Malaysian-RI palm oil producers's axis sought
Malaysian-RI palm oil producers's axis sought
KUALA LUMPUR (AFP): A minister Tuesday urged Malaysian palm
oil producers to form partnerships with producers in neighboring
Indonesia as prices decline.
"Our producers must engage them (Indonesian producers and
exporters) in talks about not undercutting prices as the
situation is already bad," Lim Keng Yaik, primary industries
minister, was quoted as saying by the official Bernama news
agency.
"In fact, we must start talks to formulate a combined
marketing strategy," he added.
Lim also urged palm oil producers to cut or at least stabilize
the cost of production to ensure profitability and reduce the
impact of the steep decline in palm oil prices.
"If prices dipped further, producers will not be able to make
any profit because of the high production cost and may not
survive," he said.
Lim said production costs now amounts to 850 ringgit (US$224)
per ton compared with 450 per ton about a decade ago.
The decline in prices by around 50 percent to about 1,150 per
ton in recent months from 2,200 at the beginning of the year was
unexpected, he said.
"Although our smallholders and estates can still survive, the
profit margin is very much lower and we are worried about this
development."
Lim also advised refiners to sell their stocks, even at
current low prices.
"If we don't sell, the accumulated stocks in the country will
create more downward pressure on the price," he warned.
Lim also said it was timely for local producers to reclaim
small but important markets.
"Since most of these markets are poor and in need of credit
facilities, we are prepared to extend palm oil credit payment
arrangement with a two-year grace period," he said.
"We will use the credit facility to reclaim small but
important markets, particularly developing countries which want
palm oil but are facing financial difficulties," he said, adding
that they include Algeria, Tanzania, Kazakhstan and the European
market.
Malaysia is the world's biggest palm oil producer, accounting
for 62 percent of total trade production and 22 percent of the
international oil and fats trade.