Adverse weather conditions last month can be one of the factors that contributed to the drop in the palm oil extraction rate.

18/07/2013 (The Star) - Palm oil millers assured smallholders in the state that the reduced oil extraction rate (OER) would be revised once the fruits are tested with higher oil content.

Northern Peninsular Malaysia Palm Oil Millers Associations (NPMPOM) president Steven Yow said the current OER, which has been reduced from last month’s 18.7% to 17.5%, would be amended from time to time.

The millers, he said, would not hesitate to increase the OER if the oil palm samples were tested with higher oil content.

“We urge smallholders to bear with us,” he told reporters after chairing a committee meeting recently.

It was reported that the new OER would cause smallholders to earn RM25 less for each metric tonne (1,000kg) of the oil palm fruits produced.

The OER is used as an assessment unit to measure the performance of a mill or plantation and is influenced by the amount of oil realised for each hectare of land under cultivation.

In simpler terms, a higher percentage in the OER would mean that more oil could be extracted from the fruits.

Few smallholders whom The Star interviewed last week were expecting a drop in revenue following the lowering of the OER.

They were worried that the rate would continue to falter and affect their livelihood.

On June 30, a group of 500 smallholders from Bagan Datoh, Langkap and Teluk Intan in Hilir Perak expressed their dissatisfaction over the lowering of the OER.

The protesters had demanded for the millers to reveal the data to support their action in the revision exercise and convince the smallholders on the legitimacy of their move.

In response to that, Yow said smallholders could retrieve data from the Malaysian Palm Oil Board (MPOB), as the agency held the reports and analyses.

He attributed the lower OER to adverse weather conditions, shortage of skilled harvesting workers, reduction in fertiliser application and diseases suffered by oil palm trees.

He also said the downward trend seemed to be a nationwide phenomenon.

“We know that smallholders are disappointed by the sudden dip in the OER, but this is not something we could control or manipulate on purpose,” he said.

He said millers could only adjust the rate based on the results obtained from the test on the oil palm samples.

In a separate interview with The Star, MPOB director-general Datuk Dr Choo Yuen May said the agency had various means to ascertain OER trend besides the oil-to-bunch analysis.

She said based on investigations conducted in May, the oil content in bunch had reduced significantly.

“Perak’s OER performance for the month is the lowest compared to other states,” she said.

On average, she said the OER for Peninsular Malaysia has dropped by 0.41% from 20.13% in April to 19.72%.

Dr Choo said MPOB is the custodian of the Malaysian oil palm industry but would not intervene in the process of determining the OER.

“The rate is to be determined by market forces. We do not want our involvement to distort the system practised by the industry,” she said, adding that MPOB would provide the platform for discussion and facilitate the exchange of information among the stakeholders.

On the increase of palm oil mills processing fees from RM50 to RM60, Dr Choo said the fees had been revised upward per tonne Fresh Fruit Bunch (FFB) after taking into consideration extra cost incurred by palm oil mills from the implementation of minimum wages.

She said the matter had also been explained to smallholders during a meeting last Tuesday.

“MPOB will be arranging another meeting with other related stakeholders, especially the NPMPOM, to resolve the issue,” she said.