Palm oil producers urged to increase supply tp tap bigger market share

BANGI: The Malaysian Palm Oil Council (MPOC) has urged palm oil producers to increase supply in order to tap a bigger share of the vegetable oil market to meet the growing world demand.

Chief Executive Officer Tan Sri Dr Yusof Basiron said palm oil already has a big chunk of the pie but expanding it would benefit the commodity’s producers.

“Other oils like soyabean, sunflower and rapeseed oil are also facing limitations to increase their supply, so efforts must be stepped up to produce more palm oil.

“However, there are problems in expansion for Malaysia as it has run out of arable land to cultivate oil palm and (the hectarage) has become stagnant at 33 million hectares while Indonesia has become the world’s number one producer with m 200 million hectares,” he told Bernama at a seminar on Thursday.

Oil and fat production in 2015 totalled 204.89 million tonnes, with palm oil accounting for 30.85 per cent, followed by soyabean oil (23.07 per cent), rapeseed oil (13.4 per cent) and sunflower oil (7.69 per cent).

Supply and demand continued to grow last year, Yusof said.

However, it was observed this year that supply may not be able to continue growing amid various issues, posing a challenge to the ever-growing world demand.

In his presentation at a seminar by the Malaysian Palm Oil Board on Thursday.

Yusof said the industry has continued to be affected by four drivers namely petroleum, El Nino, the Council of Palm Oil Producing Countries (CPOPC) and a price war.

Despite El Nino’s more severe effect this year, he said the price increase was less than expected due to the price war between two major producing countries fighting for market share.

“The price increased by RM1,500 in the previous cycle but now it’s only about RM700,” he added.

Yusof said Malaysia would need to gradually move towards mechanising its production process as the country has sufficient locally produced machines to undertake harvesting, field collection and transportation of fruit bunches.

This, he said, could address the over-reliance on foreign labour and its shortage besides reducing labour needs by 50 per cent and increasing production yield.

“We hope the government could support this opportunity by introducing some incentives, as it is affordable and viable and eventually reduce costs as well as the outflow of money overseas,” he added. — Bernama