Professional Documents
Culture Documents
Opiejv14n1 Kamalrudin
Opiejv14n1 Kamalrudin
Opiejv14n1 Kamalrudin
14 (1)/march 2014
24
Malaysian Palm Oil - Moving Ahead to Sustainable Production Growth
Million tonnes
Year
The oil palm industry accounts was dominated by large plantation between large, medium and small
for 5%-6% of Malaysia’s Gross companies usually owned by plantations, and smallholdings, as
Domestic Products (GDP), and private investors and government- well as the variation in OER from
the importance of the industry to linked companies which accounted mills across Malaysia. Evidence
the country’s export earnings is for 62% of the total oil palm area. collected from high-performing
very significant (Table 1) (www. There was a growing level of plantation companies suggests
palmoilworld.org). In 2011, the integration along the value chain. that best practices are in place.
industry contributed RM 80.3 However, a significant share of oil The best practices adopted by
billion worth of export earnings, or palm area was under the ownership these companies if shared with the
61.8% of the overall export value of organised smallholders and others can bridge the performance
of all commodities. independent smallholders, which gaps. This would result in higher
In 2013, Malaysia had 5.23 still accounted for 24% and 14% of FFB yields and OER across the
million hectares of oil palm. The the total area, respectively (Figure nation (Economic Transformation
state with the largest oil palm 2) (MPOB, 2014b). Programme: NKEA, 2009).
area was Sabah with 1.48 million The palm oil industry in Malaysia A recent study by the Forest
hectares (or 28.2% of the total has great growth potential in both Resource Assessment revealed that
area), followed by Sarawak with fresh fruit bunch (FFB) yield and 62% of the land area in Malaysia
1.16 million hectares (23.2%) in oil extraction rate (OER). This is still covered by forest (Table 2)
(MPOB, 2014a). In terms of is reflected by the high level of (FAO, 2010). Compared to many
category of ownership, the industry variation in yield performance other countries including some
Source: www.palmoilworld.org
25
OIL PALM INDUSTRY ECONOMIC JOURNAL Vol. 14 (1)/march 2014
Independant
RISDA smallholder
2% 14%
FELCRA 3%
Government scheme 6%
developed countries, Malaysia about 15% of the total land area, or Limited land space is now
may be considered ahead in 77% of the total agricultural land becoming one of the greatest
forest conservation. In line with (Sime Darby, 2014). challenges faced by the local
Malaysia’s commitment to the Rio To date, 5.2 million hectares industry. This situation has become
Summit pledge to maintain at least of land are in use for oil palm a driving force causing many large
50% of her total land area under cultivation. Given the above Malaysian companies to redirect
forest cover (Basiron, 2012), the scenario, the potential for their resources and efforts towards
country continues to be steadfast in further land expansion for oil international expansion. With the
maintaining her deforestation rate palm cultivation is limited. The situation in Indonesia being more
at the lowest possible. As a result, expansion potential is estimated favourable for the expansion of
expansion in oil palm area is made at a maximum of 1.3 million oil palm plantations, Indonesia
mainly through the conversion of additional hectares, of which has become the most preferred
land previously cultivated with 75% or 1 million hectares is destination for many Malaysian
other agricultural crops such as located in Sarawak (Economic oil palm companies. As of 2009,
rubber, cocoa and coconut (Table Transformation Programme: Malaysian companies own about
3). In 2012, oil palm accounted for NKEA, 2009). 25% of all the oil palm plantations
26
Malaysian Palm Oil - Moving Ahead to Sustainable Production Growth
27
OIL PALM INDUSTRY ECONOMIC JOURNAL Vol. 14 (1)/march 2014
2011 to December 2013. The Key Performance Index (KPI) tissues. Trunk injection of the
effort to encourage independent target of 35 000 ha (ETP, 2013). infected palm with hexaconazole
smallholders to replant and to can prolong the economic life of
newly plant has been rather Improving Fresh Fruit Bunch the palm. Breeding for Ganoderma-
challenging, especially in 2013. Yield tolerant oil palm progenies show
For 2013, the government set an promising results (Tarmizi and
ambitious target of 30 000 ha for The yield of FFB depends on Kushairi, 2014).
