© Reuters. FILE PHOTO: A mini tractor collects palm oil fruit at a plantation in Pulau Carey, Malaysia, January 31, 2020. Photo taken January 31, 2020. REUTERS / Lim Huey Teng / File Photo / File Photo
By Rajendra Jadhav, Mei Mei Chu and Bernadette Christina
MUMBAI / KUALA LUMPUR / JAKARTA (Reuters) – Farmers across Asia are busy planting trees to boost palm oil production but nurseries are struggling to meet demand for sprouts and seedlings, risking delays during the recovery of the industry after the COVID-19 pandemic.
The shortage of seedlings could slow reforestation, curb production growth and keep palm oil prices high as the world grapples with high inflation, industry officials say. Asia produces more than 90% of the world’s cheapest cooking oils used in cooking, baking and cosmetics.
Palm oil production growth has stalled in recent years, partly due to labor shortages during the COVID-19 pandemic, but farmers are now looking to replant or expand plantations amid soaring prices.
Demand has increased as supply for sprouts, used to make seedlings, has declined as oil palm nurseries scale back production during the pandemic to adjust to weaker demand. .
Traditional growers Indonesia and Malaysia, which account for more than 80 per cent of global palm oil production, are focusing on replacing aging oil palm trees that are difficult to harvest and less productive, while India and Thailand is trying to expand the acreage, industry officials said.
Tan Kim Tun, a Malaysian nursery operator based in the state of Johor, said: “Some large Malaysian facilities (decided) want to replant, causing a shortage of seedlings in the market.
Annual global palm oil production growth slowed to 0.5% from 2018 to 2022 from 4.8% in the previous four years, according to US Department of Agriculture data.
Against this backdrop, palm oil prices hit a record high of 7,268 Malaysian ringgit ($1,606.19) per tonne this year and remained above average for 2010-2020 despite a recent sharp downward correction. .
New mills take four years to develop before harvest, meaning output will continue to be low and prices high for a while, said a New Delhi-based dealer with a global trading company. said.
“When yield trees are cut down, yield growth will be negligible for a few years,” the agent said. “Replanting will support palm oil prices over the next few years.”
SHORT TERM SEEDS
Oil palm nurseries will struggle to increase production overnight to meet strong demand as it takes more than a year to produce a single seedling.
Ahmad Parveez Ghulam Kadir, Malaysian general manager, said: “We can increase our capacity but it will take time … at least it will take a year before you can have (a) seeds germinating. sprouts. The shortage cannot be resolved quickly.” Palm oil board (MPOB).
Industry officials estimate Malaysia has the capacity to produce 80 million sprouts per year and Indonesia 200 million sprouts.
However, Indonesia can currently only produce half that amount, or $110 million a year, said Hasril Hasan Siregar, head of research and productivity improvement at the Indonesian Palm Oil Association (GAPKI). know.
Meanwhile, Indonesia uses about 95% of the seedlings it produces to meet domestic demand and exports only about 5%, Siregar said, forcing importers like India and Myanmar to depend on Malaysia. and Thailand.
In fact, Malaysia’s demand for germinated seeds increased 30% in the January-August 2022 period from a year ago, to nearly 38 million seeds, according to data compiled by MPOB. For Indonesian sprouts, demand increased by nearly 24% over the same period.
The demand for Malaysian germinated seeds is so high, Tan said, that some nurseries have had to refuse orders.
All of this is causing difficulties for India, which is aiming to rapidly expand its oil palm acreage.
“The world needs more and more palm oil. For many poor consumers, it’s the only option,” said a Mumbai-based dealer with a global trading company. The agent declined to be named because of company policy.
India needs 20 million sprouts by 2022 but only 75% of that need has been met by imports from Indonesia, Malaysia, Thailand and Costa Rica so far this year, said an official at TS Oilfed, the importer. India’s largest oil palm sprouts, said. Named because of company policy.
(1 dollar = 4,5250 ringgit)