16/12/2008 (Daily Express, Sabah), Kota Kinabalu - Strategic actions and measures have been formulated for immediate implementation to help stop the decline in palm oil prices and for the industry to remain viable and competitive, said Plantation Industries and Commodities Minister, Datuk Peter Chin.

He said it included the implementation of a blend of five per cent methyl ester with petroleum diesel to be used initially by government vehicles, and subsequently implemented nationwide for the transportation and industry sectors.

About RM200 million had also been allocated for the oil palm replanting scheme to encourage planters and smallholders to replant oil palms aged 25 years and above, he said at the opening of the 2008 National Seminar on Palm Oil Milling, Refining Technology, Quality and Environment at Magellan Sutera Harbour Resort here Monday.

His speech was delivered by Deputy Minister Senator A. Kohilan Pillai.

The replanting of old and unproductive oil palms of some 200,000 hectares with quality planting materials would enhance the industry's productivity in the long run, he said.

At the same time, the Government has also discussed with palm oil millers to get an assurance from them to continue buying fresh fruit bunches (FFB).

Due to the price drop, currently hovering around RM1,500 per tonne, the income of plantation companies and smallholders has been affected and it had to some extent caused defaults and deferment of orders.

"The Ministry together with the Malaysia Palm Oil Board (MPOB) has taken swift action by holding discussions with affected parties and, we have been given assurance by palm oil mills that they will buy fresh fruit bunches supplied to the mills," he said.

Chin said in this challenging time, the mills, estates, oil palm dealers and smallholders need to work together.

According to him, the Research and Development (R&D) led by MPOB and the industry had successfully brought about many innovations including those in the palm oil milling sectors.

The adoption of new technology would increase productivity, improve efficiency, achieve zero waste and result in income maximisation, he said, adding that oil palm biomass is an important area to carry out R&D.

Besides utilisation of biomass waste for the production of bio-composite products, R&D is being carried out to produce energy from such biomass, he said, adding that R&D also needs to be intensified to look for ways to value add and produce palm oil products such as oleochemicals and biodiesel.

On milling technology, he said the future lies in improving processing to increase efficiency and reduce labour dependence through automation of operations.

"It may take many years to fully perfect an automation system but the important thing is that we have to make the start. The development of new technologies such as continuous sterilisation, vertical steriliser and indexer system capable of the same or better performance than the conventional process is the first step," he said.

The next step is to incorporate the new technologies in commercial mills to enhance the milling efficiency and reduce labour," he said.

CHIN said among the biggest challenges facing oil palm mills is the efficiency of oil and kernel extraction, product quality and environmental issues.

He said it was estimated that in an average-sized mill processing of about 150,000 tonnes of FFB per annum, the value of the products lost during processing could be worth in excess of RM5 million.

Reduction of losses can be achieved by improving the systems put in place for monitoring and controlling the losses, he said, adding that approximately 20 per cent of the overall cost of producing palm oil can be attributed to palm oil milling operations.

In today's global economy, business, institutions and non-governmental organisations (NGOs) are demanding for a more sustainable production of agricultural products, including palm oil, he said.

"I would envisage that the sustainability and environmental concerns would increase in the coming years as demand has increased for sustainable production and traceability both in food and non-food production," he said.

Towards this end, Chin urged the industry and millers to adopt new technologies for efficient processing that are environmental friendly.

Meanwhile, he said the palm oil industry recorded a tremendous growth during the first 10-month this year, particularly in terms of export earnings of oil palm products.

High palm oil prices during the first half of the year had contributed to increased export earnings by 60.3 per cent to reach RM56.5 billion as against RM35.2 billion in the corresponding period last year.

In terms of volume, exports of palm oil products increased by 10.8 per cent or 1.7 million tonnes in the first 10-month of 2008 to 17.7 million tonnes, he said.

As of October 2008, the total oil palm planted area increased to 4.45 million hectares, while the total production of crude palm oil during that period increased by 14.21 per cent to 14.59 million tonnes, he said, adding that this was due to higher FFB yield and Oil Extraction Rate (OER).

The oil palm yield and OER performance is a great concern to the Ministry, as the government had set a target for our oil palm producers to produce eight tonnes of oil per hectare by producing 35 tonnes FFB per hectare with an OER of 25 per cent, he said.

Chin urged mills which are still operating with OER below 18 per cent to take remedial actions to improve through stringent FFB grading, rejecting unripe fruit and adopting new technology for improving efficiency, he said.

The Ministry and MPOB would continue to intensify efforts and implement measures to further improve the industry's performance, he said.

Chin said the industry must not be complacent but take concerted efforts including improving agricultural practices in order to push yields and productivity to new heights.