SABAH smallholders are getting a raw deal from mill operators who buy their fresh fruit bunches (FFB) at below the market rate, said Sabah Agriculture and Food Industries Minister Junz Wong. 

Wong said the FFB price set by the Malaysian Palm Oil Board (MPOB) did not include additional costs for transport and export. 

This forces mill operators without an export licence to slash the buying prices up to RM94 for every tonne of FFB brought to them, he said.   

“Sabah CPO mills are passing down the (export) cost to smallholders. 

“The mills are being charged around RM470 per every five metric tonnes, which involves RM150 sales tax, RM120 export fees and RM200 Sabah discounted price to Port Klang. 

“But to cushion the cost, the mills are buying the FFB from smallholders at below MPOB rates,” he said. 

Worsening the problem, Wong said, were that smallholders were also made to absorb the cost of transporting their FFBs. 

The cost is especially high for smallholders who open their plantations in the west coast districts as most mills are located on the east coast of Sabah, he said. 

“At present, no one wants to open a CPO mill on the west coast as the risk is high and there is a possibility of an under-supply of FFB. 

“The situation is also not getting better as prices of FFB have dropped to historical lows. This is a worrying trend,” he said. 

Sabah accounts for 12% of the world’s crude palm oil (CPO) exports after Indonesia and Peninsular Malaysia. 

But the sector has been troubled by various issues, including labour shortages. The sector is heavily dependent on the supply of migrant workers from Indonesia.   

The labour shortage is expected to worsen in years to come as Indonesia opens up huge tracts of land for oil palm. 

Wong said a meeting would be held soon between his ministry and the smallholders to find ways to resolve the situation. – November 21, 2018.