‘No palm oil’ label is against RSPO’s aim, members told

BANGKOK: Members of the Roundtable on Sustainable Palm Oil (RSPO) are using the “no palm oil” label on their products, which goes against the movement’s objective to promote sustainable palm oil.

“Over the last few years, there has been a growing resentment among African and Asian growers against RSPO members who use the ‘no palm oil’ label on their products,” said co-chairman of the RSPO board of governors Datuk Carl Bek-Nielsen.

This goes against the spirit of the RSPO, which is to promote the production and use of RSPO-certified palm oil, he told the 14th Annual Roundtable Meeting on Sustainable Palm Oil (RT14) here yesterday.

“This dream will not happen as long as there are 489 products found on the shelves today with the ‘no palm oil’ label belonging to RSPO members.

“This is why many growers sitting on the fence refuse to join RSPO, because your actions do not facilitate our shared goal of making sustainable palm oil the norm,” said Bek-Nielsen, who is chief executive director of Malaysian palm oil producer United Plantations Berhad.

Bek-Nielsen pointed out that smallholders found the RSPO “bureaucratic, slow, not possible to reach and even arrogant”.

He said there was a need to simplify the procedural requirements for RSPO-certification for smallholders, who make up 40% of palm oil producers in Malaysia, 50% in Indonesia and 80% in Thailand.

“The smallholder fraternity requires additional resources, time and help, failing which we will risk them turning their backs on the RSPO and accusing the RSPO of not fulfilling the spirit of the United Nations’ creed on sustainable development, that ‘sustainable development must go hand in hand with action to raise the living standards of the poor’,” Bek-Nielsen cautioned.


Source : The Star, 10 November 2016

Mah calls on palm oil players to take up grants to move downstream


PUTRAJAYA: To encourage the palm oil industry to move further downstream and add value to their end-products, the government, through the 11th Malaysia Plan (11MP), has allocated RM280mil in grants for industry players.

Apart from targeting the big players, the government is also assisting small and medium enterprises (SMEs) in the industry, with RM50mil of the grants dedicated to this group.

Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong told StarBiz that the grants were aimed at encouraging domestic manufacturing of palm oil-based food and health products as well as chemicals or high-value palm oleo derivatives.

“Under the 11MP, I want industry players to know that there are RM280mil worth of grants for the taking. We want to invite the industry to work together with us, and take up these grants,” he said.

Mah said the bulk of Malaysia’s palm oil output was still being exported in the form of processed palm oil.

In 2015, 68.6% of the country’s palm oil exports were within the upstream and midstream segments, consisting of CPO and processed oil.

The export value of the crude palm oil was RM12bil and processed oil brought in RM28.2bil.

The downstream sector, while only accounting for 30.1% of total exports, saw oleo-chemicals raking in RM14.9bil and exports for finished products amounting to RM1.7bil.

The Minister noted that the export value for finished products were significantly higher, and stressed that industry players had the potential to earn much more by moving further down the downstream sector.

“We really need to add value to our exports, and that is why we are offering these grants.

“If we want to be a game-changer, and to increase our export value, we have to shift our focus to downstream and end-products.

“This is the strategic shift that we want to see in the industry,” he said.

By moving further downstream, the demand for CPO will also increase, and the entire industry will benefit, he added.

Mah said the country’s largest plantation companies had all come onboard the initiative.

“When CPO price is high, the upstream segment will generate the bulk of profits, but when prices are low, planters tend to benefit from the downstream segment.

“This is because the input costs are lower, and planters will gain from their end products.

“Companies that have strength in upstream as well as downstream will be able to leverage whether the CPO prices are high or low,” he added. Palm oil derivatives are found in various daily products – from toothpaste, toothbrushes, shampoos and biodiesel, to food and health items.

In 2015, the export of commodities and commodity products was worth over RM117.16bil, the second largest segment after electronics. The export of palm oil was valued at RM63.2bil.

During the 10th Malaysia Plan (10MP), the government had committed RM416mil worth of grants for commercialisation projects, while the private sector committed RM2.9bil in investments.

The projects under these grants are in various stages of implementation. Under the segment of the grants allocated for commercialisation projects, clinical trials were implemented across five countries.

