MARKET DEVELOPMENT
Time to take advantage of palm oil's renaissance
Time to take advantage of palm oil's renaissance
27.05.2022 (www.nst.com.my) - LETTERS: Things have not looked this rosy for the oil palm industry in a long time.
Crude palm oil prices are at a five-year high, averaging RM4,465 per metric tonne (pmt) for the first quarter of this year, a 40 per cent increase year on year (yoy) compared with RM3,185 pmt previously.
Russia's invasion of Ukraine has disrupted the supply of rapeseed and sunflower oil to Europe and the Americas.
As a result, these markets are looking at alternatives, like palm oil, of which Malaysia is the second largest producer after Indonesia.
Indonesia's decision to ban the export of the commodity to meet domestic demand has allowed 
Malaysia to step up and meet the shortfall.
While Indonesia has rescinded the ban, partly due to the country's reliance on export tax of the commodity, the episode has left global markets doubting the country's reliability as a supplier in the long run.
As it is, Malaysia has benefited. For example, India, the world's largest importer of palm oil, has been upping its purchase from us.
In the first five months of the 2021/22 marketing year, India bought 1.47 million tonnes of Malaysian palm oil compared with 982,123 tonnes from Indonesia.
This data is compiled by Solvent Extractors Association of India.
This month, India imported around 570,000 tonnes of palm oil, with 290,000 from Malaysia and 240,000 from Indonesia.
To top it off, Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin said the ministry was in talks with the Finance Ministry to slash export tax for palm oil from eight per cent to between four and six per cent.
This will make Malaysia's palm oil more competitive and even help the country regain the global top spot in palm oil production.
Zuraida was also reported as saying that her ministry would counter the global smear campaign on palm oil under the Palm Oil Full of Goodness strategy.
For decades, interest groups have undermined palm oil through fake news and misinformation, and in the process allowing alternative vegetable oils like rapeseed and sunflower to dominate, especially in the United States.
Kudos to the minister for standing up to these lobby groups.
The global edible oil shortfall and Indonesia's policy flip-flops have boosted Malaysia's palm oil.
Local planters and oil palm producers are smiling following the windfall, after sluggish demand following the Covid-19 pandemic.
But the industry should not rest on its laurels. The European markets may go back to prioritising rapeseed and sunflower oil when the Ukraine war ends.
And crude palm oil's stratospheric prices will not hold forever too.
The industry should take this opportunity to restrategise and make palm oil a more viable product in the long run.
Planters' main problem — the lack of manpower — needs to be addressed. Zuraida has rightly said that automation and modernisation are the way to go.
For example, drones can detect unhealthy trees, spray pesticides, monitor yield and conduct weed detection faster and more accurately than manual labour.
With our palm oil industry enjoying a renaissance, the industry should take advantage of favourable conditions and make itself more sustainable in the long run.
ABDUL RAZAK AHMAD
Shah Alam, Selangor
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times
https://www.nst.com.my/opinion/letters/2022/05/799824/time-take-advantage-palm-oils-renaissance