REPLANTING – OPIEJ

WORLD PALM OIL SUPPLY FORECAST: REVIEW AND UPDATE

mpob_admin — Fri, 08 Sep 2023 08:58:04 +0000

Since the beginning of palm business in the 1960’s, world palm oil production has always shown an upward trend until the year 2019. Even though there were some occasions that made palm oil production go down, such as El Nino in the year 2015-2016, it was a temporary weather anomaly. However, this article explains that a structural, not a temporary, palm oil shortage may occur in 2-3 years. This article reviews the production data in the year 2019-2022 that was published by Minchul Suh (2020), mentioned as P.F hereinafter when the growth of the world’s palm oil production was stagnant. This article forecasts palm oil production in the year 2023-2025, by employing the age profiles of Malaysian and Indonesian oil palm plantations as well as the yield profile of oil palm. According to the methodology used in this article, even without any weather effects, the growth of palm oil production will be stagnant or can even decline until the year 2025.

Production Cost of Palm Oil in Malaysia

mpob_admin — Tue, 28 Aug 2018 06:40:44 +0000

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.

Improving Productivity:The Replanting Imperative

mpob_admin — Mon, 27 Aug 2018 07:53:47 +0000

The replanting of old and uneconomic palms is one of the more practical strategies to improve oil palm productivity. High productivity will ensure that the oil palm industry continues to remain competitive even during times of low palm oil prices. In order to maintain a good productivity level, the percentage of tall and ageing palms should be small and preferably less than 10%. Changing the age profile by reducing the tall and ageing palms from the current 21.6% should improve the national fresh fruit bunches(FFB) yield. This could be done through replanting as seen from the analysis of the age profile which showed that by end of 2000, about 264 074 ha(7.8%) were in dire need of replanting. A hypothetical cash flow exercise at different FFB prices comparing immediate replanting against delayed replanting for 25-year old palms was done. Immediate replanting is referred to as replanting palms at the age of 25 years and delayed replanting is referred to as replanting of palms at the age of 30 years. At the end of the 10th year, the price sensitivity analysis showed that immediate replanting was viable when the price of FFB was at least RM 135/t. At this price, the accumulated Incremental Net Revenue (INR) is RM 5601/ha. At a 10% discount rate, the incremental Net Present Value (NPV) and Internal Rate of Return (IRR) were RM 34 and 10.1% respectively. The break-even price would be lower if the increase in the cost of replanting in the next five years had been taken into consideration. It is concluded that immediate replanting is economically viable when the long-term FFB price is at least RM 135 t-1.