Our oil palm industry is set to move into 2024 with a better prospect.
We are looking at a brighter performance next year in anticipation of rising demand for vegetable oils in sync with the increasing world's population.
The anticipated stronger performance of our oil palm industry for 2024 will be attributed to several factors which include higher production, better prices of palm oil and stronger demand from key export destinations.
Crude palm oil (CPO) production in 2024 is expected to continue to increase, supported by a recovery in labour supply, which is expected to provide a boost to the oil palm industry.
CPO production, which was 18.12 million tonnes in 2021 has increased almost two per cent to 18.45 million tonnes in 2022. Throughout the period of January to November this year, CPO production increased by almost one per cent to 17 million tonnes compared to 16.84 million tonnes in the same period of 2022.
The Government's effort in resolving labour issues in the oil palm industry will improve the CPO production for next year.
Additionally, the 2024 Budget which has allocated RM100 million for the implementation of oil palm replanting programme for the smallholders. This move is aimed at accelerating the replacement of old or unproductive palm trees using quality seedlings and encouraging the implementation of Good Agricultural Practices (GAP).
This initiative is offered through a matching grant, expected to benefit 1,500 independent smallholders, involving the replanting of 5,900 hectares of oil palm and will boost their income. This measure will increase the productivity of fresh fruit bunches (FFB) and in turn the yield of palm oil per hectare.
A total of RM70 million has also been allocated in the 2024 Budget to increase the level of sustainability of our oil palm industry and to address the anti-palm oil campaign on the international stage as well to deal with issues raised by the European Union. This will improve the image of our oil palm industry and expand our export market.
The government has also proposed to expand the scope of automation tax incentives to cover the plantation sector to increase productivity and reduce the dependence on foreign labour through mechanisation and automation.
This will make prices of machineries become cheaper and affordable which will lead to higher productivity as it will reduce dependence on human labour, especially foreign labour, and can attract local workers to join the oil palm plantation sector.
In addition, MPOB is currently advocating for oil palm growers to adopt the Shell DNA testing diagnostic technology, SureSawit, in a comprehensive manner before field planting. This initiative aims to minimise contamination, boost yield production, and align with sustainability goals.
As such, we expect CPO production to be higher for this year and continue to record better numbers for 2024. We do not foresee El Nino to significantly affect CPO production for next year.
Efforts to strengthen traditional and explore new market will improve our export of palm oil. We anticipate higher demand from our importing countries, especially China and India. Exports of palm oil for the first 11 months of this year stood at 13.75 million tonnes compared with 15.71 million recorded for 2022.
Exports of palm oil and other palm-based products in the first 11 months of 2023 increased by 0.36 per cent or 79,000 tonnes to 22.25 million tonnes compared to 22.43 million tonnes for the same period in 2022.
We exported these products to our key markets namely India, China, European Union, Turkiye dan Kenya since 2021.
Backed by the rising demand especially China and India, we expect exports of palm oil and other palm-based products to be better for this year compared to 24.72 million recorded for 2022. We are looking at a better average price of CPO in 2024 in anticipation of higher demand of palm oil from our major importing countries, especially China and India.
The average price of CPO in November was RM3,700.50 per tonne, an increase of RM60.50 or 1.66 per cent compared to October's average price of RM3,640 per tonne.
Insufficient supply of palm oil to accommodate the increasing demand of the commodity may be another factor that could attribute to the better average price.
Additionally, the implementation of B35 in Indonesia will also support demand for biodiesel which in turn may drive the price of our palm oil for 2024.
The performance of our oil palm industry for next year may be affected by several factors which include policies related to taxes of importing countries, levies, import duties, and regulations such as the European Union Delegated Regulation (EUDR).
We will elaborate in details the performance of our oil palm industry for this year and the outlook for 2024 in our Palm Oil Economic Review and Outlook Seminar 2024 which will take place in Pullman Kuala Lumpur City Centre Hotel on Jan 11 2024.
We welcome industry players involved in oil palm, palm oil and other oils and fats industry including research and development personnel, planters, millers, traders, manufacturers, exporters, economists, policy makers and academicians to participate in this seminar.
*The writer is director-general of Malaysian Palm Oil Board