KUALA LUMPUR, Aug 20 (Bernama) -- Productivity improvement is crucial forthe palm oil industry to remain competitive in the market place, saidPrimary Industries Minister Datuk Seri Dr Lim Keng Yaik.

He said that the industry needed to be more cost efficient in a situationwhere long term real prices, after adjusting for inflation, are on adeclining trend.

The industry should also actively explore for opportunities to diversifyits income base in the palm oil business, Dr Lim said in his openingaddress at the 2001 International Palm Oil Conference (2001 PIPOC), heretoday.

"We not only have to expand our potential for value addition, but also tocontinue to widen the end-use base for palm oil. In all these, technologyis the common denominator," he said in referring to this year's theme"Cutting-edge technologies for sustained competitiveness".

Dr Lim said that without technology, there is a limit as to how muchmanagement alone can uplift productivity.

"This is exactly what the other competing oils have been up to all theseyears.

"Thanks to their untiring efforts in research and development (R&D) andtheir consequent technology development, the cost gap between the softoils and palm oil has narrowed significantly," he noted.

"So, let us strive hard to develop and harness the so-called cutting edgetechnologies," he said.

Dr Lim said that besides the usage of technology, another way to sustainthe oil palm business was to make it possible for those involved in thepalm oil supply chain to enjoy fair and remunerative returns on theirinvestments.

"The farmers, must make enough, the millers and refiners must enjoyreasonable margins, so do the traders, importers, product manufacturersand even the final consumers," he said.

In this aspect, he stressed that palm oil producers or oil palm farmersare the most critical link in the whole palm oil supply chain.

"If there is no incentive for palm oil farmers to grow and harvest thepalm oil fruits, surely the entire supply line will just fall apart," hesaid.

However, he said that this did not mean that other players in the chainare less important.

"They are (important) but without the raw materials, there is no way theycan run any palm oil business."

"If we can guarantee that the entire supply chain is happy, then I see noreason why we cannot sustain the world palm oil business," Dr Lim added.

Last year the world exported about 15.1 million tonnes of palm oilaccounting for about 43 percent of the export business in oils and fats.

Malaysia contributed close to 60 percent of that export volume. Last year,Malaysia's palm oil production stood at 10.8 million and it is expected toincrease up to 11.2 million tonnes in the current year.

"Palm oil is now the fastest growing commodity in the export trade. It hasaveraged about 8.1 percent growth per year over the last five years," DrLim said.

On the other hand, the growth in soyabean oil export was only about 2.9percent a year in the same period.

-- BERNAMA