pricings of between RM2,200 and RM2,500 in the first 10 months of 2013.

“Higher palm oil prices of around RM2,700 to RM2,800 per tonne this year should contribute to better export earnings,” said Sarawak Land Development Minister Tan Sri Dr James Jemut Masing.

He reiterated that Sarawak is steadfast in its commitment to raise the income and living standard of rural folks through oil palm development.

“Sarawak’s oil palm expansion programme will go ahead as planned. The rise in palm oil prices will help generate extra capital for smallholders to expand their oil palm plantings,” he told Business Times in a telephone interview from Kuching yesterday.

Malaysian Palm Oil Board’s data showed that Sarawak produced 3.1 million tonnes of crude palm oil (CPO) last year. “This year, with more trees maturing, we hope to achieve between five and 10 per cent output growth to 3.3 million tonnes,” Masing said.

In December 2013, Wilmar International Ltd signed a “No Deforestation, No Peat, No Exploitation” pledge in its palm oil trade with consumer goods giant Unilever Plc.

Wilmar’s refinery in Bintulu is the main buyer from 41 palm oil mills across Sarawak, absorbing 1.7 million tonnes of CPO, or 55 per cent of the state’s production.

In sourcing CPO to feed its refinery, Wilmar told planters in Sarawak that it will stop buying oil from palms planted in areas of “high carbon stock” and peat swamp after 2015.

This triggered the ire of planters in the state because Wilmar’s pledge prohibits cultivation of oil palm on peat land and confines the opening up of oil palm plantations to only young scrub and cleared/open areas.

Masing likened Wilmar’s unreasonable prohibitions on its palm oil suppliers to economic bullying. “This directive from Wilmar is very disastrous because it could stop the government’s poverty eradication programmes,” he said.

“The state government will not succumb to baseless allegations. I do not agree with the argument that planting oil palms in logged-over areas and peat swamps is bad for the environment,” he said, explaining that good peat soil management is the basis for sustainable food production and a preventive measure against the spread of fire.

 “We need to differentiate between managed and unmanaged peat,” he said. He explained that land compaction and establishment of a trench system was a pre-requisite to any oil palm development in Sarawak’s peatland. A lot of effort goes into ensuring water levels in the maze of trenches is at 50cm to 75cm from the surface. This is achieved through a series of stops, weirs and water gates.

   “Oil palm planters in Sarawak follow a set of proven, good agricultural practices that balances the needs of people, planet and profits,” he said.

Meanwhile, in an interesting Valentine’s Day twist, Masing noted Wilmar’s “unloving stance” towards its suppliers in Sarawak seemed to have made a U-turn and concede to logic.

In its February 14 letter to Sarawak Land Development Ministry, Wilmar chairman and chief executive officer Kuok Khoon Hong assured that Wilmar’s policy would not affect CPO purchases from oil palm planters which had previously developed large tracts of peat land.