replanting and new planting of oil two main factors, namely, the Smallholdings, which constitute
palm by independent smallholders. number of bunches produced and about 40% of Malaysia’s oil palm
Only 15 005.44 ha, or 50% of the the weight of each bunch. As the area, are being strongly supported
2013 target, of replanting and new age of the palm increases, bunch by the government to boost their
plantings were completed during weight increases while bunch overall FFB yield. This is part of
the year (ETP, 2013). number decreases. The number the task to achieve the 2020 target
Applications for financial of bunches produced per palm of raising annual FFB yields to
incentives of up to RM 9000/ depends on frond production, sex 26.2 t/ha as the national average
ha for independent smallholders ratio, abortion and bunch failure across all categories of ownership,
to implement replanting or new rates (Tarmizi and Kushairi, 2014). smallholdings and plantations
planting were highest in number Fertiliser is a major factor in included. Some of the ways to
from Sarawak. To safeguard the oil palm cultivation. Correct and achieve this are to encourage
interests of the state and the timely application of fertiliser independent smallholders to adopt
smallholders there on property has major impact on yield and the best industry practices, and
rights, the state government has economic returns. Fertiliser to set up cooperatives of oil palm
imposed stricter land ownership requirements depend on the age planters across the country to
and suitability verifications. This of the palms, soil type and field educate and increase awareness in
is an important process to ensure conditions. By using an efficient new improved technologies. As a
targeted assistance is given out oil palm nutrient supply system, result, 210 457.39 ha of land have
to smallholders in areas suitable productivity per unit area can be achieved compliance with various
for oil palm planting, and that increased (Tarmizi and Kushairi, best practices in 2013, exceeding
yields will be delivered under the 2014). the set target of 200 000 ha (ETP,
most optimum environment. As a Pests and diseases are a major 2013).
result of this move, there have been threat to oil palm cultivation. This initiative has successfully
delays in the implementation of oil The lack of proper management established a total of 30
palm projects in Sarawak in 2013. will lead to a significant drop in cooperatives. Under the umbrella
The federal government together FFB yield. Bagworms and nettle of a cooperative, smallholders
with the independent smallholders caterpillars are the most serious enjoy bulk discounts when
are committed to complete clearing insect pests of oil palm. Outbreaks purchasing agricultural inputs
the backlog projects in 2014 (ETP, of these pests result in severe and, more importantly, they
2013). defoliation. The pests are managed receive better pricing for their
The government aims to by insecticidal sprays, trunk produce sold to palm oil millers.
continue to lead initiatives and injection, or through biological In a pilot initiative, a smallholders’
provide financial assistance to control (Wahid et al., 2000). In cooperative in Saratok managed to
independent smallholders to addition, the rhinoceros beetle offer a price which is 20% higher
facilitate replanting and new damages the oil palm crown, and for FFB compared with the price
planting. This will contribute is especially devastating in young offered by existing dealers (ETP,
towards a sustainable supply of palms. Due to environmental 2013).
FFB while reducing the proportion concerns, biological control of About 210 457.39 ha have
of aged palms. Moving forward, the pest such as by pheromone achieved compliance with best
the government is committed trapping is widely used (Tarmizi industry practices, such as MPOB’s
to ensuring replanting and and Kushairi, 2014). Code of Practices (CoP) and the
new plantings by independent Basal stem rot caused by Roundtable on Sustainable Palm
smallholders that were delayed Ganoderma boninense is a major Oil (RSPO). As a result, yields
in 2013, and has allocated an oil palm disease in Malaysia. To have improved; the annual national
additional RM 28 million to finance date, there is no remedy for the average has risen to 19.02 t FFB/ha
new applications by independent disease. Treatment of the infected in 2013 compared with 18.89 t/yr
smallholders, with an overall 2014 palm is by removing the infected before (ETP, 2013).
