6/28/2004 BUSINESS TIMES - MALAYSIA plans to reduce its palm oilproduction cost to remain competitive globally by setting upfully-automated palm oil mills on estates to cut labour cost.

The country's first fully- automated mill is being set up in NegriSembilan, Plantation Enterprises and Commodities Minister Datuk Peter ChinFah Kui said yesterday.

Among the strategies the country is adopting to remain competitive isresearch and development (R and D) on the cross-breeding of oil palmspecies. The idea is to produce new shorter species with higher yields,and this is being conducted by the Malaysian Palm Oil Board (MPOB), Chinsaid.

"We managed to produce a specie that is shorter, but it does bear as manyfruits as the taller trees. Therefore, more research is needed," he toldBusiness Times in Batu Niah recently.

MPOB is also conducting R and D to produce oil palm species that can growfaster and bear fruit after 28 months.

"We have to be innovative with our R and D because we do not want to becaught one day in a position where we cannot even market our palm oilproducts," Chin said.

He said soyaoil, produced by the US, Brazil, Argentina, China and India,poses the biggest threat to the oil palm industry.

"If one day soyaoil becomes much cheaper to produce, then we will be introuble," he said.

Malaysian palm oil products also face keen competition from Indonesianproducers, he added.