Land acquisitions to speed up

KUALA LUMPUR: Acquisitions of both greenfields and brownfields for oil palm and rubber plantations are expected to hasten up given continued interest to invest in plantation agriculture crops in the next decade, said Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron.

He said: “This interest will not only be confined to existing experienced plantation companies but also corporations which have never been involved with agriculture in the hope of reaping similar good rewards from the venture.”

The preference would be for oil palm cultivation while the areas not suitable for the crop would be relegated to rubber cultivation, Yusof said at the ongoing 7th International Conference of Planters (IPC 2012) officiated by Plantation Industries and Commodities Minister Tan Sri Bernard Dompok yesterday.

The 3-day IPC 2012 entitled The Future Direction of Plantation Business is organised by The Incorporated Society of Planters Malaysia (ISP).

Yusof said the main driver to spur interest in plantation agriculture would be good prices and revenues from oil palm and rubber plantations in recent years.

For example, crude palm oil (CPO) has escalated from a mere RM690 per tonne in 1990 and stayed above RM2,990 per tonne since 2010, a price increase of almost 4.5 times.

The price of Standard Malaysian Rubber (SMR 20), meanwhile, has increased dramatically from RM2.05 per kg in 1990 to RM10.58 per kg in 2010, a price jump of five times.

Given the high prices, Yusof pointed out that the plantation companies and the nation also benefited in terms of higher revenues.

In 2010, export of palm oil and its derivatives stood at RM62.9bil, followed by natural rubber, rubber products and heveawood (rubberwood) exports at RM33.85bil.

On the demand factor, Yusof said palm oil would continue to be a major source of oils and fats.

“Its dominance in the market is evident as the world has grown dependent on palm oil,” he said, adding that should palm oil be removed from the world market, it would have serious consequences on the world food security.

As for rubber, he described its outlook as bright. According to the International Rubber Study Group, world rubber consumption will continue to rise from 26.8 million tonnes in 2010 to 36.7 million tonnes in 2020.

Natural rubber consumption, meanwhile, will register a 39% increase during the period, from 11.3 million tonnes to 16.4 million tonnes.

On challenges given the rapid pace of expansion into new areas and acquisition of existing plantations, he said issues that needed to be dealt with include the scarcity of competent manpower to run plantation operations, scarcity of good agriculture land, understanding business culture in new-found land, insufficient planting materials and the need to increase productivity.

According to Yusof, palm land productivity has stagnated at about 18 tonnes per ha per year since the 1990s.

Earlier, Sime Darby Bhd chairman Tun Musa Hitam had also raised concern over the country's stagnating palm oil yields for the past 35 years.

Planters should not blame the bad weather pattern or El Nino phenomenon to the low productivity pattern, he said, adding that they should focus on R&D, apply sustainable agricultural practice and taking human resource development in the right direction to boost yields.

Furthermore, planters should also focus on widening the scope of other end-use products for palm oil.

Meanwhile, Platinum Nanochem Sdn Bhd special advisor MR Chandran said sustainability in palm oil production would be the greatest challenge in the coming decades.

Today, palm oil is produced in 43 countries and a significant business sector for Malaysia and Indonesia which jointly accounts for 85% of the global palm oil production.

“Palm oil will continue to play a significant role with global demand projected for palm oil at about 63 million tonnes by 2015 fand 77 million tonnes in 2020,” he added.

Assuming part of the projected demand can be met via increases in land productivity, about 12 million ha needed to be developed to satisfy demand by 2020.

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