By SHAHEERA AZNAM SHAH / Pic By ISMAIL CHE RUS

The Primary Industries Ministry is proposing to cap land used for oil palm plantations at 6.5 million ha as part of a previously announced aim to maintain forest cover in the country.

Minister Teresa Kok said the proposal is expected to be presented to the Cabinet this month and is in part done to dismiss accusations that palm oil causes massive deforestation.

She said with the acreage under palm oil at about 5.85 million ha currently, the limit is expected to be reached by 2023 and more effort would be put into increasing the yield per ha.

“My ministry has come up with a proposition to cap the expansion of our oil palm plantation and find solutions to improve the yield of our planting area through more research and development.

“My ministry will be presenting a Cabinet paper to accommodate the palm oil situation. We will cap it at 6.5 million ha until 2023, giving an allowance to the replanting area,” she said at the 30th Annual Palm and Lauric Oils Conference and Exhibition in Kuala Lumpur yesterday.

She said the participation of state governments would be needed to make the limit successful.

“We will have to discuss with state governments on this and get their approval on this limitation,” she said.

Meanwhile, she said the government has not made any decisions over possible retaliation against the European Union’s (EU) move to ban palm oil imports for certain applications based on its indirect land use change concept which may target palm oil.

“At the moment, we do not have plans to boycott any products from any country yet, as we are trying to fight the issue using reasons.

“My ministry has sent out a team to Brussels and we hope the European Commission can consider our country’s position. At this stage, there is no plan to retaliate by banning European products,” she said.

On the commodity’s price outlook, Kok said the projected increased use of palm oil in the government’s biodiesel programme will improve prices.

“The government had started the expansion of the B7 biodiesel programme for the transportation sector to B10 — a blend of 10% palm biodiesel and 90% petroleum diesel, from Feb 1, while the B7 biodiesel will be introduced for the industrial sector on July 1.

“These two programmes are expected to mop up 761,000 tonnes of palm oil annually, subsequently reducing the high stock levels and increasing the price of palm oil which suffered a reduction in 2018, with crude palm oil (CPO) averaging at RM2,200 per tonne,” she said.

Last year, Malaysian planters cultivated 5.85 million ha, 40% of which are smallholdings.

The total land had produced about 19.5 million tonnes of CPO, which contributed to the 25.2 million tonnes of palm oil and palm oil-based products exports.

At the same conference, Malaysian Biodiesel Association president UR Unnithan said the CPO price is expected to average between RM2,300 and RM2,400, supported by domestic consumption.

“The government has announced the B10 and B7 biodiesel programmes, which will increase the local consumption of palm oil, and that alone would increase the demand for the commodity in Malaysia.

“Malaysia is also planning to go from the current B10 to B20 next year, which means it could double the quantity that we are using. The country’s mandates are going to have a significant impact on the total use of palm oil.

“I do not see the price to further hurt in 2019 as it will likely to trend between RM2,300 and RM2,400,” he said.

He said the commodity’s price in 2019 will not yet be impaired by the strong objection on palm oil from the West.

“In 2019, there is nothing that will kick in, in terms of the objection from EU on our palm oil. So, the export and demand of the commodity are expected to be at a comfortable level this year,” he said.

The EU is proposing for the biofuel usage for the bloc to be capped at the current level until 2023, and to be reduced to zero by 2030.