The minister cited a project successfully implemented in China, in which students in were given biscuits with palm oil derivatives, making the food item rich in carotene and Vitamin A.

He said the programme had resulted in reduced malnutrion among the students and a significant decline in eye diseases.

The project, in collaboration with Lanzhou University in Longxi District, China, was initiated in Dec 2014.Since the 10MP, the government has emphasised on five product categories for industry players to explore.

The categories are surfactants, which are used in detergents, bio-lubricants, which are chemicals used in industries and cars, bio-polyols used to produce foams and plastics, as well as agrochemicals and glycerol derivatives, which can be used in food and non-food products.

Under the total RM280mil in grants, RM100mil is allocated for the manufacturing of high-value palm oleo derivatives or chemical products, another RM100mil for food and health products, RM30mil for clinical trials and RM50mil for SMEs. On the grants allocated for SMEs under the 11MP, the minister said this was a new addition.

While SMEs were not expected to produce oleo derivatives, which involves very costly technology, these businesses incorporate these derivatives into their products.

For example, by adding red palm olein into their food product, the business will be able to produce a higher value-added product, and market it as a health food.

Malaysia has nearly one million smallholders involved in commodities, with 568,354 of them in the palm oil industry, and forming 40% of the oil palm land.

For more general information and criteria, log on to www.mpob.gov.my. For enquiries, write to nkeagrants@mpob.gov.my.


Source : The Star, 31 Oct. 2016

Why engagement, not punishment, is the key to a sustainable palm oil supply chain

By Shu Ling Lim

Monday 10 October 2016
Recently, Greenpeace released a report entitled “A Deadly Trade-Off”. It delved into the various alleged misdemeanours of the IOI group and its supply chain, claiming that nothing is being done about third party suppliers who continue to carry out deforestation and exploitation.

At the end of it, Greenpeace criticised palm oil traders (including GAR) for not taking more action to ensure compliance in their supply chain including their suppliers’ subsidiaries.

Greenpeace went on to call for “proactive monitoring at group level, accelerating independent third-party auditing (to standards such as the Palm Oil Innovation Group (POIG)) and clear unequivocal demands for compliance that carry the consequence of exclusion”.

Greenpeace appears to be seeking a commitment to an ever-watchful Orwellian Big Brother approach to supply chain management with punitive measures against suppliers who are not yet meeting standards as their key method of delivering change.

GAR’s experience is that such an approach is neither practical in a vast and complex agricultural supply chain nor is it likely to bring about the industry-wide changes in behaviour that Greenpeace is pursuing.

Disagreeing with Greenpeace’s “supply chain cop” approach to punishing the bad guys doesn’t mean GAR is not taking responsibility for its supply chain.

Quite the contrary, our investments in supply chain engagement have never been greater.

Down in the trenches with our suppliers
In 2014, we decided to extend our sustainability policy to cover all our suppliers.

We acknowledged that we have a responsibility to ensure that our supply chain is sustainable and we wanted to bring them along with us on our sustainability journey.

The first step in achieving this was to map out our supply chain. And we completed the first phase of this to the mill in 2015.

We know the 489 individual mills which supply us in Indonesia. We know their exact GPS coordinates which helps us determine if they are near or based in sensitive eco-systems. We also know their legal details and whether they have obtained certification in sustainable palm oil.

Getting this sort of information may look like a cake walk. But we had to overcome initial resistance and suspicion regarding our motives in wanting to document this information.

This is because we are pushing the boundaries of what constitutes traditional business relationships in this part of the world. And we are doing this all the way to the plantation and with individual farmers.

We also continue to push the envelope through our intensive engagement with our suppliers.

We proactively support them through site visits and training and special workshops that we convene for them after canvassing their most important needs.

An approach that leads with punishment does not work. GAR will take that step where and when necessary but we believe exclusion should be the tool of last resort, not the starting point.
We have a dedicated Supplier Support Team, which as the name suggests, is there to help suppliers with sustainability issues.

All this builds trust and a stronger working relationship with our suppliers. This is absolutely key in helping them understand and be willing to make the changes to achieve sustainable palm oil production.

An approach that leads with punishment does not work. GAR will take that step where and when necessary but we believe exclusion should be the tool of last resort, not the starting point.

