Prime Minister Datuk Seri Anwar Ibrahim (frontmost) observes a displayed exhibition item at the MPOB International Palm Oil Congress and Exhibition 2023 (PIPOC 2023) at the Kuala Lumpur Convention Centre (KLCC) on Wednesday, Nov 8, 2023. (Photo by Shahrill Basri/The Edge)

KUALA LUMPUR (Nov 8): The government has proposed a possible synergy between smallholders and major companies to boost palm oil production, said Prime Minister Datuk Seri Anwar Ibrahim.

“I hope the MPOB [Malaysian Palm Oil Board] and the Ministry [of Plantations and Commodities] will seriously consider this because it would certainly be more difficult to rely entirely on smallholders in their capacity, given the limited research, understanding and challenges of the [palm oil] industry,” he said.

Malaysia, as the world's second largest palm oil producer, accounted for 31% of 87.39 million tonnes of palm oil produced globally in 2022. The country was able to achieve this production level with only around 5.67 million hectares of planted area. Smallholders account for 28% of the total area for palm oil production.

“[The] Madani economy requires us to promote the welfare of society as a whole, and we cannot continue to see this gross disparity in inequality between the most successful businesses and the relatively smaller businesses, which are very numerous and sometimes fall into the lower income bracket," Anwar said when officiating the MPOB International Palm Oil Congress and Exhibition 2023 (PIPOC 2023) on Wednesday.

“With the support of the big players in the palm oil industry, I could certainly look at the possibility of increasing the allocation for smallholders [from the RM100 million announced in Budget 2024] on the condition that these big players have some form of support for the smallholders,” he added.

When tabling the Budget 2024 last month, Anwar announced the RM100 million palm replanting programme incentive allocation through grant and loan to 7,000 independent oil palm smallholders.

This incentive will enable smallholders to increase productivity by replanting old trees with new breeds, including clonal materials, with high yield potential of fresh fruit bunches.

Currently, there are 660,000 hectares (ha), roughly 11.6% of the total oil palm planted area in the country, with trees aged 25 years or older, necessitating immediate replanting, according to Malaysian Palm Oil Association (MPOA) data.

If the current replanting rate, which is less than 2% of the total planted area per year, continues, the aged palm area will expand to 770,000ha by 2027, according to MPOA.

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