Palm oil rebound a boost to agri-sector this year

BY FARA AISYAH / Pic by BLOOMBERG

The agriculture sector is expected to grow 5.6% this year compared to a 5.1% decrease in 2016, boosted by higher prices for palm oil and rubber.

These two commodities account for 53.1% of the sector’s value. Palm oil is expected to register an a 11.8% growth this year compared to a 12.7% drop for the same period last year.

With seasonal trends and waning effect of El Nino, production of crude palm oil (CPO) is predicted to reach 20 million tonnes this year from 17.3 million tonnes in 2016, according to the government Economic Report 2017/18.

CPO price is expected to average at RM2,700 per tonne this year compared to RM2,653 per tonne in 2016, backed by strong demand, particularly from China and India.

The rubber sector is expected to record a 10.8% rise with prices averaging at RM7.30 per kg compared to a 6.3% drop last year and an average price of RM5.68 per kg.

For 2017, rubber production is expected to increase 3.9% to 700,000 tonnes, from 673,513 tonnes last year.

The food-related industry is expected help push the sector, especially with the utilisation of modern farming techniques and stronger demand from the food processing industries.

Livestock sub-sector is projected to expand slower at 3.1% this year from 3.7% in 2016, supported by ongoing government programmes and rising demand from households.

The government’s marketing assistance such as MyFarm Outlets and Agrobazaar Rakyat 1Malaysia, and development of corn plantations for animal feed are expected to boost the subsector. Other agriculture subsectors — including paddy, fruits, vegetables, coconut and tobacco, among others — are expected to increase 2.4% this year compared to 5.1% growth in 2016.

The growth is boosted by the expansion of the Permanent Food Production Parks and stronger demand for tropical fruits, especially from China and the Middle East.

But the fishing subsector is expected to grow 0.2% this year compared to 2.2% last year.

Meanwhile, Prime Minister Datuk Seri Mohd Najib Razak had announced a RM6.5 billion allocation to boost the agricultural sector in the Budget 2018 presentation last Friday.

The allocation aims to help farmers, fishermen, smallholders and rubber tappers.

A total of RM2.3 billion is allocated to provide assistance and incentives such as fertilisers and input to paddy farmers, rubber smallholders and fishermen.

About RM500 million is allocated to improve irrigation infrastructure and upgrade plantation roads.

While another RM200 million is allocated for the rubber replanting programme and provide infrastructure to increase production of latex instead of cup lump as this will raise the income of smallholders.

About RM140 million is allocated to developing and replanting of oil palm, as well as enhance marketing programmes.

In addition to that, a sum of RM200 million is allocated for the agricultural programme as new sources of income, particularly the development of dairy industry through the establishment of Lembaga Tenusu dan Ruminan.