Palm oil industry to benefit from positive demand supply fundamentals in 2022

Palm oil production was severely impacted last year due to a shortfall in plantation workers 

by NUR HANANI AZMAN / pic by TMR

MALAYSIA’S palm oil industry is expected to have a good year with production forecast to increase by 30% to 20 million tonnes in 2022. 

Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin said the industry, the fourth largest contributor to the economy, is expected to benefit from sustained global demand for edible oils. 

Crude palm oil (CPO) price rose in 2021 due to low stocks induced by low production levels from January to November of last year. 

Malaysian CPO production dropped by 1.1 million tonnes or 6.3% to 16.7 million tonnes compared to 17.8 million tonnes in 2020 due partly to a shortage of labour. 

The government has agreed to employ 32,000 foreign workers with strict compliance to the current standard operating procedures. 

“We have the potential of meeting the number and cater to global demand for vegetable oils. The lower supply and high demand mean we will still be able to enjoy high CPO prices,” she told reporters at the Reach and Remind, Friends of the Industry Seminar 2022 and Dialogue organised by the Malaysian Palm Oil Council (MPOC) on Wednesday. 

Total exports of Malaysian palm oil and its derivatives stood at 22.14 million tonnes as of November 2021, which is 2.13 million tonnes or 8.8% lower compared to 24.3 million tonnes recorded in the same period of 2020. 

Due to high CPO prices, total revenue increased by 40% year-on-year to RM91.4 billion. 

India remained the number one destination for Malaysian palm oil with 3.2 million tonnes exported to the country. Other major destinations were China, the European Union, Turkey and Pakistan. 

Palm oil production was severely impacted last year due to a shortfall in plantation workers, estimated at 75,000, which hampered harvesting activities and lowered the quality of the fruit bunches harvested. 

For this year, the industry will step up marketing and promotional (M&P) efforts to gain global recognition of the Malaysian Sustainable Palm Oil (MSPO) as Malaysia’s sustainability standard. 

“A 360-degree M&P programmes to ensure visibility and understanding of MSPO will be undertaken, ranging from engagements with key government officials, seminars and talks with trade associations representing the hotel, restaurant and cafe sector, as well as roadshows and out-of-home, electronic and social media advertising for the general consumers. 

“We see this as a long-term endeavour that will start with our neighbouring countries, and the ripple effect will finally be seen on products proudly carrying our MSPO logo, an indication that the sustainability standard has gained international stature,” the minister said. 

Malaysia is committed to becoming a carbon-neutral nation by 2050. Based on the nation’s projected GDP in 2030, Malaysia aims to reduce the intensity of greenhouse gas emissions across the economy by 45%. 

Some of the initiatives proposed by the industry include methane capture at mills and the utilisation of palm biofuels. 

The country is also committed to keeping its forest cover at 50% and capping the planted area under oil palm at 6.5 million ha. 

As of Dec 2021, 5.36 million ha or 91.3% of the total plantation area of 5.87 million ha has received MSPO certification. 

Of this figure, 684,970ha under organised smallholders and 518,981ha cultivated by independent smallholders has been certified. 

MPOC chairman Larry Sng Wei Shien said the council have built a presence in markets throughout the world via its 10 regional offices. 

He said MPOC will host a sustainability debate in Dubai next month in conjunction with the World Expo. 

“The objective is to identify possible challenges and opportunities in the palm oil industry, especially at the global level post the United Nations Climate Change Conference, from the different stakeholders,” he said. 

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