The pandemic and last year’s record palm oil prices have exacerbated delays to replanting efforts, putting future supply at risk.
-- Across swathes of Southeast Asia, maturing palm oil trees, some as tall as a 12-storey building, are turning into a multi-billion dollar headache for local farmers, regional governments and consumers everywhere.
Oil World, a market researcher, warned last month of the consequences of an “alarming decline” in average yields due to slow replanting. Annual output growth may fall to 1.8 million tons or less in the 10 years to 2030, from an average of 2.9 million tons in the decade to 2020, the Hamburg-based outfit estimated. The El Nino weather phenomenon won’t help, and in the year ending September 2024, the annual output increase could be the smallest amount in four years.
For governments, it may well add up to a multi-billion financial aid bill. Small farmers underpin the industry, accounting for roughly two-fifths of the planted area in Malaysia and Indonesia, and they form an important voting bloc. Malaysia’s top growers’ group is already seeking tax breaks and grants in the nation’s budget this month in order to accelerate replanting — going well beyond an existing loan scheme.
Among those caught in the dilemma is Jamari, who like many in Indonesia only uses one name. Having switched from rice to palm oil two decades ago, the planter owns two hectares in the Riau islands. But some of his trees are now 19 and 18 meters high, and the harvest is shrinking.
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