government’s new replanting scheme will target 365,000ha of oil

palms older than 25 years as the world’s No. 2 palm oil producer

tries to lift flagging output, a top Malaysian industry official said.

Industry regulator Malaysian Palm Oil Board’s (MPOB) new chairman,

Datuk Seri Shahrir Samad, said the scheme would take two to three

years to complete and that the government had allocated RM297 million

under the 2011 Budget.

The scheme is the latest initiative

to boost yields in the country, which has fallen behind top producer

Indonesia in terms of output. An earlier industry-funded scheme to

replant 200,000ha in 2008 in a bid to boost slumping prices was almost

completed this year.

“I think we can easily achieve 17.5

million tonnes (in 2011) even with this new replanting scheme as there

will be more young oil palms coming into maturity,” Shahrir said in his

production target of 18.4 million tonnes for next year, and roughly the

same as his projection of 17.5 million tonnes for this year.

“I don’t think there will be a drop in production even after the

erratic weather this year. The younger trees are quite resilient,” he

said.

Early this year, El Nino-driven hotter weather dried up

yields and lifted the Malaysian benchmark palm oil prices, which have

gained almost 15 per cent so far this year.

The weather

condition was quickly followed by La Nina, which brings more rains and

floods to Southeast Asia that can complicate harvesting and transport

of the palm fruits.

Malaysia exports almost 90 per cent of

its output. Last year, Malaysia derived RM37 billion from crude palm

oil exports and RM13 billion for refined products and oleochemicals.

Shahrir said the government would allocate up to RM127 million to

further develop the refining and oleochemical industries, with aid

mostly targeted at Sime Darby, IOI Corp and Kuala Lumpur Kepong (KLK) –

the top three palm oil companies in the country.

The MPOB is

in discussions with the government on possible mandatory green

standards to ensure palm oil does not come from estates that expand by

felling forests and marginalising local communities, Shahrir said.

The MPOB has had a code of practice for palm oil firms to halt

environment pollution since 2007, which firms such as IJM Plantations,

Genting Plantations and KLK have adopted.

“The code is

similar to the RSPO’s principles and criteria,” Shahrir said,

referring to the industry-driven Roundtable on Sustainable Palm Oil

that has produced a certification system whose participants have to

commit to to preserve the environment.

“The industry has

asked that we keep this code voluntary like the RSPO, but we are also

in discussions with the government on starting an audit body to look

at the industry, to ensure that the standards are met,” Shahrir said

ahead of the RSPO conference early next month in Jakarta. – Reuters