THE Covid-19 pandemic poses a global threat, disrupting lives and affecting economic growth.
We are facing common challenges to balance health, social, and economic concerns.
Malaysia initiated the Movement Control Order (MCO) on March 18 last year to prevent the spread of Covid-19 and it was extended multiple times.
Essential economic activities, including those in the agri-commodity sector, are allowed to operate with strict standard operating procedures.
The palm oil sector's operations are uninterrupted, even with the limitation of workers up to 60 per cent, beginning May 26.
Indicators for the first half of this year show that our palm oil industry remains resilient as it is not severely affected by the MCO 3.0 being implemented nationwide.
The agriculture sector continues to be one the main contributors to the country's gross domestic product growth during the Covid-19 pandemic.
The average price of crude palm oil (CPO) surged 66.9 per cent, or RM1,628, to RM4,061.50 per tonne for the first half of this year from RM2,433.50 per tonne for the same period last year. CPO recorded its highest price of RM4,773.50 per tonne on May 18 this year.
In sync with that, the export value of palm oil increased 36.3 per cent, or RM7.69 billion, to RM28.87 billion for the period of January to June this year from RM21.19 billion in the previous corresponding period.
Prices of CPO and soyabean oil in the world market were on an upward trend during the January to June period compared to the previous corresponding period due to the resumption of social and economic sectors in many countries as well as supply tightness in the global vegetable oil market.
From January to June last year, the price was lower in line with the global economic recession as a result of the pandemic.
We expect the price of CPO to be firmer this year and may average at around RM3,600 per tonne, primarily due to the expected firmer soyabean oil price and slower palm oil production growth especially in the first quarter of this year.
Total production of fresh fruit bunches (FFB) decreased 7.2 per cent to 42.76 million tonnes between January and June this year compared to 46.09 million tonnes in the same period last year due to labour shortage.
Plantations are now encouraged to embark on mechanisation to address the shortage of labour.
The government has introduced the People and Economic Strategic Empowerment Programme stimulus package to encourage the adoption of machinery and the Workforce Recalibration Programme to enable illegal immigrants to be employed as legitimate foreign workers.
These moves ensure the operations of oil palm plantations run smoothly, especially harvesting activities that can impact productivity.
The production of CPO and crude palm kernel oil during the January to June period was lower by 7.6 and 8.2 per cent, respectively, against the same period last year mainly due to lower FFB received by mills.
Despite being able to operate, logistics problems due to border closures have affected productivity.
The Malaysian Palm Oil Board (MPOB) sees the production of palm oil increasing gradually and steadily in the coming five to 10 years.
Production of palm oil is expected to reach 22 million tonnes by 2025 and will further rise to 25 million tonnes by 2030.
The anticipated upward trend is attributed to the expected increase in matured oil palm areas and higher oil palm productivity through better FFB yield and higher oil extraction rate.
We do not see the land area of oil palm as a major barrier for Malaysia to upscale its palm oil production. With the advancement of technologies, particularly high-yielding planting materials, and the adoption of mechanisation and automation in estates, we can assist plantation players to increase productivity.
MPOB foresees the impact of the Covid-19 pandemic to be less severe this year as the country is more prepared in managing the economic activities.
The MPOB and the Plantation Industries and Commodities Ministry as well as other related agencies and industries will continue to work closely to strengthen the industry in facing challenges for the sustenance of the Malaysian palm oil industry.
The writer is the director-general of Malaysian Palm Oil Board