23/10/2008 (Solomon Star News) - GUADALCANAL Plains Palm Oil Limited (GPPOL) general manager, Harry Brock, says the drop in palm oil prices to local outgrowers was due to global market forces.

He said the palm oil price has lost two thirds of its value from an all time high of USD$1100 earlier this year.

“This is pressured by increased supplies of global vegetable oils and faltering crude oil prices,” Mr Brock said.

“Current world stocks are high and exports from around the world have slowed drastically. The Palm oil price in September hit a 17 month low, and in October has now hit a 27 month low. These are worrying times for the industry worldwide,” he said.

Mr Brock said the big issue at the moment is crude oil.

“If it continues to fall, then all other commodities which are priced in comparison with oil, will tumble.”

Mr Brock said the decrease on the price is the nature of any commodity business of which palm oil is not an exception. The majority of the outgrowers commenced harvesting when crude palm oil prices were exceptionally high.

“Some outgrowers will recall that the price is similar to the price in the early part of 2007. Others that only started harvesting in the peak period will find this as a new experience. It must be understood that the palm oil price will fluctuate, and unfortunately this is out of our control,” he said.

The company has been advising growers that prices have fallen throughout the month of August and September.

“For further confirmation on the drop in commodity prices I can advise people to check with the Central Bank,” Mr Brock added.

He said the recent drop in price has also coincided with a fall in production, as expected at this time of the year.

“Palms will not pump out fresh fruit at the same level all year; they go through a quiet stage. This has resulted in out growers’ production falling by 35% in the month of September.

“This also has a huge impact on the earnings for the outgrowers. Palms will go through periods of low crop and you will expect the crop to pick up again in early 2009.

“At this point I would strongly advise the growers to budget carefully during this period of low crude palm oil price. We are still unsure how low the oil price will go and for how long,” he said.

Mr Brock said it is time for all to tighten their belt and be patient.