08/11/2008 (news.balita.ph), Jakarta — Indonesia and Malaysia, which produce some 85 percent of the world's crude palm oil (CPO), will cut production in short-term to help limit supply and prevent further price drops.

The cut will be made starting next year through a replanting program covering a total 300,000 hectares of oil palm trees in both countries, Jakarta Post Daily on Saturday quoted Agriculture Ministry Director General for plantations Achmad Mangga Barani as saying.

The agreement between both nations was signed with the aim of anticipating over-supply amid falling demand, he said here Friday.

"Demand is projected to slow down in every sector next year as a result of global recession. We're preventing possible over-supply of palm oil that may occur next year by replanting trees," he added.

He hopes this will help boost palm oil price to its normal level — around US$ 700 to US$ 800 per ton.

The agreement comprises the second move that anticipated over-supply of a commodity next year after Indonesia, Malaysia and Thailand jointly agreed last Wednesday to cut rubber production by 210,000 tons next year.

The three countries account for 70 percent of global rubber output.