February 13 2004 (Business Times) - EARNINGS from the export of palm oiland related products are expected to reach RM30 billion this year, fromRM28 billion in 2003.

The forecast earnings would almost be double Malaysia’s RM16 billionearnings from crude petroleum exports last year.

Palm oil exports have been growing from strength to strength earningRM10.2 billion in 2000, RM14.2 billion in 2001 and RM19.6 billion in 2002.

Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said yesterdaythat if crude palm oil (CPO) prices remain at the current level of betweenRM1,800 and RM1,900 a tonne, Malaysia can achieve the RM30 billion exporttarget.

CPO prices can even go higher to hit RM2,000 a tonne any time soon andthis will impact earnings positively.

Palm oil production is expected to rise to 14 million tonnes from 13.5million tonnes last year, which will also boost earnings, Dr Lim toldreporters in Kuala Lumpur.

Earlier, he chaired a palm oil roundtable meeting with the captains of theindustry on strategies to meet the challenges for this year.

The strong prices have been attributed to factors such as the continuoushigh demand from China, India, the European Union and Pakistan. CPO isalso cheaper by RM450 a tonne currently compared to its main rival,soyabean oil.

Analysts said CPO prices may rally to hit the RM2,000-a-tonne mark in thefirst quarter of this year due to an anticipated shortfall in soyabean oilharvest.

The soyabean oil harvest due by next month is expected to fall to 60million tonnes, 25 per cent short of the forecast 80 million tonnes, as aresult of unfavourable weather.

Dr Lim’s ministry, meanwhile, continues to seek ways to better theindustry’s performance.

Two task forces have been formed: one to improve the industry’sproductivity and the other to improve marketing and promotional activitiesfor the commodity.

Members of the first task force include the Malaysian Palm Association,the Malaysian Palm Oil Board and several companies which will meetproducers to seek ways to boost productivity.

The second task force will be led by the Malaysian Palm Oil PromotionCouncil.

I want to find out why is it that some companies can produce up to seventonnes of CPO a year per hectare when some smallholders can only produce 4tonnes a year per hectare.

The task force will find out the reasons and report to me. If smallholdersare no longer interested in planting oil palm, they should exit thebusiness, Dr Lim said.

He said that by increasing productivity at an additional one tonne of CPOper hectare, Malaysia, which has a planted oil palm area of four millionhectares, stands to earn an additional RM7.6 billion in earnings based onthe current CPO price of RM1,900 a tonne.

With total earnings of RM28 billion last year, we can double that bydoubling productivity on the very same planted land with better oil palmclones, said Dr Lim.

He said Malaysia has wasted this earning opportunity because somecompanies, which have high-yielding clones, do not want to share it withother companies and smallholders.

Dr Lim said that to address this problem, he will ask the industry’scustodian and watchdog, the Malaysian Palm Oil Board, to team up withcompanies in sharing and disbursing research and development findings.

It is my hope that by 2020, Malaysia’s average CPO production can hiteight tonnes per hectare a year.

Malaysia is the world’s largest producer of CPO and its related productssuch as palm kernel, palm olein and oleochemicals, accounting for about 60per cent of the world’s output.