Producing quality crude palm oil (CPO) has given Malaysia the edge as the world’s largest exporter of palm oil products. Even though Malaysia comes in second after Indonesia, which is now the world’s leading producer of the commodity, quality has always been the determining factor in terms of exported goods.
However, of late producing quality CPO for local refineries is fast turning into an uphill task among local independent palm oil millers due to the poor supply and poor quality of fresh fruit bunches (FFB) sourced mainly from licensed dealers.
Millers in other categories like the government-backed Felda, Felcra and Risda as well as the Malaysian Palm Oil Association (MPOA) members (who are the big boys) have better control over the supply chain – derived mainly from their own plantations.
Most independent millers, on the other hand, do not own estates. Many are getting a raw deal from some unscrupulous dealers who are taking advantage of the situation by selling FFB which are not fresh and are unripe.
This, to a certain extent, has led to increasingly poor quality CPO, which in turn saw some of CPO produced by independent millers being rejected by refineries.
(The FFB crop once harvested, must reach the mills, at best, within 24 hours to ensure it retains DOBI (Degree of Breachable Index) – a measurement for freshness in the FFB and the FFA acid content)
Another claim by independent millers is that some FFB dealers have even started to step into other territories – sourcing and buying FFB from small estate holdings – instead of sticking to their original mode of buying from smallholders and supply direct to independent millers.
To make matters worst, some FFB dealers have even started to run their own palm oil mills and compete with independent millers who are struggling to get enough supply to run an optimal scale of operation.
Given such rampant unhealthy practices by some dealers, independent millers are now calling for the Malaysian Palm Oil Board (MPOB) to impose proper rules and regulations especially on its licensed dealers.
MPOB licensed dealers should be penalised should they operate out of their boundaries, suggested a seasoned palm oil miller.
To maintain the CPO quality from Malaysia, a healthy and proper supply chain must be established to ensure the survival of independent millers.
Dealers must also stick to their original modus operandi – FFB collection and fast transportation to the mills. Of the total 411 palm oil mills nationwide, MPOA members represent about 40% while government-scheme agencies and independent millers accounted for 30% each.
Furthermore, with the increasing competition from Indonesia, it is vital for Malaysian palm oil millers to get enough supply of good origin and quality to continue producing premium CPO.
Indonesia is fast catching up with Malaysia, especially when most of the plantations there were owned by big companies with the ability to control the supply chain and provide quality fruit crop directly to their own mills and refineries.
Source: The Star by Hanim Adnan
