MELAKA, Aug 18 (Bernama) -- Malaysia is facing stiff competition fromIndonesia in the export of palm oil and could be overtaken by theneighbouring country as the leading exporter of palm oil in five yearstime.

Primary Industry Minister Datuk Seri Dr Lim Keng Yaik said that the reasonfor this was the low production level faced by local smallholders, whocurrently contribute 40 percent to the country's palm oil production.

Therefore, what needs to be stressed is the push for higher productionlevels of palm oil and oil extraction rates (OER) through better agronomicmethods, he told reporters after launching the Malaysian Palm Oil Board'smanaged fertilizer supply programme, MPOB F2, at a hotel here Monday.

Dr Lim said a major problem faced by local smallholders was the high costversus lower production situation compared with Indonesia where cost waslower and production higher.

He said the country's palm oil export last year was 12 million tonnescompared with 10 million tonnes exported by Indonesia.

Palm oil export to India, one of the world's biggest importers of palm oilwith 3.5 million tonnes imported last year, is now 55 percent dominated byIndonesia while the remaining 45 percent is held by Malaysia, he said.

Dr Lim said Malaysia once held 90 percent of the Indian palm oil exportmarket.

"Our palm oil industry has been in existence for 30 years and yet theproductivity level, based on the production of palm oil per hectare peryear, shows that has not been much improvement especially in the last 10years," he said.

He said the average palm oil output was at 3.6 tonnes per hectare per yearfor smallholders compared with seven to eight tonnes by the biggerplantations per year.

The minister called for the use of the best clone during planting toincrease the OER for smallholders, and harvesting only when the fruitshave really matured.

"There are smallholders who in their haste to make quick money, do notfollow the right harvesting practices," he said.

Picking unripe fruits would not produce enough oil, he added.

On the launch of the fertilizer programme, MPOB F2, he said that he wasconfident that in the medium term, the production of palm oil could beincreased to five tonnes per hectare per year from 3.8 tonnes now.

He said the programme was to make it easier for smallholders to get theirsupply of fertilizers with the view of helping them to increase theirproduction capacity.

-- BERNAMA