Palm oil industry may be affected by exit of foreign workers

SANDAKAN: Indonesian workers in the palm oil industry are apparently returning home now because of the upswing in the palm oil industry in their home country, and this has raised concerns on the ability of the Malaysian palm oil industry to fill the void with local workers.

According to Malaysian Palm Oil Association executive secretary Genga G Pillai, rumours that Indonesian palm oil workers are returning home are true but how it will affect the local palm oil industry is still yet to be known.
“Locals do not normally want to work at something they consider as 3D (dirty, dangerous, demeaning) jobs. You can even see this in the construction sector. They would prefer office jobs and such. But as to how the return of these foreign workers to their homeland will affect the industry, we’ll have to wait and see,” said Pillai in a phone interview with The Borneo Post.

The Sun Daily has reported that Indonesia is currently the largest exporter of the commodity, with over 7.3 million hectares of land dedicated to palm oil in 2009, from only 274,000 hectares in the 1980s. The industry had also raised the country’s GDP above 6.0 per cent a year since 2005.
However, according to a report in Bloomberg.com, both countries would “tumble into a bear market next year” as their monthly output surges while demand from Europe and China declines.

Pillai said most oil palm mills in Sabah were refusing to accept fresh fruit bunches (FFB) because there was already a glut of FFB locally while the world market’s demand for crude palm oil (CPO) was diminishing.
According to a Bloomberg survey, Malaysia’s production of palm oil in November exceeded exports by over 2.5 million tons, compared to 2.51 million tons in October.

Global economic slowdown is said to be one of the main reasons for the decline in demand.


Read more: http://www.theborneopost.com/2012/12/16/palm-oil-industry-may-be-affected-by-exit-of-foreign-workers/#ixzz2FAcvU2zy

15 Fresh Fruits Bunch

The best so far. 15 fresh fruits bunch

Costs and Benefits Analysis of Aquilaria Species on Plantation for Agarwood Production in Malaysia

By
Mohd Farid Mamat
Forest Research Institute Malaysia 52109 Kepong Selangor paridms@frim.gov.my

Both options, whether planting Aquilaria spp. integration with banana (Musa spp.) or planting Aqualaria spp. as a single crop for agarwood production are viable.

An investment return for planting Aqualaria spp. integrated with banana (Musa spp.) is much higher with an IRR of 54.85% compared with 38.49% for a single crop plantation.

The NPVs of investment at 10% discount for a 1,000 hectares integrated planting are RM185.6 million while the option involving single crop plantation for agarwood production is RM153.6 million.

The better present value of return of the option involving integration planting is attributed to the added and earlier revenue contribution from agriculture crop. The good demand and encouraging banana price over the years would make this option the preferred choice.

However, the establishment of Aqualaria spp. plantation solely for agarwood production also has its attraction. The option is not labour intensive. This speaks well for a rapidly developing country like Malaysia, where labour is no more a luxury relative to neighboring countries.

The buffaloes in Sarawak plantations

By Mahbob Abdullah
The Buffalo in Jenderata Estate, United Plantations, Perak.


