Negligible impact from biodiesel mandate

March 27, 2010, Saturday
KUCHING: Plantation stocks should benefit less so from palm oil price impact but more so from the removal of risk relating to the bearing of subsidies which are now directed at petroleum companies.

NEGLIGIBLE IMPACT: Research believes the impact of Malaysia’s biodiesel mandate on palm oil demand for next year would be negligible given that it would only be introduced in stages within central Peninsular Malaysia.

OSK Research Sdn Bhd (OSK Research) believed the impact of Malaysia’s bio­diesel mandate on palm oil demand for next year would be negligible given that it would only be introduced in stages within central Peninsular Malaysia.

Assuming that the central Peninsular Malaysia uses 50 per cent of Malaysia’s total diesel consumption of 10 million tonnes, maximum demand for palm oil biodiesel next year will amount to just 146,000 tonnes if implemented all at one go rather than in stages.
Hence, the impact to palm oil price should be positive but likely insignificant, added the research
firm.

Generally, Malaysia exported a total of 227.5 thousand tonnes of biodiesel last year, compared with available capacity of 1.5 to 1.7 million tonnes, indicating a very low utilisation rate of 15 per cent, which was consistent with global biodiesel plant utilisation.
The research firm highlighted the company in its coverage with biodiesel exposure in Malaysia is Sime Darby Bhd (inherited from Golden Hope) with capacity of 90,000 tonnes per annum, breaking it down from 30,000 tonnes in Carey Island plus 60,000 tonnes from Teluk Panglima Garang.

That also included Kulim that had effective capacity of 100,000 tonnes per annum in Tanjong Langsat, Johor. However, Kulim’s biodiesel unit had been running at a loss due to selling price and low capacity utilisation. Last year, the segment reported a RM10.4 million loss.
While utilisation rates should improve with the biodiesel mandate, it was highly uncertain if it would be a good enough to turn around loss-making biodiesel ventures, as the pricing mechanism was still unknown.

To recap, Malaysia’s biodiesel mandate would start in June next year. The blend would be five per cent and would be introduced in stages in the central states of Peninsular Malaysia.
The subsidies on biodiesel would be borne by petroleum companies but the government would bear the RM43.1 million cost of developing six petroleum depots with blending facilities, sources from Business Times.

OSK Research said the country’s overall utilisation rate would remain relatively low at less than 50 per cent even upon full implementation, assuming biodiesel produced for export market remained constant.

Schemes for NCL small pockets being fine-tuned

February 1, 2010, Monday
KUCHING: Land Development Minister Dato Sri Dr James Masing said the state government is intensifying efforts to develop native customary land (NCL). He said even the smaller pockets of NCL or untitled land will soon be developed through government schemes. “I have spoken to the Chief Minister (Pehin Sri Abdul Taib Mahmud) about land development involving smaller NCL. Indeed we are now fine-tuning the schemes and ways to develop these smaller pockets of NCL,” he said when asked to comment on Dayak Chamber of Commerce and Industry (DCCI)’s query on government schemes for native customary rights (NCR) landowners.

Masing clarified that DCCI president Tan Sri Leo Moggie had probably referred to the federal government agencies when he (Moggie) suggested that “government agencies” study the possibility of allowing NCR landowners to apply for government schemes even though they do not have land titles. Masing said: “He (Moggie) was probably referring to federal government because as far as Sarawak government is concerned we do have schemes to help NCR landowners. We are now fine-tuning schemes in our efforts to help the smallholders.”

During a DCCI function here on Saturday, Moggie said he was worried to see land disputes involving the government and NCR landowners and that there should be a more flexible approach to get more people involved in land schemes.

Silicon 23 organic fertilizer

This picture were taken on 22 Oct 2009. Half kilogramme of Silicon 23 organic fertilizer was applied to the affected palm.

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.

Oil palm seedlings must be sourced from MPOB

By Nigel Edgar
Seeds from fallen oil palm fruits not allowed to be planted
KUCHING: Local oil palm planters are not permitted to plant seeds from fallen oil palm fruits due to the government’s quality control.Planters who disregarded this could be charged with possessing illegal or unlicensed seeds as stated in the Malaysian Palm Oil Board (MPOB) Act 1998.