Firstly, while GAR continues to improve its due diligence and supply chain data collection it is unrealistic to think that we will ever have a 24/7, all-encompassing information system for each of our thousands of suppliers and their subsidiaries.

To do this, we would have to become a full-time supply chain auditor and monitoring agency a la Big Brother or the NSA.

It’s hard to imagine any supplier willing to engage with us in this scenario, and even harder to imagine they would want to share serious problems and issues with us.

Secondly, through trial and error, we realised that while taking punitive action against errant suppliers might earn us external kudos, in reality, it achieved nothing.

Suppliers who were dropped simply shrugged it off, turned to other buyers who have laxer standards, and continued their bad behaviour.

We have learnt that if we are really serious about improving the standards across our supply chain, we have to be down in the trenches with them.

Thirdly, we are not talking about a homogenous supply chain. Our suppliers range from big companies to medium and smaller-sized ones and individual farmers.

There is no one-size-fits-all solution. We have to try out various approaches to see what works best with our different suppliers.

This involves taking into account real, practical issues such as the extent of their resources and their ability to bear the cost of adopting sustainable practices.

Reports by NGOs have specific aims and are designed to zoom in and emphasise shortcomings and negatives, employing a traditional and somewhat clichéd strategy to push for change.

Contrary to the gloomy picture painted of the palm oil supply chain, we have had success stories born of long-term, dogged effort and engagement.

Look through our Grievance List on the Sustainability Dashboard carefully and you will see evidence of suppliers who are willing to listen, to accept advice, to engage, to write new policies and strengthen their practices.

Excluding suppliers is easy while accomplishing nothing meaningful. But going the distance with them, investing resources, time and energy – that’s the true test of how fully committed we are to lifting the standards of our supply chain and the industry.

Shu Ling Lim is the Head of Sustainability Communications at Golden Agri-Resources. She has previously worked for the BBC and the UNDP.


Source : Eco Business, 10 Oct 2016

Global palm oil output to recover in H1 2017 as El Nino effects fade

KUALA LUMPUR, Sept 22 — Global palm oil production will recover in 2017, increasing by 4 million tonnes in the first half of next year from the same time in 2016, said leading industry analyst James Fry, after the crop damaging El Nino weather event reduced output this year.

Rising palm oil production could dampen benchmark palm oil prices, which hit a five-month high on tight market supplies in early trade on Wednesday.

Palm futures rose 0.2 per cent to RM2,683 per tonne at the midday break today, up 3.4 per cent so far this week.

“The 2017 first half rebound will almost offset the 2016 first half collapse,” said Fry, chairman of commodities consultancy LMC International, in a speech at the industry conference Globoil India today.

Fry also forecasts a rise in global palm production in the second half of 2017 by over 2 million tonnes from the corresponding period this year.

2016 palm oil production was impacted by the El Nino, a warming of the Eastern Pacific Ocean waters which brings dry weather across Southeast Asia and lowers palm yields in top producers Indonesia and Malaysia.

Fry last forecast in March that global palm oil production could fall by over 2 million tonnes this year, and saw Southeast Asian output declining by 4 million tonnes.

For the last quarter of 2016, Fry estimates Malaysian inventories to climb to a range between 1.75 to 1.80 million tonnes.

“Crude palm oil output will resume year-on-year growth, but we have the seasonal slowdown after November,” he said.

“Malaysian Palm Oil Board (MPOB) stocks will settle at 1.75-1.80 million tonnes in October-December, and will then fall back until they soar from Q2 onwards.”

Palm oil end-stocks in Malaysia, the world’s No. 2 producer after Indonesia, fell to a near six-year low of 1.46 million tonnes in August, according to data from industry regulator MPOB.

Indonesian output may fall by 0.6 million tonnes in the third quarter this year, but could rise by 0.2 million tonnes from October to December, Fry said.

Fry also forecast that CPO prices would ease to US$650 (RM2,688) a tonne on a free-on-board basis in November and December, and “move up briefly in January to February” before falling to US$550 next year, based on a Brent crude oil forecast of US$45 per barrel.

CPO was trading at US$705 a tonne on a free-on-board basis today. — Reuters


– Source :: http://www.themalaymailonline.com/money/article/global-palm-oil-output-to-recover-in-h1-2017-as-el-nino-effects-fade#sthash.ev6k7ACi.dpuf

Malaysian Government reviewing CPO tax ahead of Budget 2017

PUTRAJAYA (Sept 20): The Malaysian Government is considering the oil palm sector’s tax policy suggestions, which include double deduction for companies, which promote industry sustainability.

