THE government has taken
sufficient measures to address the temporary decline in the prices of palm oil
and rubber, according to Minister of Plantation Industries and Commodities, Tan
Sri Bernard Dompok.
In a statement from
Putrajaya, Dompok explained that the government would not relent in its efforts
to strengthen the palm oil and rubber commodity sectors as both are among the
main sectors under the National Key Economic Area (NKEA) contributing to the
government's goal of transforming Malaysia into a high-income nation.
Dompok stressed that his
Ministry would continue to monitor the price trend for both commodities to
ensure that planters and smallholders would not be badly affected by its
declining prices. He also assured commodity stakeholders that proactive
measures would be taken to ensure price stability.
In general, Dompok said that
commodity prices are influenced by the supply of other vegetable oils and
demands in major importing countries such as China, the European Union,
Pakistan, United States and India.
In 2012, these countries,
including the European Union accounted for 60 percent of Malaysia's palm oil
exports. However, decline in domestic production and slower economic growth in
the European Union in the third quarter of 2012 directly affected the import of
Malaysian palm oil products.
The declining prices of
rubber in the country, on the other hand, are affected by the drop in demand
for raw rubber due to the global economic slowdown.
The value of exports for
palm oil in 2011 amounted to RM83.4 billion, with the average CPO price of
RM3,219 per tonne. However, demand from major importing countries has
substantially declined in recent months causing the average CPO price for the
period between January and November 2012 to drop to RM2, 844 per tonne.
As a result, the total
export value for the same period has dropped to RM65.9 billion.
To counter the sluggish
demand from overseas markets, Dompok said that the government has taken several
steps to strengthen the CPO price.
"This is reflected with
the increase in CPO price from RM2, 065 per tonne in October 2012 to RM2, 235
per tonne as of January 3rd 2013," he said.
The measures include the
acceleration of the implementation of B5 (a 5 percent blend of palm methyl
ester with diesel) nationwide, promoting the use of palm oil-based biofuel up
to 10 percent in other sectors and the use of palm oil plants power generation,
especially in Sabah. With the expansion of the B5 programme, domestic
consumption is expected to increase up to 500,000 tonnes of oil per year.
The government has also
allocated a sum of RM100 million for the purpose of cutting down palm trees
over the age of 25 years under the Replanting Incentive Scheme. Through the
scheme, the government provides incentives of RM1,000 per hectare of oil palm
plot that has been replanted to Felda settlers and smallholders.
According to Dompok, this
measure is expected to reduce the supply of CPO in the local market, which is
currently at 350,000 tonnes annually, and strengthen the CPO price. This step
will also reduce palm oil stocks and contribute to increased palm productivity
in the long run for the country.
The government also assists
smallholders managing less than 40.46 hectares of plantation in replanting
programmes by allocation RM9,000 per hectare in Sabah and Sarawak and RM7,500
per hectare in Peninsular Malaysia. This assistance by the government includes
the cost of tree felling and replanting.
Through the programme, the
government allocated RM300.2 million last year and RM432.8 million this year.
In order to reduce the heavy
reliance on foreign labour, the Ministry of Plantation Industries and
Commodities encouraged mechanisation and automation such as the use of a
motorised harvester or CANTAS. Research shows that the use of CANTAS has
improved harvest by almost two-fold from 1.4 tonnes of bunches to 2.7 tonnes of
bunches per day.
Harvesting with the use of
CANTAS can cover an area of 35 hectares as compared to just 21 hectares by
sickle, which is an improvement of nearly 70 percent.
To encourage widespread
usage of CANTAS, Dompok said that the Ministry provides a RM1,000 cash
incentive for every one unit purchased.
In the case of the rubber
industry, Dompok said that the lowest price recorded for Standard Malaysian
Rubber (SMR) was RM7.99 per kilogramme in August 2012 . However the price has
gone up to RM9.21 per kilogramme as of January 3rd 2013.
According to Dompok, this
increase is due in part to the various government initiatives including the
incentive to encourage replanting , which is aimed at cutting down supply.
In 2012, the government
allocated a sum of RM184.52 million to replant an area of 40,000 hectares.
Under the programme, cash incentives of RM14, 000 is provided for every hectare
in Sabah, RM13, 500 in Sarawak and RM9, 230 in Peninsular Malaysia.
Nationally, Malaysia has
co-operated with a few of the world's main players in the palm oil and rubber
industries in a bid to stabilise and monitor the price trend for these
commodities.
For palm oil, Malaysia has
signed a bilateral co-operation framework with Indonesia, which led to the
holding of ministerial meetings annually to strengthen cooperation in the
development of upstream and downstream industries, to deal with non-tariff
barriers as well as to strengthen market expansion through the issuance of
techno-economic advantages of palm oil.
Together, Malaysia and
Indonesia produce about 85 percent of the world's palm oil.
In the rubber industry,
Malaysia is also involved in co-operation with other main producing countries
like Thailand and Indonesia. Together, Malaysia, Thailand and Indonesia produced
68 percent of the world's raw rubber.
Under the framework of the
International Tripartite Rubber Council, Malaysia, Thailand and Indonesia
implemented the Agreed Export Tonnage Scheme in a bid to balance the supply of
raw rubber in the world market. (Insight Sabah)
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