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Don’t let palm oil industry go the way of rubber, Johari tells Felda

The country’s largest owner of plantation land must focus on the downstream sector, says the plantation and commodities minister.

Don’t let palm oil industry go the way of rubber, Johari tells Felda

KUALA LUMPUR: Felda must ensure the sustainability of Malaysia’s palm oil industry so that it will not suffer the same fate that befell the country’s rubber industry, says plantation and commodities minister Johari Ghani.

He said Felda, being the country’s largest owner of plantation land with 800,000ha, needed to fully utilise its strength by increasing production and focussing on the downstream sector.

“If we do not focus on the downstream industry in the next 15 to 30 years, the palm oil industry will go down the same path as the rubber industry. I don’t want to see that.

“We were the largest rubber producer in the world at one time. Today, we are the main producer of rubber products, but we import natural rubber from Vietnam and Thailand because we do not have enough of it.

“The strange thing is, we have 420,000ha of rubber trees belonging to 290,000 smallholders,” he said in his keynote speech at the Felda 2024 symposium.

Johari said Malaysia produced 19.5 million tonnes of palm oil in 2013, while Indonesia produced 26 million tonnes. However, production here dropped to 18.5 million tonnes in 2023 while Indonesia grew its output to 46.5 million tonnes.

Noting that Indonesia used half of its palm oil for biodiesel production, while Malaysia exported 15 million tonnes, Johari said the country’s main oil palm industry players produced an estimated 20 tonnes of fresh fruit bunches (FFB) per hectare, and suggested Felda beat its 2023 production of 16.49 tonnes per hectare.

He said it was important for Felda to consolidate its land assets and upgrade its infrastructure as best as possible, noting that Felda’s total FFB yield would rise to 14.4 million tonnes if it were to produce 18 tonnes per hectare.

The agency could then become the largest producer, with 2.8 million tonnes of crude palm oil (CPO), he said.

“If the price of palm oil is RM4,000 per tonne, and the estimated cost is RM3,000, we make a RM1,000 profit. Overall, we will make a profit of RM2.8 billion.

“We have to learn from Felda’s successes and put together a strategy for the next 20 to 30 years. I believe that if we are good at (managing) the 800,000 hectares belonging to Felda, (Felda’s) fifth and later generations will be proud to be part of Felda,” said Johari.

He envisioned Felda settlers organising their land into large clusters and fully operating their assets to produce downstream products.

“The palm oil industry is very important to the country. It is only sustainable if it can make a large profit. No (company) can contribute to society if it does not generate income,” he said.

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