Speaking to reporters today, Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said the Government was also evaluating suggestions on crude palm oil (CPO) tax.

Mah said industry players had proposed the introduction of double-tax deduction for companies, which cooperate with the Government to increase sustainability of the oil palm industry.

“Another suggestion is to harmonise the export duty of CPO between Malaysia and Indonesia, through the Council of Palm Producing Country framework,” he said after a two-day dialogue between the ministry and Malaysian commodity industries.

Mah said the ministry would consider inputs from the dialogue, as the Government prepared for Budget 2017. Prime Minister Datuk Seri Najib Tun Razak will announce the budget in Parliament this Oct 21.

Today, Mah said he could not provide details on the Government’s planned oil palm sector tax policy, as tax structures for the upstream and downstream segments were different.


Source : The Borneo Post, 20 September 2016

Malaysia to persuade France not to hike tax on palm oil imports

PUTRAJAYA: Malaysia, as a major palm oil producer, will try and persuade France not to hike duties on Malaysian palm oil which currently attracts 21 per cent import tax, said Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong.

“We are engaged in high-level discussions with French parliamentarians.

“Malaysia is concerned as the proposal is to increase the import tax on palm oil only and not other vegetable oils.

“The tax must be fair and apply to similar vegetables oils,” said Mah, adding that the review on the vegetable oils tax was expected to be deliberated in the French Parliament in November.

Saying that the proposed tax was discriminatory, the minister, who just returned from a working visit to Belgium, France and the United Kingdom, added that if France were to increase the tax, then the European Union would also do the same.

“Oil palm is the most productive crop among vegetable oils and forms an important component of the food supply chain,” he said.

Mah defended that Malaysian palm oil was a good and healthy oil, which contained no genetically modified foods and was scientifically proven to have similar properties as olive oil.

Industry players say that the potential crisis looming now for the industry was the use of palm oil for energy with the attack now focused on sustainability.

Oil palm cultivation in Malaysia is always being blamed for widespread deforestation that destroys biodiversity, degrades ecosystems, emits green house gases and carbon which contributes to climate change and traps workers in inequitable working conditions.

To the non-government organisations, deforestation in developing countries should be stopped at all costs while sustainability was actually linked to the price of palm oil.

The market perception which labelled palm oil as “unsustainable” would have economic implications that is high price discounts of palm oil vis-a-vis other vegetable oils.

Mah’s trip, from Sept 5-10, was aimed at promoting palm oil, rubber and timber and to address increasing concerns over the French food taxation and food safety issues relating to palm oil, as well as, timber certification matters in the Netherlands.

Palm oil contributes about €167 million (RM760 million) in tax revenue to France. — Bernama

Malaysia challenges the world over palm oil on peatland

Kuching, Serawak, Malaysia | Wed, August 24 2016.

Malaysia is a “lone ranger” in Southeast Asia as it fights more or less solo against the majority of environmentalists’ views that palm oil trees should not be planted on tropical peatland as it is believed to severely affect the local environment and exacerbate global warming.

Malaysia, the second biggest palm oil producer after Indonesia, is a home to 2.43 million hectares of peatland, 27.5 percent of which has been developed into palm oil plantation, while Indonesia with production of 23 million tons last year is a home to 16 million hectares of peatland with 1.6 million hectares of it developed.

Unlike Indonesia which prefers to follow the mainstream views of the environmentalists and has decided to launch a moratorium on new development on peatland since 2011, Malaysia fully supports its palm oil industry who have tried to prove that peatland cannot be classified as “sacred land”.

The Malaysian government established the Tropical Peat Research Laboratory (TPRL) in Serawak state to facilitate its scientists to conduct research on the economic and environmental aspects of peatland development.

They claimed that they have managed to eradicate the negative impacts of peatland exploitation. However, their arguments were nearly unheard as they were inundated by the mainstream opinion of the environmentalists.

Militant environmentalists have long believed any peatland exploitation would cause serious problems—land subsidence, water scarcity, forest fires, flooding and worsen global warming. They disapprove of any peatland exploitation—either for producing raw materials such as fertilizer, agricultural media and biomass briquettes or for plantation purposes.

