24/05/2012 (Borneo Post) - The Outlook for the palm oil industry is bright, with international analysts predicting that its price would range between RM3,100 and RM3,840 per tonne this year. Land Development Minister Tan Sri Dr James Masing, in his winding-up speech yesterday, however, said production was expected to decline in the near term due to biological stress on oil palm trees following the bumper harvest last year.

With production of soy bean in South America expected to be down by three to five per cent this year due to adverse weather conditions, the situation would benefit palm oil in terms of demand and price.

“In addition, the political unrest in the Middle East has caused uncertainty over crude oil supply that spiked the price above US$100 per barrel. This scenario, barring any worsening in the Iranian nuclear crisis, has led to the prediction set by the international palm oil industry analysts.”

In the longer term, the demand for palm oil and other oil seeds would be driven by increase in population and economic growth.

Masing said world population had grown four times over the last century to seven billion in 2011. By 2050, this would reach 9.3 billion, which means an extra 150 million tonnes of vegetable oil had to be produced.

However, he mentioned that land would be a shrinking resource. At current yield of 4.1 tonnes of crude palm oil (CPO) per hectares, oil palm is nine times more productive than soybean and almost six times more productive than rapeseed.

“Therefore, there is indeed a vast opportunity for enhanced demand for palm oil in the coming years.”

In addition, Masing revealed that areas planted with oil palm in the state had increased by 22.5 per cent to 1,183,627 hectares as of Dec 31, 2011.

He added that the increment was largely due to the confidence and resolve shown by Sarawak Land Consolidation and Rehabilitation Authority (Salcra), Felcra Bhd and smallholders in opening up new land with oil palm.

“Over the past five years, the cultivation of oil palm has grown at an average of 14.5 per cent annually. I strongly believe that if this growth momentum is maintained for the next five to eight years, the state will achieve its target of two million hectares of oil palm oil by 2020.”

The number of palm oil mills in operation in the state has increased from 53 as of Dec 31, 2011 to 55 currently, with another 14 new mills at various stages of construction. In addition, nine applications to set up new palm oil mills were being evaluated.

Masing said he believed with all these existing and upcoming new mills, problems encountered by oil palm estates, in particular the smallholders, in selling their Fresh Fruit Bunch (FFB) would be alleviated.