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Palm Oil and Rubber

Global dependence on palm oil will continue to rise in the coming years, owing to insufficient production of other grains and oilseeds1. Therefore, higher investments in major palm oil-producing countries such as Malaysia will be necessary to boost yields to meet future palm oil demand.

In addition, continued growth of the middle and upper-middle classes in developing and developed markets will mean an uptick in domestic consumption, and will likely also create demand for health foods and environmentally-friendly products derived from palm oil.

In the Malaysian context, this NKEA has formulated key strategies, particularly in the downstream expansion of highvalue oleo derivatives that will ensure the country remains at the forefront of global palm oil production and exports.

A Note From the Minister

In 2014, both these sectors have contributed a GNI RM60.5 billion. We will continue to explore new measures to strengthen the implementation of the Palm Oil and Rubber NKEA towards achieving the target by 2020.

EPP Highlights
EPP 1: Accelerating the Replanting and New Planting of Oil Palm

During the year, the Government set an ambitious target of 35,000 approved hectares and 20,000 implemented hectares for replanting and new oil palm planting by independent smallholders to replace ageing and unproductive trees with higher-yielding seedlings.

To effect change, a more proactive approach was adopted to ensure replanting and new planting initiatives remained on track and contributed towards a sustainable supply of the commodity to downstream palm oil operators within and outside the region.

EPP 3: Improving Worker Productivity

To address the low take-up rate of MPOB’s mechanised sickle CantasTM, the industry regulator MPOB hosted the International Competition on Oil Palm Mechanisation for nine months over three stages from March to November 2014. Entries were received from both domestic and international educational institutions, individuals and companies.

As agricultural land becomes increasingly scarce in Malaysia, there is a greater push to increase productivity and yields on existing plantation land. Therefore, there is a need to foster deeper collaboration between public agencies and private institutions in order to develop innovative products to increase upstream productivity and bring down labour costs.

EPP 9.1: Ensuring Sustainability of the Upstream Rubber Industry

In 2014, approximately 51,629 hectares of rubber replanting and new planting were implemented nationwide, a 6.4 per cent increase from the previous year’s figure of 48,546 hectares.

This EPP is moving on track and has consistently over-achieved targets since its launch in 2012, with the first batch of planted rubber trees expected to begin yielding in 2017 at the earliest. Moving forward, this EPP will be maintained given its impact on smallholders in rural areas and future upstream productivity. In a related aspect, natural rubber price is on a downward trend as supply overtakes demand. There have been ongoing discussions on the impact of this EPP on future prices, which will determine the future direction of this EPP.

  • 1
    Accelerating the Replanting and New Planting of Oil Palm
  • 3
    Improving Worker Productivity
  • 9.1
    Ensuring Sustainability of the Upstream Rubber Industry
KPI Achievement 2014
  • Method 1 106%
  • Method 2 93%
  • Method 3 75%
Business Opportunities 2015
  1. Expansion of Plantation Land Bank
  2. Development of Existing Downstream Activities
  3. Development of National Biodiesel Activities
Critical Target 2015
  1. Approved and implemented area of replanting and new planting by independent smallholders to 8,550 hectares and 20,000 hectares respectively
  2. Ensure that 10 cooperatives are able to sell a cumulative minimum of 12,000 metric tonnes of fresh fruit bunches
  3. Area of replanting and new planting of rubber by independent smallholders to 24,000 hectares
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