Malaysia looks to increase allocation to replant ageing oil palms

According to Plantation and Commodities Minister Johari Abdul Ghani, the current replanting allocation for independent smallholders is MYR100M/year with a 0.7% replanting rate.

“For 2024 and 2025, MYR100M (US$23.6M) was allocated each year for replanting. While this provides opportunities for smallholders to benefit from the programme, the amount remains insufficient,” Johari was quoted as saying in the 21 August report.

The increased allocations, averaging MYR280M/year, would be channelled directly to smallholders, he added.

In the meantime, to meet the ideal annual replanting target of 4%, Johari said the ministry would continue supporting plantation companies, growers and smallholders in replanting efforts to ensure ageing and unproductive oil palms were removed and replaced with high-quality planting materials.

Johari said he would be making a special presentation (pembentangan khusus) for the additional allocation, the report said.

From 2014-2024, Malaysia’s average oil palm replanting rate was 2%/year, with independent smallholders recording 0.7%/year, organised smallholders 1%/year and large estates 2.5%/year – significantly lower than the industry standard of 4%/year.

Although the requested amount would only cover part of the replanting needs of independent smallholders, it represented an important first step in strengthening long-term support for them, Johari said.

Smallholders currently account for 14.6% of Malaysia’s oil palm planted area, according to the report.

The ministry’s policy would ensure that only eligible independent smallholders would benefit from the replanting allocation, to ensure transparency, efficiency and effectiveness in the use of government funds, and to prevent overlapping financing, Johari said.

Without achieving the 4% replanting target, Johari said national export income could be affected.

Palm oil is Malaysia’s third largest export contributor, with exports exceeding MYR120bn (US$28.4bn) last year, he said.

“However, with ageing palms now covering nearly 520,000ha nationwide, productivity is at risk,” he said.

The extra funding would be aimed at raising the replanting rate among smallholders from 0.7%/year to at least 3%/year, NST wrote.

“If the 1.5M ha under both independent and organised smallholders could increase fresh fruit bunch (FFB) yields by just two tonnes annually, it would generate an additional MYR2.5bn (US$592M),” Johari said.

“Consistent replanting, combined with quality planting material, high-performing clones and good agricultural practices could further boost yields by 8 to 10 tonnes.”

Johari said the ministry placed a strong focus on replanting, as Malaysia had adopted a policy prohibiting new cultivation in areas classified as deforestation.

“Without compliance, palm oil products cannot obtain the Malaysian Sustainable Palm Oil (MSPO) certification. Without MSPO, products cannot be exported, particularly to European markets,” he added.

Tags: Malaysia, oil palms, smallholders, replanting, allocation