Malaysia palm oil firms must replant old trees or perish, says industry executive
MALAYSIA palm oil companies must replant its vast hectarage of old, unproductive palm oil trees to overcome stagnant yields and maintain its competitiveness as the world’s second-largest producer, an industry executive said on Tuesday (Mar 7).
Production in the South-east Asian country, which accounts for around 23 per cent of global palm oil output, has been stagnant over the past six years amid rising demand for the world’s cheapest edible oil.
Yields plummeted to near 40-year lows in the 2020/21 marketing year after the pandemic triggered an acute shortage of workers to harvest and replant trees. That sent prices skyrocketing to record highs and led to increased costs of foodstuff, detergent and other palm oil-based products.
Replanting rates have been on a declining trend in the past 15 years, partly as planters capitalise on rising prices of palm fruits, Carl Bek-Nielsen, co-chairman of the Roundtable on Sustainable Palm Oil, an industry watchdog, told Reuters.
Old palm oil trees are unproductive and are typically replanted with higher-yielding seedlings that are resistant to drought and disease.
But plantation companies and smallholders have delayed replanting programmes, limiting a significant recovery in yields.
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“Replant or perish. The failure to replant in a timely manner has been going on for far too long,” Bek-Nielsen, who is also the chief executive of United Plantations, said.
“If this trend continues, we are going to see our yields regress even more. Our ability to compete on the international market will also be undermined.”
This is even more crucial as yields by emerging producers in Latin America and Africa are good, he added.
Bek-Nielsen forecast Malaysia’s production in 2023 at 19 million tonnes, compared with 18.45 million tonnes in the year before.
He forecast 2023 average crude palm oil price between RM3,700 and RM4,200 (between S$1,100 and S$1,264) a tonne.
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