In trying to get attention from other parts of the world, Malaysia lobbied members of the International Peat Society (IPS) so that the peatland country could host the International Peat Congress. As a result, the 15th congress was held in the Sarawak state capital of Kuching from Aug. 16 to 19, attended by hundreds of scientists, the first ever peatland congress in Asia since its first edition in 1954 in Dublin.

“We want it to be organized here because anytime a peatland congress was organized in Europe, Malaysia and Indonesia were always ‘hit black and blue’. We were accused of being criminals against the environment,” Lulie Melling, a TPRL director and chief of the congress’s steering committee, told The Jakarta Post on the sidelines of the congress.

Participants of the International Peat Congress listen to the presentation from an expert on peatland management during the first day of the congress in Kuching, Sarawak, Malaysia, on Aug. 16.(JP/Bambang Nurbianto)

Malaysia managed to manuever the congress as a showcase for the results of TPRL’s research, particularly for its finding on mechanical soil compaction, which claimed to effectively reduce susceptibility of peat-fire outbreaks during the dry season and flooding during the rainy season as the land had higher capability to absorb water. They also said the compaction also reduces CO2 emissions from peatland up to half from what was believed previously by many scientists.

However, Susan Page, a professor of physical geography at the University of Leicester in the UK, who was a keynote speaker at the congress, insisted that developing palm oil plantations was unsustainable. “People talk about sustainable development on peatland. But it really doesn’t exist because the only sustainable peatland is a peatland that is left alone,” Page told the Post in an interview.

Certain crops and vegetables may be allowed to be cultivated on the peatland, but not an intensive peatland development because a conversion into palm oil plantation which in fact improves the economy and people’s welfares was not equal to the big losses that will follow, she believed.

Meanwhile, Bjorn Hanell, the IPS president, said environmental activists and scientists should not just prevent people from utilizing peatland, while ignoring new findings on peatland management. “They should be ready to discuss the new findings on peatland management openly,” he added.

But, for palm oil players, criticism against palm oil development on peatland is not merely a scientific matter. They believe it is part of a trade war because palm oil is a tough competitor to soya bean oil and sunflower oil that have been developed in America and Europe.

Children sing ‘Heal the World’ together with President of the International Peat Society (IPS) Bjorn Hanell (left), Sarawak Chief Minister Haji Adenan bin Haji Satem (Center), Malaysia’s Plantation Industry and Commodities Minister Mah Siew Keong and other Malaysian officials during the opening of the International Peat Congress in Kuching, Sarawak, Malaysia, on Aug. 16.(JP/Bambang Nurbianto)

They claim the two vegetable oils were less sustainable as people need much larger land to cultivate bean and sunflowers. They even criticized scientists in developed countries, who called for stopping peatland development in developing countries while ignoring the fact that their countries have earlier exploited peatland in the past.

Responding to that, Page admitted that Western countries have committed the same mistake in the past. “It is very true that there was intensive exploitation of peatland in Europe. But it happened hundreds of years ago when the people had not been informed about gas emissions and global warning,” she said, adding that European countries had already paid the cost for their past mistake by building large seawalls with expensive pumping systems to prevent seawater flowing into land.

But certainly such finger pointing will not end the differences. Scientists across the world now have an opportunity to look into documents presented by their Malaysian and Indonesian counterparts, as well as those from other countries about sustainable peatland development that had been presented in the congress.

The result of this research has now been well-documented by the IPS and countries like Malaysia and Indonesia are waiting for a fair discussion on the issue. Member of IPS executive board Moritz Bocking promised to follow up the result of the congress by inviting all involved parties in a roundtable meeting.

Meanwhile, Supiandi Sahabian, the Indonesian Peat Association (IPA) chairman, called on the Indonesian government not to be just passive in the peatland issue. Instead, it needs to support more research on peatland management so that the major peatland country will not just accept the mainstream opinion that peatland should remain a “sacred ground” and ignore its potential. (bbn/ags)


Source : The Jakarta Post, 25th August, 2016

Hefty taxes impinge on palm oil’s competitiveness

KUCHING: The tax structure in Malaysia is one of the factors hindering the oil palm industry’s competitiveness, especially when compared to Indonesia.

