In-dept study to help oil palm planters – Junz
KOTA KINABALU: The Ministry of Agriculture and Food Industry is making an in-depth study on ways to help Sabah’s oil palm planters, especially small and medium entrepreneur (SME) planters, said its minister, Datuk Junz Wong.
“My ministry will be setting up meetings with Sabah’s main key players and SME representatives to discuss and seek the best solutions to the problems faced by the industry,” he said.
Junz said he had been informed that currently, these Sabah crude palm oil (CPO) mills (without export licence) pay 7.5% Sabah Sales Tax of RM150, export fees to exporters of RM120, and Sabah discounted price to Port Klang of RM200.
Subsequently, this cost of RM470 per every five metric tons is passed on by the mills to SME planters in the form of lower purchase price, equivalent to RM94 per metric ton FFB, he added.
Thus, the published FFB price by MPOB do not reflect the hidden expenses (as aforementioned), resulting in SME planters getting a lower price.
Furthermore, some mills are located quite a distance away from the refinery. For example, in the West Coast there is no refinery, so the CPO has to be trucked to nearest refineries in the East Coast at a very high cost, thereby bringing the FFB price down due to this logistic burden in the West Coast.
Junz reckons that if a refinery were to be built in the West Coast, it could go a long way for securing a good FFB price. However, no one wants to do it at the moment because it is a very high risk business venture with extremely low margins in a highly volatile commodity market. Even hedging may not protect the margin.
Setting up a refinery in the West Coast would face the problem of under-supply of CPO and may have to resort to getting it from the East Coast.
“We would have to talk to big capable companies, such as Wilmar to undertake to set up a refinery. Perhaps, the Sabah government can look into an incentive scheme and other forms of assistance to help achieve this,” the minister said, adding that the situation is not getting better now as price has dropped to a historical low, and this is a worrying trend.
Junz opined that Malaysia (and Indonesia) did not do enough work to eliminate palm oil stock. A lot more efforts must be put in to address the planters’ woes.
“The third and fourth quarter of next year could get worst, thus, my ministry will be holding a meeting soon to address this matter, and, hopefully, come out with good solutions. We must help our industry players,” Junz reiterated.