As usual when I am in Sarawak I look forward to seeing the egrets. My father called them ‘bangau’ and he had told me long ago what they stood for.
Recently on the road from Bintulu to Selangau I saw the white birds as they stalked for insects in the grass. Elegant and confident, they flew and circled, and then landed again to go on feeding. They were used to people.
But now I thought there was something missing.
I had to think hard and I was reminded of the advice of a plantations director, Ken Eales whom I had once worked for. He did not talk much, he kept his distance, but one day on a plane journey when people tended to be a bit more relaxed, I had the chance to ask him about his way of management.
“As a leader I am not close to anybody. I can look at issues so that my likes and dislikes cannot cloud my judgement.”
From his wallet he took out a piece of paper and he read out, “This is what I remind myself. Believe none of what you hear, and half of what you see.”
“There is one more way I look at management,” he went on. He turned the paper over and read again: “Do not see what is there, you must also see what is not there.”
I remembered those words, and realised what I could not see among the egrets. Buffaloes.
When I was working in Sabah on a plantation in the Labuk valley, many years back, I had seen many egrets, but they were among the buffaloes on the plantations. The Bajaus in Kota Belud brought them upriver and I would buy them on behalf of the workers.
The male buffaloes pulled the carts loaded with oil palm bunches. Previously the harvesters carried the bunches in baskets slung on a pole over their shoulders, and the heavy weight had made them stagger to the roadside.
Now the buffaloes did the hard work. They even looked forward to the start of the day. Some could step up and lift the yoke with their horns and put them on their shoulders ready to pull the cart on the word ‘Jalan’. The owners treated them like pets.
The female buffaloes formed a breeding herd. With one hundred and fifty females I would put five bulls, which were selected for their size and temperament. A veterinary officer Paddy Kehoe would come upriver by boat from Sandakan to check the herd.
The use of buffaloes to pull the carts of bunches had come about by chance. In the early days of Pamol Sabah, one of the Filipino workers had brought a buffalo to pull a cart full of bunches. His headman wanted to sack him. He should carry the oil palm bunches like everybody else. At that time the estate manager, Leslie Davidson arrived on the scene.
“He is lazy, sir,” the headman said. “I want to sack him.”
When Davidson saw the buffalo working, he promised the headman he would be sacked.
“The only way you can keep your job is if you can get all the other harvesters to use buffaloes. Like he does.”
To help the harvesters, he arranged to start a breeding herd. At two years old the male buffaloes were put to work.
But even as they worked, the egrets would come to them. The birds would hop on their backs, and look for ticks and flies even in their ears, or waited near their feet to peck at insects that were disturbed in the grass.
But along the road in Sarawak I saw only egrets and few buffaloes. In the plantations I saw workers move the bunches in wheel barrows. Sometimes they used mini-tractors which they called the mechanical buffaloes. The first models appeared thirty years ago, and since then the prices of these machines have gone up many times, as has the price of diesel.
So in Sarawak the buffaloes should come back. Buffaloes now cost much less than a tractor. They feed on grass and their waste becomes fertiliser. The harvesters earn more with higher output. Fewer workers will be needed. A small premium per month will get an insurance cover against losses and thefts. It worked very well when I was running an estate.
As plantations expand and come into harvesting more buffaloes will be needed, especially in the land where there is no peat. Even on slopes the buffaloes can go on the hills, follow the terraces, work downhill and then home for the day. Later they would get a bath and the owners would give them a scrub, and a feed of fresh-cut grass.
Some readers may see this is a chance to start a buffalo farm and a breeding herd. In Indonesia I have seen healthy beasts in Aceh and in Tanah Toraja, pulling ploughs in the padi-fields. In the Nile valley of Egypt they are also raised for milk, made into ghee as cooking fat.
I have looked after buffaloes in my village in Rembau, I knew their characters and temperament, some were leaders, many were not, while a few were rebels. Each day after school I would take them out to graze but let them free after the rice harvest.
They remained in the open fields until the next planting season. Then I would go out and call them, they responded, and it was no problem to lead them back. It was even better if the buffalo had dropped a calf and it followed its mother home with you.
It was not long after the Japanese war that my father had told me about the egrets when they returned to the village. They had landed in the padi-fields.
“That is a sign that peace is with us again.”
My mother could recite to me the nursery rhyme “Bangau oh bangau” and today I can recite it completely with the help of the internet.
It would be great to see more buffaloes in Sarawak. There is plenty of grass, ample space, and water is in abundance. The state is virtually disease-free. Their population can grow with the pace of development in oil palm.
The egrets can feed with the buffaloes. It is a scene I would love to see. It is as green as you can get but don’t talk to the workers about selling their pets.


Read more: http://www.theborneopost.com/2012/12/02/the-buffaloes-in-sarawak-plantations/#ixzz2DqjxHtua

Palm Oil Set for Bear Market on Record Output, Mistry Says

Palm oil will probably tumble into a bear market next year as monthly output in Malaysia and Indonesia surges to records, compounding the impact of the biggest ever stockpiles, according to Godrej International Ltd.

Prices will drop below 2,200 ringgit ($723) a metric ton in August or earlier after trading between 2,300 ringgit and 2,600 ringgit between now and February, Dorab Mistry, director at Godrej, told a conference, giving his first outlook for 2013.

The most-active contract closed at 2,370 ringgit on the Malaysia Derivatives Exchange today, after touching a three-year low of 2,220 ringgit on Nov. 12.

Palm oil, used in everything from biofuels to noodles, fell 25 percent this year, extending a loss from 2011, as slowdowns in China and the European Union cut demand and boosted stockpiles.

