Photo: Collected
The old oil palm is threatening national production, so Malaysia's Plantations and Commodities Ministry is seeking 280 million ringgit per year for five years to increase replanting among smallholders. Minister Datuk Seri Johari Ghani said the current allocation for replanting independent smallholders is 100 million ringgit per year, at a rate of 0.7 percent.
"For 2024 and 2025, 100 million ringgit was allocated per year for replanting. Although this allows smallholders to benefit from this programme, this amount remains insufficient," Johari said in his closing speech at the Dewan Rakyat on the 13th Malaysia Plan, adding that the ministry would seek an increased allocation for direct distribution to smallholders, averaging 280 million ringgit per year.
In the meantime, to meet the ideal annual replanting target of 4 per cent, the ministry will continue supporting plantation companies, growers, and smallholders in replanting efforts, he said. Johari said this was to ensure that ageing and unproductive oil palms are removed and replaced with high-quality planting materials.
Malaysia is the world's second-largest producer of palm oil, after neighboring Indonesia. While Indonesia holds the top position, Malaysia plays a significant role in the global palm oil market, both in production and exports. Palm oil is an edible oil used in everything from cakes, chocolate, margarine, and frying fats to cosmetics, soap, shampoo, and cleaning products. Johari said he will make a special presentation (pembentangan khusus) for the additional allocation.
On average, Malaysia's oil palm replanting rate between 2014 and 2024 was only 2 per cent: independent smallholders recorded 0.7 per cent, organised smallholders 1 per cent, and large estates 2.5 per cent — significantly lower than the industry standard of 4 per cent annually.
Johari said while the requested amount would only cover part of the replanting needs of independent smallholders, it represents an important first step in strengthening long-term support for them. Smallholders currently account for 14.6 per cent of Malaysia's oil palm planted area.
He added that the ministry has set a policy stipulating that only eligible independent smallholders will benefit from the replanting allocation, to ensure transparency, efficiency, and effectiveness in the use of government funds, and to prevent overlapping financing.
Without achieving the 4 per cent replanting target, Johari cautioned, national export income could be affected. He said palm oil is Malaysia's third-largest export contributor, with exports exceeding RM120 billion last year.
"However, with ageing palms now covering nearly 520,000 hectares nationwide, productivity is at risk.
This is why the ministry is requesting RM280 million to raise the replanting rate among smallholders from 0.7 percent to at least 3 percent.
"For instance, if the 1.5 million hectares under both independent and organised smallholders could increase fresh fruit bunch (FFB) yields by just two tonnes annually, it would generate an additional RM2.5 billion.
"Consistent replanting, combined with quality planting material, high-performing clones, and good agricultural practices, could further boost yields by 8 to 10 tonnes," he said.
Johari said the ministry places strong emphasis on replanting, as Malaysia has adopted a policy prohibiting new cultivation in areas classified as deforestation.
"Without compliance, palm oil products cannot obtain the Malaysian Sustainable Palm Oil (MSPO) certification. Without MSPO, products cannot be exported, particularly to European markets," he said.
Source: Online/OFA
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