KUALA LUMPUR, Jan 14 (Bernama) -- Malaysia's palm oil production isexpected to grow by two to three percent in 2003 when compared with lastyear, Malaysian Palm Oil Association's (MPOA) chief executive, M.RChandran, said Tuesday.The increased output can be attributed to the fact that a lot ofplantation areas in Sabah with young palms would start producing palm oilin a bigger way this year, he explained.In fact, he said Malaysia's palm oil production for 2003 ought to havebeen lower as a result of the on-going replanting programme embarked fromearly last year following low prices for the commodity.He told Bernama after presenting a paper entitled "The Outlook forPlantation Commodities" at the Malaysia Strategic Outlook 2003 Conferencehere Tuesday that Malaysia produced about 11.9 million tonnes of palm oilin 2002, a marginal increase from 11.8 million tonnes registered in 2001.In 2004, Chandran said production was going to be even higher, given thecurrent high price, which would encourage plantations to use morefertilisers."Normally when prices are low, people tend to cut back on fertiliserswhich will effect the yield for one year. So next year, it should be goodbecause a lot of fertilisers have gone in (the palms)."On the price outlook for the current year, Chandran said the average pricefor crude palm oil (CPO) was around an average of RM1,400 per tonne.Currently, CPO prices are hovering around RM1,650-RM1,670 per tonne.On why the average figure was somewhat lower, he said higher production ofsoya beans in Argentina and Brazil expected in March or April this yearcould have an adverse impact on CPO."Higher prices for soya oil towards the end of last year had boostedplanting (of soya beans) and increased availability of soya bean (later)could have an effect on palm oil prices," he said.Unless there was a change in climatic conditions, a good harvest for soyabeans had been anticipated, he said.Moving forward, Chandran said the local palm oil industry should embark onproducing more branded cooking oils or invest in countries like India,China and Europe and go into refining and downstream activites."Or we should go in together with people who are already producing theseproducts with a brand name and get in with them and sell it as a brandname," he said.In the process, consumers would tend to associate the product or palm oilwith the brand and would not be so bothered whether the cooking oil wasproduced from palm oil or soya oil."If I were to mention Cadbury Chocolates, then you might only beinterested in Cadbury Chocolates for you are not so bothered about wherethe cocoa came from. So this is the kind of strategy we need to adopt," hesaid.Chandran said there was a need to restructure the industry verticallywhereby producers would also be associated with milling, refining,producing oleochemicals and other products in the downstream sector.At present, he said only 25 percent of the CPO was refined in refineriesowned by plantation companies while the balance was processed bynon-plantation companies and most of them were foreign-owned.He lauded IOI Corporation Bhd's move to acquire the Netherland-basedLoders from Unilever Group which has downstream activities in fivedifferent countries."This is the way to move forward," said Chandran.He revealed that the Malaysian Palm Oil Board (MPOB) was looking atchanging the structure of palm oil to be like olive oil through the use ofbio-technology.MPOB, he said, was also working on reducing the planting of oil palms inrainforest areas as well as producing "dwarf" oil palms which would beeasier to harvest.But he said these bio-technological efforts could only materialise in12-15 years.Such efforts were crucial over the long term because Indonesia has thecapacity to take over Malaysia as the world's largest palm oil producer,said Chandran."This is because Malaysia is constrained by land. We can plant a maximumof 4.5 million hectares of oil palm but Indonesia has the capacity toplant more than 10 million hectares of oil palms," he said.However, he said Indonesia could only achieve this target if there wastotal co-operation within its industry as it lacked funding and would haveto rely on foreign funds.In terms of quality, he said Indonesian palm oil was as good asMalaysia's, if not better, because Indonesian has an abundance of labourand this played a major role in improving quality.-- BERNAMA