Mistry’s forecast raises the prospect that prices may drop for three straight years in what would be the worst run of losses since at least 1996, according to data compiled by Bloomberg.
“I expect vegetable oil prices to remain range-bound in the first half of the year and to begin a major bear market in the second half,” Mistry said in Bali, Indonesia. “How low they will go is very difficult to predict at this stage.”
Rabobank Forecast

The outlook from Godrej contrasts with a forecast this week from Rabobank International, the world’s biggest agricultural lender, that picked palm oil to be the best-performing agricultural commodity in 2013. Prices will rise as inventories decline from record levels and demand increases from importers including China and India, the Amsterdam-based bank said in a report on Nov. 28.

Falling prices may contribute to lower global food costs in 2013, while paring profits and revenues at producers including Sime Darby Bhd. (SIME) and Golden Agri-Resources Ltd. (GGR)

Palm oil may trade between 2,500 ringgit and 3,000 ringgit for the next six months, supported by lower production in the first quarter of the next year and higher demand, Sime Chief Executive Officer Mohd Bakke Salleh said Nov. 27.

Output in Indonesia and Malaysia, which account for 87 percent of global production, may reach monthly records between September to December next year if weather remains normal, said Mistry.

Malaysia may produce a record 19 million tons in 2013, while Indonesian output may reach as much as 30 million tons, an all-time high, he said. Production is forecast at 18.4 million tons and more than 27.5 million tons this year, he said.

Monthly Loss
Futures dropped 5 percent in November, a third monthly loss. Mistry didn’t define what he meant by a bear market. A bear market is typically defined as a decline of 20 percent or more from a closing high and is compared with a closing low.
Prices may have bottomed out as stockpiles are set to decline amid a pick-up in demand from buyers including India, Thomas Mielke, executive director of Oil World, told the conference.

Futures may rebound to 3,100 ringgit to 3,200 ringgit between March and May, he said.
“Prices will strengthen quite a bit more than 2,600 ringgit as we’re in this inventory downcycle, which follows production,” Alvin Tai, an analyst at OSK Investment Bank Bhd., said by phone in Kuala Lumpur. Inventory in Malaysia may fall to about 1.6 million tons by May, he said.

Global food use of vegetable oils may grow by about 3.5 million tons as lower prices stimulate consumption, while biodiesel usage will expand 500,000 tons in the year that began on Oct. 1, said Mistry, who’s worked in the industry for 35 years. The increase in demand of 4 million tons will exceed incremental supply of 3.15 million tons, he said.

‘Heaviest Stocks’
The new season is starting with the “heaviest stocks in history” and this overhang will cushion the impact of the lower production of vegetable oils in the first half, said Mistry. Malaysia’s reserves climbed to a record of 2.51 million tons in October, according to the nation’s palm oil board. Stockpiles in Indonesia may be more than 4 million tons, Mistry said.

India, the biggest buyer of palm oil, started its new oil year with record inventories of 1.65 million tons, said Mistry. Domestic cooking oil output should expand this year due to a bigger mustard crop, he said. That may prompt the government to impose a 10 percent duty on crude palm oil imports and more than double taxes on refined oils to 20 percent, he said.
“I am bearish on the soya complex post-May with a gradual erosion of risk premium from as early as February,” he said. “Old crop soya oil needs to control demand and will therefore remain at a big premium to palm'

Soybean Oil
Soybean oil futures in Chicago may trade in a range of 48 cents and 53 cents a pound, while the new soybean oil crop from May onwards should see prices between $900 and $1,020 a ton on a free-on-board basis in Argentina, he said. Soybean oil for delivery in January traded at 49.92 cents today. Soybeans are crushed to make an oil that competes with palm oil.

Global economic growth is expected to be better in 2013, compared with this year, with the U.S. avoiding or resolving the so-called fiscal cliff, leading to a stronger dollar and gains for equities in most markets, said Mistry.

“The end of the cyclical bull market in commodities leads me to believe that profitability in agriculture and in plantations will soon revert to more normal levels,” he said. “The days of super-normal profits in palm oil cultivation are coming to a close.”

To contact the reporters on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Oil Palm 7 Months After Field Planting

Planted germinated seed in april 2011. Now on the 1 December, the oil palm grow very well.