19/12/2008 (Business Times) - The government may make imported chemical fertiliser a controlled item, placing a ceiling on its price so as to ease oil palm planters' burden.
 
 
Fertiliser makes up 60 per cent of the planters' total production cost.

Malaysia's 4.3 million hectares oil palm plantations consume around 3.5 million tonnes, or 95 per cent, of fertiliser imports.

Generally, oil palm planters do not want to skim on fertiliser unless left with no other option. This is because the trees produce more fruits with fertiliser.

But the severity of the situation was seen last month when some 200,000-odd oil palm planters, including the six biggest plantation companies, pledged to reduce fertiliser purchase in the next six months because of the high prices that were eating up their profits.
 
"The government is aware that fertiliser prices have yet to come down despite importers pledging to drop prices by 15 per cent.

"Fertiliser prices have risen significantly, about three times higher than in 2006. While crude oil prices have dropped significantly, fertiliser is still sold at high prices," Agriculture and Agro-based Industry Minister Mustapa Mohamed told reporters after officiating the launch of the Fisheries Department's business prospectus on aquaculture in Kuantan yesterday.

Also present was Pahang Menteri Besar Datuk Seri Adnan Yaakob, who strongly supported agriculture's role in helping reduce the country's food import bill.

"The government is already subsidising fertiliser for padi and vegetable farmers, but the biggest users are oil palm planters. It would be disastrous if planters cut back on fertiliser usage as this would affect Malaysia's palm oil output next year," Mustapa said.

Last year, Malaysia produced 15.8 million tonnes of palm oil and exported RM45 billion's worth.

Asked how soon there would be a ceiling price on fertiliser, he said: "The proposal is still preliminary. We have yet to bring it up to the Cabinet."

Oil palm planters in the country spent RM2.6 billion on 3.4 million tonnes of imported fertiliser last year. Imports are expected to surpass RM5 billion this year.

The Malaysian Estate Owners Association (MEOA) and the Malaysian Palm Oil Association, representing 90 per cent of the country's oil palm planters, have expressed dissatisfaction over fertiliser importers' pledge to cut prices by 15 per cent.

"Fertiliser suppliers should drop prices by 50 per cent considering that international crude oil has come down by more than 65 per cent from its high of US$147.27 (RM512) a barrel in July," MEOA president Boon Weng Siew said.