22/11/05 SEREMBAN (Bernama) -- The Malaysian Palm Oil Board (MPOB) has lined up several strategies to raise the production of palm oil from two sectors, namely its plantation agencies and smallholders in the country.

Minister of Plantation Industries and Commodities Datuk Peter Chin Fah Kui said the guidelines have given focus to factors that come under the control of management in view of a drop in the production of palm oil by the two segments compared with the production from private sector.

He said the average production of fresh fruit bunches (FFB) from the two sectors had declined by almost two percent to 18.60 tonnes per hectare in 2004 from a level of 19 tonnes per hectare in 2003.

This resulted in a decline in the production of palm oil at 3.72 tonnes per hectare last year, which is considered low and not reflective of the real palm oil production capacity projected at 35 tonnes of FFB per hectare a year or six to seven tonnes of palm oil per hectare a year.

Apart from this, the average cost of palm oil production in Malaysia, at RM910 per tonne compared with RM628 per tonne in Indonesia in 2004, could result in pressure for the industry if it continues to operate at high cost, while demand declines, he said.

"In line with this, our move is for the replanting of aged oil palm with high yield crops, effective agronomic practices such as balanced application of fertilizers, disease and pest control and proper harvesting practices to ensure productivity and cost efficiency," he said.

The minister said this in his speech at a management workshop retreat for plantation agencies, here today.

His speech was read by his deputy, Datuk Anifah Aman, who officiated the event on his behalf.

Chin said that the among the new sources for development in the industry included biomass from the pulp, trunk, empty bunches all of which contributed to the plantation industry.

In line with the higher productivity aim, he said the ministry had also set a target of 35:25 ratio where for 35 tonnes of FFB per hectare per year, the oil extraction rate has been set at 25 percent.

Based on the potential of oil that could be extracted following a study by MPOB, he said the production of palm oil in the country could be raised from 3.7 tonnes per hectare a year to 4.5 to 5.5 tonnes in the near term.

He said due to the decline in the production of FFB and low oil extraction rate in the past 10 years, the industry has roughly lost about an average of RM1.6 billion.

There were 101 participants at the one-day workshop today comprising representatives from government agencies, the private sector and farmers' associations nationwide.