There is an urgent need to ensure the sustainability of the palm oil industry in Malaysia and maintaining a strong level of output for competitive reasons.
This is necessary through the replanting of ageing and unproductive oil palm trees in the country to ensure that the industry remains a viable player, according to the Malaysian Palm Oil Association (MPOA).
“The staggering statistics reveal that there are currently over 664,000ha of oil palm trees in the country that are above the 25-year mark and are in dire need of replanting. This situation demands immediate attention and action,” MPOA said in a statement.
It noted that by 2027, the industry will face the daunting prospect of having two million ha or some 35% of the total oil palm planted hectarage being classified as “old and old mature.”
“This impending scenario underscores the critical importance of implementing strategic measures to rejuvenate the ageing palm trees, safeguarding the productivity and competitiveness of the sector,” it said noting this is a highly crucial matter to address.
The palm oil industry is a main economic generator for the nation and the association said it contributes significantly to rural development, poverty eradication, employment generation and foreign exchange earnings including taxes to the government.
“With 5.67 million ha of planted oil palm trees, which is a mere 0.1% of global agricultural land area and an extensive supply chain, it accounts for a significant 20% of the world’s exports of edible oils and fats,” it noted.
“However, the sector operates in unique conditions, a commodity business model based on a biological and perennial tree, requiring ongoing investments, labor-intensive practices and a complex supply chain,” it added.
The association said the upcoming MPOA National Palm Oil Conference 2023 holds significant importance as it is poised to shape the future trajectory of the plantation sector’s priorities for Budget 2024.
It will not only set the tone for industry aspirations, but also serve as a guiding beacon for policymaking and fostering sustainable industry growth.
It also noted the industry’s pending appeal for a comprehensive review of the windfall profit levy’s price threshold and levy rate.
“The existing levy disproportionately burdens the oil palm industry, particularly in the face of escalated production costs at present,” MPOA said.
The MPOA said the future of the Malaysian oil palm sector hinges on cost-productivity, competitiveness and sustainability.
Thus, addressing these concerns and setting forth a clear roadmap for the Malaysian palm oil industry’s future is not only a necessity, but also an opportunity to drive positive change and foster continued growth in this vital sector of Malaysia. The MPOA represents some 40% of the total planted oil palm areas in the country with members including major plantation companies such as Sime Darby Plantation Bhd, FGV Holdings Bhd, Kuala Lumpur Kepong Bhd and IOI Corp Bhd.