Oil Palm Industry Economic Journal Vol. 9 (2) September 2009 p. 1-12

Production Cost of Palm Oil in Malaysia

Mohd Basri Wahid and Mohd Arif Simeh
Received:    Accepted:    Available Online:


The Malaysian oil palm industry is facing rising production cost which is partly due to a stagnation in productivity. This affects business profitability, especially during those times when prices of palm oil are low. A low replanting rate has contributed to an age profile featuring the existence of more old palms which are less productive. There will be larger areas of old palms in the near term if the current low replanting rate continues, and will result in pushing production cost to a higher level. The article provides an overview of the need to monitor production cost dynamics to mitigate further cost increases. In particular, these include, among others, the prospects of using clonal materials during replanting, addressing the skyrocketing cost of fertilizer application, the approach towards integrated pest and disease management, and the prospects of precision agriculture, good agricultural practices, etc.

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