The best is yet to come, says oil palm man

Palm oil exports have grown 16.4% to 1.6 million tonnes last month.

PETALING JAYA: An association representing thousands of oil palm smallholders has voiced confidence that the price of palm oil will continue to rise even as it hits RM2,600 per tonne.

“The best is yet to come,” said Aliasak Ambia, president of the National Association of Smallholders Malaysia.

The new price was reported yesterday. In January, the average price was RM2,037.

It was also reported yesterday that exports grew 16.4% to 1.6 million tonnes last month.

Aliasak told FMT the upward trend was likely to continue and demand would increase with the push, at home and abroad, for greater use of palm oil-based biodiesel.

He said smallholders were naturally happy with the development. “There’s a big difference in their income from what it was at the start of the year.”

According to the Financial Times, the price increase was fuelled by Indonesia’s move to mandate the use of B30 biodiesel from next January. B30 is a blend of 70% diesel and 30% biofuel.

The paper noted that Indonesian President Joko Widodo had indicated he wanted his country to use a 50-50 blend (B50) by the end of 2020.

At home, Prime Minister Dr Mahathir Mohamad said he hoped all parties would be prepared to accept the use of B20 biodiesel fuel by next year.

Economist Barjoyai Bardai of Universiti Tun Abdul Razak said Jakarta’s push for greater biodiesel consumption was good for Malaysia because it meant Indonesia would have less of the commodity to export.

But he also said Malaysia could not “just sit idly by“ because Indonesia was actively looking into producing more palm oil.

He said the government must ramp up efforts to encourage the merger of small plantations so they could be run like big plantations with professional management and better economies of scale.

Mahathir recently urged smallholders to merge their holdings so that they would become more sustainable.

He said if 20 people combined their lands, they could become directors and hire trained professionals to run the estate using techniques used by big plantations.