Palm Oil Exports Set for Another Record Year

MALAYSIA’S palm oil exports may achieve another record year like 2008’s

all time high of RM65 billion, thanks to higher average palm oil prices

and improving global demand.

So far in January 2011, palm oil futures prices is averaging at RM3,500 per tonne, higher than last year’s RM2,700 per tonne.

“I don’t foresee any sudden plunge in the market. if prices remain

buoyant, I think it is achievable,” Plantation Minister Tan Sri Bernard

Dompok told reporters at an industry dialogue in Putrajaya yesterday

Prices are set to stay firm as the current limited global supply is

due to continue for the rest of 2011 with Indonesia imposing higher

export duties on its palm oil shipments.

Also, as more rapeseed, soybean and corn oil are burnt as renewable

energy in Europe, the US and Latin America, more palm oil is needed to

make margarine, mayonnaise, cheese spread and chocolate.


2008, Malaysia produced 17.7 million tonnes and the following year, it

dipped to 17.6 million tonnes. In 2010, it plunged to 17 million tonnes.

This means Malaysia’s palm oil output had declined for two straight

years, while Indonesia had seen rising production.

Dompok thinks palm oil output hit 17.6 million tonnes this year as more oil palms mature.

The minister also announced that the current foreign labour constraint

will soon be resolved. The labour shortage have severely affected palm

oil output and therefore billions of ringgit in export opportunities.

“The labour issue will not be a problem anymore. The Sabah state

government has given the green light to allow the plantation industry to

hire more foreign workers from other nations like Bangladesh. I know we

face competition with Indonesia for skilled workers to harvest the oil

palm fresh fruit bunches,” Dompok said.

The Malaysian Palm Oil

Association raised the issue of unwarranted imposition of quarantine

controls of oil palm planting materials by Sabah’s Department of

Agriculture that has caused much grievance to oil palm seed producers.

Effective 1st January 2011, the Sabah state government had subjected

the entry of oil palm planting materials to be certified free of the

Philippines’ coconut cadang-cadang viroid (CCCVd) disease by University

Putra Malaysia’s laboratory.

While Dompok sees the logic that

the quarantine controls do not serve a purpose, he said, “we’ve to

respect the decision of Sabah state government. It is their


He then revealed that Palm Oil Refinery

Association of Malaysia (PORAM) appealed to his ministry to ask Europe

to waive import duty on processed palm oil.

Dompok assured

PORAM that he would forward to Finance Ministry of the need for more

efficient trading by approving export quota on crude palm oil earlier.

The Malaysian Biodiesel Association vice president U.R. Unnithan, who

was also present at the dialogue, said members are facing non-tariff

trade barriers in the export market and as a result are facing


He then appealed to the government to implement the

mandate to blend 5 per cent biodiesel into the domestic diesel supply

on a nationwide basis rather than just the central region.


the B5 mandate were to just apply in the central region of Peninsula

Malaysia, it would only take up 139,000 tonnes per year as opposed to

500,000 tonnes per year if done nationwide,” he said.

To this

Dompok replied, “We have to treat this matter cautiously because at

current world oil prices, we’re looking at a subsidy of RM20 million a

month for biodiesel. That is taxpayers’ money going to subsidy.”

Source : Business Times

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