According to IJM Plantations Bhd (IJM Plantations) chief executive officer and managing director Joseph Tek Choon Yee, Malaysia producers are more competitive against the Indonesian producers when crude palm oil (CPO) prices are below RM2,300 per tonne but beyond that, will become less compeitive and more so for Sabah and Sarawak when it is at RM2,300.

“In Indonesia today, for every tonne of CPO produced, the grower will need to pay a tax of RM200, which is equivalent to US$50.

“Beyond a certain price, say RM2,800, with just a threshold of RM750, this is when you increase (tax) to RM215, all the way to RM400,” he said in his ‘Synopsis of the Factors Impacting the Competitiveness of the Malaysian Oil Palm Industry’ presentation at the 12 ISP National Seminar 2016 (NATSEM 2016).

Looking at Peninsular Malaysia, Tek explained that the difference in comparison with Sabah and Sarawak is the sales tax, whereby the sales tax in Sabah and Sarawak is of a different percentage. In addition, planters pay cess of RM13 per tonne of CPO to the Malaysia Palm Oil Board.

Taking all the calculations in mind, Peninsular Malaysia, on a taxation comparison, will lose out in terms of competitiveness against Indonesia when producers reach a price of RM2,800.

Looking at East Malaysia, Tek explained that windfall for Sabah and Sarawak will not kick in until they are at RM3,000. At RM2,300 at Sabah, tax amounts to RM289 whch is already higher than Indonesia.

“It’s the same for Sarawak, although at a lower taxation from a sales tax of RM232, it’s still higher than Indonesia,” he said.

In summary, Malaysian producers are more competitive than Indonesian producers when crude palm oil (CPO) prices are below RM2,300 per tonne after paying for the relevant taxes that are based on average selling price (ASP). This is because of the prevailing Indonesian export levy.

However, he pointed out that Malaysian producers will be less competitive against Indonesian producers when CPO prices are above RM2,300 per tonne for East Malaysian planters (because the export tax kicks-in, in addition to the sales tax) and RM2,800 per tonne for Peninsular Malaysia because of the additionality in windfall profit tax.

Overall, the numbers basically reveal that this industry pays RM1.7 billion in sales tax, in cess, in windfall, and RM3.8 billion in terms of effective income tax.

“All in all, the industry of ours is nurturing this country, is providing the coffers of government, of RM5.5 billion and that was based on January to December last year,

“If the CPO price go up further, then we will have more taxation rate. So basically, it’s an important industry, it contributes to the government coffer.

“It’s a shared destiny that we have as growers and the government, to nurture this industry, that there is a win-win. You over tax us, then we become less competitive, overtax us, then it’s going to be a different ballgame,” he said.


Source : Borneo Post, 19th July 2016

FFB thefts ‘history’ by year-end

KUCHING: The state government hopes to put a stop to fresh fruit bunch (FFB) thefts by the end of this year.

Deputy Chief Minister Datuk Amar Douglas Uggah Embas said although the number of such cases had dropped, it remained a problem.

“I have assigned Assistant Minister of Rural Economy (Interior Areas) and Plantation Datuk Francis Harden Hollis to look into this issue and my key performance indicator (KPI) is by the end of the year … I hope it’s history (by then),” he told reporters after officiating at the 12th Incorporated Society of Planters (ISP) National Seminar 2016 here yesterday.

Uggah, who is also Modernisation of Agriculture and Rural Economy Minister, acknowledged that the task to stem FFB thefts was not easy, but it could be done if all stakeholders cooperate.

“There is also a ruling by Malaysian Palm Oil Board (MPOB) that only two tonnes per hectare per month can be sent to a particular collecting centre.

“However, the palm oil mills, collecting centres, palm oil owners and police must also cooperate with us.”

Uggah noted it was now tougher to sell illegal FFB due to MPOB’s ruling.

“If it is found that you have sold more than two tonnes, you would have to explain where the FFB comes from. If you can’t explain, then you will be in trouble.”

He cautioned that MPOB had suspended the licences of collecting centres who bought illegal FFB.

“However, the state government would like to appeal to MPOB to revoke licences if this regulation was violated. It is through this that we hope the issue of stolen FFB can be resolved.”

