KUCHING: Despite crude palm oil (CPO) prices surging past the RM4,700 mark, independent oil palm smallholders in Sarawak are feeling the pinch from skyrocketing production costs, forcing them to slash fertiliser use by nearly half.
Sarawak Dayak Oil Palm Planters Association (Doppa) president Dr Napolean R. Ningkos said while CPO prices have jumped 14.6% from RM4,100 at the start of the year, smallholders are not seeing higher net profits.
This is largely due to a drastic rise in the prices of fertilisers, agro-chemicals, and diesel, which are essential for daily estate operations.
According to Napolean, the cost of producing fresh fruit bunches (FFB) has increased by 18%, rising from RM345 to RM407 per tonne.
Adding to their financial burden, smallholders are also required to pay a higher Sarawak Sales Tax (SST) rate, which is pegged to the elevated prices of CPO and palm kernel oil.
He warned that the situation could worsen, with the cost of raw materials for fertilisers projected to jump by another 30% to 35%.
"Currently, many fertiliser manufacturers are withholding sales, driven by uncertainties in raw material supply and price volatility," Napolean told The Star on Tuesday (April 14).
He also anticipates further challenges ahead, noting that milling processing charges are expected to increase soon due to rising diesel prices.
In response to the squeeze on margins, Napolean advised Doppa members to take immediate cost-saving measures to mitigate the impact of current market uncertainties.
This includes a drastic 40% reduction in fertiliser application as an immediate stop-gap measure.
Smallholders have also been urged to maximise the use of empty fruit bunches (EFB) as an organic alternative to maintain soil fertility and reduce their dependency on expensive chemical fertilisers.
CPO prices surged to over RM4,700 in April from RM4,000 in January.
Recently, palm oil smallholders told The Star that they are not reaping the windfall from higher CPO prices due to spikes in operating costs.
Since the Middle East conflict began, smallholders said their operating costs have increased between 20% and 30%.
