Malaysia is expecting palm oil export earnings to drop 25 per cent this year and has initiated measures to cushion the fall.

It would be the first annual decline in four years.

Last year, palm oil export reached a record RM65.2 billion as prices rose to a high of RM4,486 a tonne.

This year, however, with prices at about half of last year’s record high coupled with lower production and world demand, earnings will likely be weaker.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said the government will encourage more downstream activities and launch more replanting schemes to cushion against falling prices.

Speaking to reporters after launching the seventh Roundtable on Sustainable Palm Oil (RSPO) meeting in Kuala Lumpur yesterday, Dompok said the government will spend RM100 million to encourage replanting among smallholders.

The move is anticipated to take away some 500,000 tonnes of palm oil output from the market over the next two years.

“We expect the smallholders to replant some 200,000ha of their estates to replace trees that are 25 years old and above,” he said.

Dompok said the government has also allocated an additional RM50 million to educate smallholders on sustainable practices and RSPO standards.

Currently, 157,000ha of planted area producing more than one million tonnes of palm oil have been certified under the RSPO. Source: Business Times by Zaidi Isham Ismail

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