Sarawak to increase oil palm production

By Nigel Edgar
KUCHING: Sarawak, the “last frontier of oil palm development in Malaysia”, aims at producing 20 million metric tonnes of oil palm fresh fruit bunch (FFB) per year within the next five years from the current 16 million metric tonnes.

Malaysian Palm Oil Board (MPOB) Sarawak regional head, Sulim Lumong, said the government has a long term plan to achieve that target by expanding plantation areas in the state to 1.2 million hectares within five years or one million hectares by 2010. “As of August this year, Sarawak had 744,371 hectares of plantation,” he said when interviewed by The Borneo Post on Wednesday. “We are aiming for 1.2 million hectares within the next five years, thus increasing our fresh fruit bunch harvest from 16 million metric tonnes per year to at least 20 million metric tonnes in five years,” he said.

Five metric tonnes of FFB could produce about one metric tonne of crude palm oil (CPO) and Sarawak is now producing 1.86 million tonnes of CPO with the current price at around RM2,000 to RM2,100. The number one oil palm producer in Malaysia is Sabah which currently produces about 23 million metric tonnes of oil palm fresh fruits harvest per year.

Sulim also pointed out that the time frame of five years was in tandem with the development of the Sarawak Corridor of Renewable Energy (Score). “Our focus area at the moment is Bintulu, Sri Aman and Sibu. Sarawak is the last frontier of oil palm development in the country because land resources in the Peninsular have depleted while in Sabah it is reaching its plateau,” Sulim said. “The government has identified potential areas and corridors suitable for oil palm cultivation in the state - about 3.9 million hectares.”

The oil palm corridors according to their priority is the Miri-Bintulu Corridor which is currently the main focus; the Tatau-Sibu corridor; the Sibu-Sri Aman corridor; and areas south of Kuching near the Indonesian border. About 600,000 hectares are State land; 400,000 hectares are Native Customary Rights (NCR) land; 1.29 million hectares are alienated land; while the rest would be small time planters.

Chief Minister Pehin Sri Abdul Taib Mahmud had said at the Agronomic and Practices of Oil Palm Cultivation (ACT 2008) Seminar last year that the corridors when fully implemented would be able to generate RM10.8 billion a year in exports for the state. Sulim pointed out the northern region if the state is most active in the industry with Miri having 246, 821.21 hectares of plantation followed by Bintulu (141,286), Mukah (129,528), Samarahan (55,612), Sibu (54,852), Kapit (41,240), Sri Aman (35,284), Kuching (33,814), Betong (25,370), Limbang (12,638) and Sarikei (8,431).

He also said MPOB Research Centre in Sessang, Betong - the only one operational in the state at the moment - is putting up extra effort to meet the ever growing needs of the industry.
“The first quarter of this year, three million seedlings were imported from the Peninsular and Sabah into the state. “We have to import most of the seedlings because at the moment we (Sarawak) only have one operational research centre,” he said.

When asked on the prospects of palm oil industries in Malaysia, Sulim said it is increasing every year as demand of oils and fats increases due to population growth and income per capita.
“Palm oil share is expected to increase in terms of export market share; investments in palm oil are expected to increase especially in Sabah and Sarawak around the palm oil industrial cluster (POIC); and CPO and crude palm kernel oil (CPKO) production is increasing. “There is also a potential in Sarawak to export to nearby Kalimantan and Far East. There is also the setting up of a Halal Hub in Tanjung Manis in Mukah where Malaysia would conduct global halal activities including palm oil products to Muslim countries,” he said.

With all the prospects and opportunities, there are also challenges faced by the industry, said Sulim. “Feedstock prices (CPO and CPKO) are volatile which makes it hard for investors to estimate income. There are also Non-governmental Organisations (NGOs) bringing up issues that could hinder the industry’s development, pointing out its impact on environment,” he explained. Another challenge he added was competition in the world market especially from Indonesia - a low cost producer country.

To further boost the industry, Sulim said the government has come up with several policies and strategies. “The government provides infrastructures such as new coastal highways and port facilities, apart from the Joint-Venture NCR Land Development model to potential investors.
“The Joint-Venture NCR Land Development model is where NCR land owners can joint-venture with the government in developing oil palm plantation or processing plant on their land,” he said.

Apply Licence and Sell to Factory For Smallholders In Rural Areas

Govt agencies offer better prices to oil palm smallholders
PORT DICKSON: Palm oil mills operated by several agencies under the Rural and Regional Development Ministry are in a better position to offer attractive prices directly to smallholders based on market prices. Its Deputy Minister, Datuk Hasan Malek, said this eliminated middlemen who normally enjoyed exorbitant profits from smallholders in rural areas.
“In our pursuit to reap profits, the mills under the agencies also have a social obligation towards these oil palm smallholders.“There is an estimated 250,000 smallholders in the rural areas operating 500,000 hectares of smallholdings,” Hasan told reporters yesterday after officiating a workshop on management practices for palm oil mills under the ministry’s agencies.

The agencies, Felcra Bhd, the Rubber Industry Smallholders’ Development Authority (Risda), the Development Authority of Terengganu Tengah (Ketengah) and the South Kelantan Development Authority (Kesedar) jointly operate 13 oil palm mills under the Rural and Regional Development ministry. Hasan said although the price of per fresh fruit bunch (ffb) was based on standard prices set by the Malaysian Palm Oil Board (MPOB), smallholders were nevertheless subject to manipulation by middlemen.

Meanwhile, he disclosed that proceeds from the sale of crude palm oil by the 13 mills, last year, rose 46 per cent to RM1.6 billion compared with RM1.1 billion in 2007. Optimistic that sales this year would hover around RM1.5 billion, Hasan said the ministry was hopeful the 13 palm oil mills, under the ministry, would perform at par with those managed by Sime Darby Bhd, IOI Plantation, Kulim Plantation and others, in years to come. He also said Felcra, which operated a palm oil mill in Samarahan, Sarawak, planned to set up two additional mills, costing RM60 million, one each in Sri Aman and Mukah, Sarawak, in the next 18 months.