KL set to extend scheme to control palm oil output

KL set to extend scheme to control palm oil output

Reuters, Kuala Lumpur

Malaysia said on Friday it will extend a scheme to control
production by cutting down oil palm by six months to June to try
to attract more growers to the project.

Primary Industries Minister Lim Keng Yaik said the government
was extending the scheme because a rally in palm oil futures
prices had deterred growers from taking up a compensation offer
to cut back their crop.

Under the scheme, the government offers oil palm growers 1,000
ringgit (US$263) cash for each hectare they chop and replant.

But palm oil prices have risen nearly 400 ringgit a ton, or
more than 50 percent, since the plan was launched early this
year, negating whatever incentive the scheme offered.

Lim said the government target was to cut down 200,000
hectares but so far it has only managed to clear 44,000 hectares.
The government had forecast that land given over to oil palm
would total 3.5 million hectares in 2001.

"That's why we need to extend the scheme till June," he told
reporters.

The minister said he expected production to touch 11.4 million
tons this year and 11.8 million in 2002.

Market researchers said output for this year will be at least
11.7 million tons, while use, including exports, will total
around 11.95 million due to measures such as burning of crude
palm oil to clear stocks.