MPOB Sarawak Regional Head, Sulim Lumong told The Borneo Post yesterday that farmers must get their seedlings from the Board.He pointed out that farmers found having or planting illegal or unlicensed seeds can be convicted in court. If found guilty, offenders can be compounded not more than RM250,000 and/or jail not more than three years. “Apart from planning, researching and developing the palm oil industry in Malaysia, MPOB is also responsible in enforcing the MPOB Act,” he said. Sulim revealed that this year, a planter have been convicted of possessing illegal or unlicensed seedlings and three others were found guilty of operating illegal or unlicensed nurseries.“You can’t just plant oil palm like any other trees. You must have licences in distributing and selling the seedlings,” he pointed out. Therefore, under the second stimulus package, RM100 million was allocated by the government to aid small time farmers to apply for licence or to replant palm oil.

Under the second stimulus package, the government is providing aid of RM6,000 per hectare to small farmers to replant old oil palm estate.Small scale private farmers are those with plantation size 40.46 hectares or 100 acres. Sulim explained that this aid, implemented on December 1, 2008, was an addition to the Oil Palm Replanting Incentive Scheme which is RM1,000 per hectare for small farmers with trees aged 25 years and above. “Until December 2008, MPOB nationwide statistics show 46,061 hectares of small plantation were trees aged over 25 years old which involved 24,763 small farmers. “Palm oil trees aged above 25 years are not productive and have lower yield of quality stalk. Therefore, small farmers who have trees beyond 25 years old are urged to apply for the government’s aid so they cant plant new high quality seedlings,” he said.

The objective of the aid, Sulim further revealed, was to stimulate the economy with the involvement of small time farmers contributing to the input of raw materials.
The aid was also aimed to lower the replanting cost like covering the buying of seedlings, fertilizer and pesticide. It is also aimed to lower the palm oil stockpile to help in increasing the market value, he added.

The aid worth RM6,000 per hectare would include site preparation and management, seedlings, and farming input which includes fertilizer and pesticide. The programme was initiated in March this year and will end in December 2010 or until the allocation is finished. Application is a first-come-first-serve basis.

According to a printed statement from MPOB, here are two ways how eligible small farmers can make use of the aid.They can manage their own by choosing their own contractor to prepare the site and supply of farming input, and present the receipt or a certified letter to claim RM6,000 per hectare from MPOB.

To make it easier for the farmers, MPOB will advance of RM3,000 per hectare to start.
The second way is small farmers can leave all the management to MPOB including appointing of contractor. If the cost is less then RM6,000 per hectare, the remainder will be given to the farmer. If it is more, the scope of the aid will be limited. Therefore farmers, in this way, are required to sign an agreement letter between the contractor and MPOB. For more information on the aid, interested farmers can contact MPOB at 03-89251122 or 03-87694400, or go to website www.mpob.gov.my.

ECM Libra: CPO exports to be slower this month

KUALA LUMPUR: Crude palm oil (CPO) exports are likely to be slower this month following stronger production and festive season in Pakistan, according to ECM Libra. Pakistan had made heavy purchases of palm oil for August and September, the firm said in a research note yesterday.

ECM Libra said many factors like weather, poor fertilisation, practices and government replanting that might stem the growth in production numbers.
Last month, the CPO stocks stood at 1.3 million tonnes, the same level as in July. However, the research firm said that news reports on drought in India are likely increase demand for the commodity in the region.

Meanwhile, ECM Libra Investment Research has maintained its neutral recommendation on the property sector.It said while the property sector has bottomed out and was recovering, conditions were not sufficient to re-rate it.ECM Libra said its stock picks remained selective, preferring mid- to small-capitalised property developers where valua-tions were more compelling. “Among the picks are Sunway City, for its resilient property investment earnings while there is potential upside from recovering property development earnings, and Sunrise due to its strong brand name and prime landbank,” it said in its research note yesterday.

It said there was pick-up in commercial activities in August following the acquisition of a 50 per cent stake in Menara Citibank by Hap Seng Consolidated, as well as the sale of an eight-storey corporate block in Southgate commercial centre by Mah Sing to Koperasi Permodalan Felda Bhd.
ECM Libra said Glomac was also finalising the sale of a 30-storey corporate tower at its Glomac Damansara project to a government agency.

It said following a pick-up in property transactions in recent months, more developers were now planning new property launches. “Among them are IJM Land, Mah Sing, Selangor Dredging, Dijaya Corp, GuocoLand, MRCB, Metro Kajang, TA Enterprise and TSR Capital,” it said.
— Bernama