10/8/06 (The Edge News) - The government has called for oil palm plantation owners to step up their investments given the projected doubling of global demand for vegetable oils to 169 million tonnes annually by 2020.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said the owners needed to invest in replanting, research & development (R&D), increasing yield, restructuring of estates, machinery and human resources.

Chin said big plantation players like IOI Corporation Bhd and the government-linked companies must set aside big amounts of profits for such investments.

He said such investments were needed to ensure that the country could take advantage of the increasing global demand for vegetable oils.

“The world consumption of vegetable oil is still small, about 90 million tonnes annually, but this is expected to rise to 169 million tonnes by 2020.

"Palm oil can surely contribute to this demand," he said after the opening of a Clonal and Quality Replanting Material workshop 2006 in Seri Kembangan on Aug 10.

Chin also called on the industry to invest in the use of cloned fruits and other forward-looking technologies to increase yield.

He said the targets now were to produce the national average of 35 tonnes of fresh fruit bunches per hectare per year, compared with 18.8 tonnes now, and a 25% oil extraction rate by 2020.

Chin said Malaysia and Indonesia were not the only countries that had the right conditions for producing palm oil.

“Competition will spring up in Africa and the Americas and they can pose a serious threat to our position as a world leader in palm oil production,” he added.

He also called on the independent smallholders, those owning 100 acres or less, to take advantage of government soft loans to replant more trees before diminishing returns kicked in.

“The industry right now has an attitude where it’s comfortable because profits are good and the balance sheet looks good.

"Replanting is expensive and, even when they are replanting, the industry average of 3% is below the 5% we’d like to see.

“Maybe 5% is not enough, maybe we should raise replanting average to 10%? Even at 5%, it takes 20 years to complete the cycle and 20 years is the age of the productive lifespan of our oil palms,” he added.

Chin said the government was rethinking its replanting incentive scheme for smallholders.