Drop in palm oil prices prompts millers to stop buying commodity


  • Nation
  • Thursday, 31 Jul 2008

MUAR: The drop in palm oil prices for August has prompted several millers here to stop buying oil palm fruits from smallholders for two days.

A mill in Bukit Pasir, when contacted, said it would not buy the fruits from the smallholders for two days – yesterday and today – as it already had more than enough fruits to process.

However, one mill in Kangkar Kenanga along the Pagoh-Parit Sulong road, decided to continue to purchase the fruits from the smallholders and dealers yesterday.

The mill's decision to buy prompted thousands of smallholders with harvested fruits to rush to the mill as their regular millers refused to buy the fruits.

According to smallholder Bhagwan Singh, hundreds of trucks laden with oil palm fruits queued for several hours to enter the mill to sell the fruits yesterday.

No other choice: Trucks laden with oil palm fruits queuing to enter a mill along the Pagoh-Parit Sulong road in Kangkar Kenanga Wednesday.

He said he believed the refusal of some millers to buy the fruits for the two days was because the August price of oil palm fruits had fallen by about RM100 per tonne.

If they had bought the fruits in the last two days of the month, the millers would have to pay the July price of about RM600 per tonne. For supplies in August they need only pay about RM500 per tonne.

Some millers called the dealers and smallholders on Tuesday to inform them of the halt in purchase, Bhagwan Singh told reporters in Pagoh yesterday.

He said the smallholders had harvested the fruits and could not delay sales, as the fruits would start to go bad.

He said there were only five oil palm mills in north Johor and most were set up more than 20 years ago.

He added that although they had upgraded production lines, their output capacity was still small.

He said the authorities should realise that over the past several years more land had been opened up for oil palm cultivation and the recent high price of the commodity had also prompted many farmers to plant oil palms.

He urged the authorities to allow new mills to be set up.

“We (smallholders) feel that with more mills in the district, we will have more outlets to sell our produce and this could lead to healthy price competition among the millers.

“At present we have no choice but to supply the existing millers and if they decide to stop buying we cannot sell our produce,” he said.

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