RENEWING and strengthening ties with traditional crude palm oil (CPO) export markets as well as finding new buyers have boosted the sale of the product for Malaysia, Wee Jeck Seng said.

Ministry of Plantation Industries and Commodities Deputy Minister added that the Perikatan Nasional (PN) government’s decision to strengthen relationships with China and India saw the two traditional buyers increase their purchase volume again from Malaysia.

At the same time, he said, the government also opened up a new palm oil market in Turkey, which would lead to the opening up of markets in Greece and the Balkans. Sales to Saudi Arabia has seen an increase as well.

“Maintaining the original market is very important. We must maintain the original market and open up new markets,” the Tanjung Piai MP told The Malaysian Insight in an interview.

Apart from strengthening and opening up new markets, Malaysia also gave 100% export tax exemption on CPO for a period of six months, from July to December last year.

“Our price has become comparable to that of Indonesia, the largest exporter of palm oil. As a result, many countries are interested to purchase palm oil from Malaysia,” he said.

Malaysia’s traditional palm oil export markets are China, India, Pakistan, the Philippines and the European Union.

Crude palm oil price hit the highest in the nation’s history with RM4,773 per metric tonne (MT) on May 18 this year. This is a huge jump from the RM1,800 per MT in December 2018.

The increase in price had freed palm oil companies and smallholders from the nightmare of financial hardship.

Wee said that smallholders suffered a severe setback when the CPO prices continued to fall in 2018 and 2019.

Hundreds of small owners had then blamed the Pakatan Harapan (PH) government for the fall in price.

Former prime minister Najib Razak had also repeatedly blamed the price fall on the PH government’s cancellation of several projects with China.

Then primary industries minister Teresa Kok, however, had said the cancellation of deals with China was irrelevant with the price of palm oil.

She added that about 60% of China’s palm oil was imported from Indonesia, while only 30% is from Malaysia, because Indonesia’s palm oil was cheaper.

In an ensuing November 2019 by-election in Tanjung Piai, Johor, many of the voters who were oil palm smallholders, voted for Barisan Nasional (BN) candidate Wee to “teach PH a lesson”.

“Since many smallholders belong to the B40 group, the decline in palm oil price has put them in financial difficulty,” he said.

He added that the PN government immediately put in place countermeasures when it took over in March 2020.

According to the ministry’s data, the average CPO price was RM2,232 per MT in 2018, RM2,079 per MT in 2019, and RM2,685 per MT in 2020.

Malaysia’s July CPO forward price is at RM4,500 per MT, and a three-month benchmark at RM4,513 per MT, setting a record high.

New markets and new system for smallholders

Wee also said that the government’s efforts to open up the new palm oil markets included the promotion of palm oil in Turkey.

The goal is to turn Turkey into a hub and increase exports of palm oil by 300,000 MT. Through Turkey, exports would make their way to Greece and the Balkans, he added.

He said that Prime Minister Muhyiddin Yassin’s official visit to Saudi Arabia in March this year also resulted in increasing palm oil trade.

In addition, the ministry is focused on expanding markets in Africa, the Middle East and the United States.

Malaysia’s palm oil exports in 2020 reached RM45.6 billion. The main export markets are India (RM7.16 billion), China (RM6.96 billion), the European Union (RM5.22 billion), Pakistan (RM2.4 billion) and the Philippines (RM1.95 billion).

Wee also said that the Malaysian Palm Oil Board (MPOB) has developed an online system for independent oil palm smallholders and national oil palm traders to monitor and report transactions of fresh fruit bunches (FFB).

This system will encourage independent smallholders to practise keeping records of the maintenance of their smallholdings and yields consistently and accurately, he added.

“At present, there is no specific system to record the yields and the prices of FFB for independent smallholders, thus making it difficult for MPOB to provide effective expansion services without complete data on the revenue, production costs and profits earned by smallholders.

“Through this system, the traceability aspect of the Malaysian Sustainable Palm Oil (MSPO) certification can also be implemented more smoothly and in a transparent manner,” he said.

The system will also increase transparency on the transactions of FFB by gathering revenue records of independent smallholders and monitoring the sales of stolen oil palm fruits and the dealings of unscrupulous fruit dealers.

The pilot project of the system was implemented in Tanjung Piai, involving 6,045 oil palm smallholders, covering an area of 11,954ha. Thirty-three palm oil harvesters and an oil refinery have also participated in the programme. – July 19, 2021.