Sarawak CPO output to grow 5%

MIRI: SARAWAK expects five per cent output growth to 3.6 million tonnes of crude palm oil (CPO) this year, as more oil palms mature and bear more fruits.

Sarawak Oil Palm Plantation Owners' Association (Soppoa) chairman Paul Wong said members should be able to harvest and squeeze out five per cent more than last year's 3.44 million tonnes. 

Currently, more than 1.2 million hectares are planted with oil palms, spreading from Tanjong Datu to Limbang.

"This covers practically the length and breathe of Sarawak, of which about 10 per cent of the planted area is owned by 17,578 smallholder families," Wong told Business Times in a telephone interview yesterday.

The palm oil industry is one of the most stringently governed industries in Malaysia. It comes under the purview of the Malaysian Palm Oil Board (MPOB) from planting, harvesting and export of palm oil. 

In addition to this, planters there adhere to land codes and laws administered by Sarawak's Ministry of Land Development. 

Palm oil produced in Sarawak is traceable from the mills to the fresh fruit suppliers as majority of these are from estates of the mills’ companies which adopt Good Agricultural Practices (GAP) in their operations. 

Smallholders who sell fresh fruits bunches to the mills, also adopt GAP as part of their responsibilities to ensure that the entire supply chain is traceable.

From 2000 to 2015, SOPPOA estimates investments in estates, mills, refineries and other related activities to surpass RM25 billion.

“Many assume that the palm oil industry is just confined to farmers. But it is more than that,” Wong said. Bankers, insurance companies, freight forwarders, cargo surveyors, scientists and engineers are also part of the palm oil supply chain, he said.

Malaysia's sprawling palm oil industry is also employing more talents, Wong added.

The sector entails production of margarine, cooking oil, oleochemicals, transport and storage of palm oil at the ports, palm oil futures trading at brokerages, design and building of refineries and biodiesel plants, animal feeds, vitamin E extraction and even the development of nutrient-enriched cosmetics.

On CPO, in the last six months, the weakening Ringgit over the US Dollar has helped stimulate demand and firm up prices. More so, supply cuts from low-lying estates in Kelantan, Terengganu and Pahang that had been inundated by floods has fuelled bullish sentiment in palm oil prices. 

The third month benchmark CPO futures on the Malaysian Derivatives Exchange continued its uptrend for the fifth week. Yesterday, it closed at RM2,344 a tonne.

"The higher the price climbs, the higher our palm oil exports. Hopefully, this year we can do better than last year's average of RM2,350 per tonne," Wong said.