28
Malaysian Palm Oil - Moving Ahead to Sustainable Production Growth
Improving Workers’ Productivity topographic reasons. Thus, only 3 labour shortage faced by oil palm
million hectares of the total area plantations in Peninsular Malaysia
To address the issue of labour are suitable for farm mechanisation (Azman, 2013).
shortage, the current productivity technologies. However, even with
of workers has to increase from 1.5 t this area, the full adoption of Increasing the OER
of FFB per worker to 3 t per worker mechanisation will reduce worker
or higher per day. Productivity can reliance by 33%-46%. Therefore, A key performance indicator
be increased by improving oil palm mechanisation is a tool to reduce for the palm oil industry is its
mechanised operations (Norasikin over-dependency on foreign labour oil extraction rate (OER), which
et al., 2014). Advancements in and improve farm efficiency has remained stagnant at below
field mechanisation for the oil (Norasikin et al., 2014). 20.5%. Entry Point Projects (EPP)
palm plantation industry involve Concerned over the issue of aims to increase OER to 23% by
the introduction of machines and labour shortage, especially for 2020, chiefly by getting more mills
implements that are adapted to harvesting and FFB collection, certified under MPOB’s CoP. MPOB
local terrain conditions. Through the government has made some has also placed more than 200 of
re s e a rc h a n d d e v e l o p m e n t , efforts to address the problem. To its officers at selected mills across
mechanisation in the industry encourage locals to work in the the country to provide advisory
has undergone several changes, plantation sector, effective January and enforcement services on FFB
and is still currently progressing 2013, the government introduced quality. This will ensure that only
well. Over the years, the industry a minimum wage of RM 900 per high quality and ripe FFB are
has adopted several mechanised month for Peninsular Malaysia and accepted and processed at all mills
operations in various field activities RM 800 per month for Sabah and (ETP, 2013).
(Norasikin et al., 2014). They Sarawak (Azman, 2013). Statistics on the national OER
include buffalo- assisted harvesting, To reduce the dependency for 2013 show a drop of 0.10%
Cantas and C-Kat harvesting, semi- on labour from Indonesia, the from 20.35% in 2012 to 20.25%
mechanical manuring, mini tractor government has agreed to allow in 2013. Four states with oil palm
grabber system and prime movers. the plantation sector to recruit mills saw an improvement in OER,
Although the area under oil workers from Bangladesh on a namely, Kedah, Melaka, Selangor
palm cultivation reached 5.2 government-to-government basis. and Sabah, while OER in the other
million hectares in 2013, only In the initial stage, the government states recorded decreases (ETP,
60% of these areas are suitable for requested 10 000 workers from 2013) (Figure 3). The highest OER
mechanisation, mainly because of Bangladesh to alleviate the acute was achieved in Melaka with a
r h k r h ak
sia ho da tan ka ila
n
an
g ra
na
ng go an
u
ba aw
y Jo Ke n la b h Pe Pi ela
n g Sa r
ala K ela Me em Pa S e ng Sa
M
N.
S lau Te
r
Pu
29
OIL PALM INDUSTRY ECONOMIC JOURNAL Vol. 14 (1)/march 2014
Year
CPO production CPO production
forecast
Year
30
Malaysian Palm Oil - Moving Ahead to Sustainable Production Growth
REFERENCES
31
OIL PALM INDUSTRY ECONOMIC JOURNAL Vol. 14 (1)/march 2014
FAO (2010). Global Forest Resources Assessment 2010. Food and Agriculture
Organisation of the United Nations‚ Rome. Available from http://www.
fao.org/ forestry/fra/fra2010/en/, assessed on 15 August 2014.
MIELKE, T (2013). Palm oil, the leader in global oils and fats supply.
Paper presented at the Malaysia/Myanmar Palm Oil Trade Fair & Seminar,
Yangoon, Myanmar on 28 June 2013.
MIELKE, T (2014). Global oils & fats outlook – forecast on demand and
consumption. Paper presented at the Palm Oil Trade Fair & Seminar,
Tehran, Iran on 20 January 2014.
MPOB (2001). Malaysian Oil Palm Statistics 2001. 21st edition. MPOB, Bangi.
MPOB (2014a). Review of the Malaysian Oil Palm Industry 2013. MPOB,
Bangi.
MPOB (2014b). Malaysian Oil Palm Statistics 2013. 33rd edition. MPOB,
Bangi.
OIL WORLD ANNUAL (2014). Oil World Annual 2014. Vol 2. Hamburg.
ISTA Mielke GmbH.
32
Malaysian Palm Oil - Moving Ahead to Sustainable Production Growth
SIME DARBY (2014). Palm Oil Facts and Figures. Available from http://
www.simedarby.com/upload/Palm_Oil_Facts_and_Figures.pdf, assessed
on 15 August 2014.
33