KL to cut palm oil output

KL to cut palm oil output

KUALA LUMPUR (Reuters): Malaysia is considering cutting palm oil output by 450,000 tons a year to help support prices by replanting aging trees, Primary Industries Minister Lim Keng Yaik said on Monday.

"Perhaps it's time to think about replanting," Lim told reporters after a meeting with Vietnamese Foreign Minister Nguyen Dy Nien in Malaysia's capital.

"If we replant 150,000 hectares per year, let's say an average one hectare can produce three tonnes of oil, we would have reduced production (by) 450,000 tons per year through replanting," said Lim.

Crude palm oil output in Malaysia, the world's largest producer, is expected to rise to nearly 11 million tons in 2000 from 10.5 million in 1999, but rising production has depressed prices.

Lim said the government had set aside 80 million ringgit (US$21 million) for a soft loan scheme to help small growers replant old trees. Asked when the replanting would start, he said: "Immediately."