KUALA LUMPUR: India's decision to resume importing Malaysian refined palm oil will not only strengthen the commodity's prices but benefit about 500,000 smallholders.
More than half of them, or 258,000, are independent smallholders, whose livelihoods had been on the balance since early this year by India's 'boycott', with the situation made worse by the Covid-19 pandemic.
Plantation Industries and Commodities Minister Datuk Dr Mohd Khairuddin Aman Razali said Malaysia's palm oil exports to India for the first four months this year plummeted by 94 per cent to 96,145 tonnes, as compared with 1.6 million tonnes for the same period last year, following import sanctions by the republic after a diplomatic row.
India is the world's largest edible oil buyer, accounting for 4.5 million tonnes of palm oil and palm oil-based products, worth RM9.8 billion, from Malaysia last year.
Khairuddin said Malaysia, the world's second-largest palm oil producer and exporter after Indonesia, slashed the June palm oil export duty to zero, lowering its price against its arch rivals Indonesia.
He revealed that palm oil futures traded on Bursa Malaysia spiked 47 per cent to 66,427 lots on Wednesday, compared to the daily average of 45,200 lots last week
"Indian buyers contracted up to 200,000 tonnes of Malaysian crude palm oil for the next two months (June and July).
"With crude palm oil prices falling below Malaysia's palm oil duty threshold level and India's decision on March 4 not to extend its import sanctions on refined palm oil imports, there are now increased purchases.
"A lot has to do with the improved diplomatic relations between both countries, which is expected to have a positive impact on the nation's oil palm industry as well as the economy," said Khairuddin in a statement.
Stressing that India was an important trading partner in the agro-commodity sector, he said the government was striving to improve ties with the former.
Malaysia reportedly last week signed an agreement to buy a record 100,000 tonnes of Indian rice.
India's diplomatic row with Malaysia came about after former Prime Minister Tun Dr Mahathir Mohamad sparked controversy when he criticised India's controversial new citizenship law, which was deemed discriminatory to its Muslim minority.
Then, at last September's United Nations General Assembly, Dr Mahathir said India had 'invaded and occupied' Kashmir, a disputed Muslim-majority region also claimed by Pakistan.
India, Malaysia's largest palm oil importer the past five years, retaliated by ending all purchases from Malaysia.