Meanwhile, Uggah in his speech said the state’s palm oil industry was a major player in the state’s economy.

“Planted areas under oil palm increased three folds from 543,400 hectares in 2005 to 1.441 million hectares in 2015, accounting for 25.5 per cent of the total area of 5.6 million hectares in the country.”

He pointed out that FFB production had also increased correspondingly, from 7.8 million metric tonnes in 2007 to 18.6 million tonnes in 2015, an increase of 139 per cent.

“During the same period, crude palm oil (CPO) production increased by 126 per cent, from 1.6 million metric tonnes to 3.7 million metric tonnes.”

The state currently has 73 palm oil mills, six refineries, four palm kernel (PK) crusher plants, one biodiesel plant and 166 collection centres.

“Overall, the industry contributed RM8 billion, or nine per cent of the state total export value, in 2015. In addition, it also contributes directly to the state coffer through collection of sales tax, with a total of about RM1.9 billion from 2011 to 2015,” he said.

Also present at the ceremony was Deputy Minister of Plantation Industries and Commodities Datuk Datu Nasrun Datu Mansur.


Source : Borneo Post, 19th July 2016

Plantation sector at ‘neutral’

PETALING JAYA: Most research houses are maintaining a “neutral” call on the plantation sector, given the rising stocks and increasing production, but the average crude palm oil (CPO) price forecast for 2016 remains intact at RM2,400-RM2,500 per tonne.

Kenanga Investment Bank Bhd, in its third quarter (Q3) 2016 strategy report yesterday, said as peak production season came in, CPO prices were likely to decline on higher supply, towards RM2,250 per tonne over Q3 the third quarter.

While the biodiesel mandates are expected to continue to support CPO prices, this would unlikely catalyse the market, given the slow uptakes.

Instead, a year-end La Nina phenomenon could boost CPO prices in Q4 2016, with appreciation potential of at least RM120 per tonne for year-end CPO prices of about RM2,400 per tonne.

On the CPO price outlook, Kenanga said that investors should adopt a trading view by trimming holdings in early Q3 2016 and position for a rebound in late-Q3 2016.

The research unit continues to like Kuala Lumpur Kepong Bhd (KLK) for lower downside risk, given its big cap status and integrated operations, while its positive fresh fruit bunches growth should provide good earnings upside.

It has also upgraded TSH Resources Bhd and Ta Ann Holdings Bhd as “we believe the recent price correction was overdone.”

Furthermore, Kenanga is maintaining a “market perform” call on Felda Global Ventures Holdings Bhd but up its target price to RM1.58 on strengthening investors’ confidence and guided Q2 2016 production recovery.

Meanwhile, UOB Kay Hian is maintaining its CPO price assumption of RM2,500 per tonne this year as CPO prices should strengthen towards late third quarter to early Q4 2016 on the back of a recovery in production, and a wider CPO price discount to soybean oil.

The discount has increased from US$14.7 per tonne on May 26 to US$49.90 per tonne on July 11 this year.

Moreover, Indonesia’s B20 programme is doing well, with first five months 2016 domestic consumption recording 4.5 million tonnes (about 54% of 2015 domestic consumption).

UOB Kay Hian also expects Sabah-based companies to report better quarter-on-quarter (q-o-q) results in Q2 this year.

Based on the production data, Sabah reported the largest q-o-q increase in production versus Sarawak and Peninsula Malaysia.

Besides better production growth, selling prices are also higher q-o-q.

Among the plantation stocks under UOB Kay Hian’s coverage, Genting Plantations Bhd, IJM Plantations Bhd and IOI Corp Bhd have the highest exposure to Sabah.

MIDF Research is maintaining its average CPO price assumption at RM2,450 per tonne for 2016, about 14% higher than 2015 average of RM2,153.50 per tonne.

“We believe that China is likely to stock up palm oil in the near term as the inventory has fall down to below average level in major ports.

“Our top pick is KLK due to its earnings which is expected to benefit from high CPO price given its high exposure to palm oil business and good earnings growth of 41% year on year to RM536mil in the first half 2016.

“It is also one of the rare big cap index-linked planters, which is syariah-compliant and also an RSPO (Roundtable on Sustainable Palm Oil) member,” it added.


Source : The Star, 14 July 2016