MARKET DEVELOPMENT
Oil palm planters can tackle rising operation costs by improving FFB yields — CGS-CIMB
Oil palm planters can tackle rising operation costs by improving FFB yields — CGS-CIMB
29.03.2022 (www.theedgemarkets.com) - KUALA LUMPUR (March 29): Oil palm planters can address rising operation costs, potentially between 10% and 15%, by improving their fresh fruit bunch (FFB) yields to reduce their production cost per tonne, CGS-CIMB Securities Sdn Bhd said.
Head of research Ivy Ng said plantation companies are expected to face cost headwinds this year as all key components of estate costs are rising, such as fertilisers, labour, fuel, taxes and environmental, social and governance (ESG) compliance.
“The current high crude palm oil (CPO) prices are able to offset rising costs of production for plantation companies and smallholders. Nevertheless, the high CPO prices may not be sustainable over the medium term,” she said at the Palm Oil Internet Seminar (Pointers) on Tuesday (March 29).
Ng said FFB yields could also be improved via higher productivity at estates through the ability to hire foreign workers to alleviate the labour shortage issue.
She said this would allow for timely fertiliser input, replanting of old palm trees with higher yielding seeds and better agronomic practices.
In the medium term, she said mechanisation of some of the estates’ activities to improve productivity could be another way to reduce costs.
Ng said Malaysia had set up the Mechanisation and Automation Research Consortium of Oil Palm (MARCOP) to explore mechanisation and automatic technologies for oil palm plantations towards increasing productivity, specifically focusing on the operation of harvesting FFB and reducing dependence on oil palm harvesters.
Meanwhile, she said the government is expected to collect more than RM1 billion in windfall profit tax levy in 2022 based on the projected average CPO price of RM4,250 per tonne and production of 19 million tonnes.
Themed “Assessing 2022: Managing Opportunities and Risks”, the seminar features six presentations covering topics such as supply and demand of oils and fats, prices and the market outlook and opportunities for palm oil in Central Asia and the Middle East and North Africa markets, among others.
The seminar runs from March 28 until April 1.