MPOB ruling unpopular with dealers

Commodities Talk- by Hanim Adnan

THE Malaysian Palm Oil Board's (MPOB) decision to bar its licenced oil palm dealers from buying and selling oil palm fresh fruit bunches (FFBs) with other co-dealers, effective Jan 1, has come under fire.

Last Friday, board members of the Malaysian Palm Oil Dealers Association (MPODA) openly challenged MPOB's move, claiming it to be unfair and favouring palm oil millers which can now accept FFBs from various sources, like estate owners, independent dealers, smallholders.

Previously, they were restricted to just licenced FFB dealers. Despite repeated attempts to get MPOB to withdraw the new ruling, which was proposed in 2009, the plea by MPODA members has gone unheeded.

Furthermore, dealers claim that the reasons given by MPOB for introducing the ruling were rather weak.

It had said that the ruling would give opportunity for estates, smallholdings and other dealers to sell directly to millers, enable small dealers to not be monopolised by big dealers and to ensure quality of the FFB for the oil extraction rate (OER) to exceed 25 tonnes.

It is important to emphasise that the low OER lies in the hands of millers and not oil palm dealers. Why are some inefficient millers not penalised when they failed to produce higher OER? Some dealers even claim that some millers, who are also large plantation owners with representatives in MPOB, have enough clout to influence the decision of MPOB.

Currently, there are easily at least over 3,000 oil palm dealers serving over 400 palm oil mills nationwide.

Furthermore, if the buying and selling of FFBs among oil palm dealers were banned, this would translate into loss of employment, income and the folding-up of many small dealers nationwide.

The implication is particularly severe to the cooperative scheme for smallholders and district farmers' organisations which had reaped better returns from the current dealers' system via open tender.Under the new ruling, the closure of small dealers' enterprises would be unavoidable given the lack of financial resources, logistics, transportation problems and rotten FFBs, especially during peak harvesting season. Apart from providing transportation to FFBs, oil palm dealers were also known to provide other services like credit terms, cash advancement, fertiliser supply and harvesters.

As for MPOB, it is also wise to provide proper statistical data to support its claim that big oil palm FFB dealers are monopolising the industry. It should also undertake an indepth study on the OER to show who is actually at fault - the millers or the dealers.

As MPODA president Datuk Abdul Fattah Abdullah said, stakeholders in the industry should work together to ensure that the country's OER ranged 20% to 24%. Those who are not able to produce at the desired level should not blame others for their own inadequacy.