28/08/2007 (Bernama) - The palm oil industry will continue to enjoy better prices in the future due to the tight supply of edible oils and fats in the world market and strong demand for palm oil as feedstock for the production of palm based biodiesel.
In expressing optimism for Malaysia's golden crop, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said the demand for palm oil would continue to increase as soya bean producers switch to corn to capitalise on bio-ethanol production.
"2007 has been a fruitful year for the industry. The price of palm oil, fetching a record price of above RM2,000 per tonne in January 2006, rallied to surpass RM2,600 in the middle of this year up from about RM1,400 a year ago," he said at the opening ceremony of the biennial International Palm Oil Congress (PIPOC 2007).
The minister said palm oil now was the leading edible oil in the international export trade, accounting for more than 50 percent of world trade among the 17 major oils and fats.
He said palm oil has gained greater acceptance worldwide as a "healthy oil" with market trends having shown food manufacturers switching from hydrogenated fats to trans-acid free alternative for food products formulations.
"The shift to palm oil in food formulations has made a great impact in palm oil trade with the United States. Malaysia's palm oil export to the U.S increased to 684,000 tonnes in 2006 from 558,000 tonnes in 2005," he said.
Touching on the development of the palm oil industry in Malaysia, Chin said the industry recorded impressive achievements, especially in the context of transforming the landscape of the rural agricultural sector.
He said crude palm oil production increased by 6.1 percent to 15.9 million tonnes last year compared with 15 million tonnes in 2005.
"This is the eighth consecutive year where the industry has recorded a positive growth in production. The industry in 2006 accounted for RM32.2 billion in export earnings and provided employment to more than 500,000 people," he said.
On environmental issues, Chin said Malaysia was committed towards ensuring sustainable practices and a cleaner environment in the development of the palm oil industry.
He said in Malaysia, much of the land planted with oil palm was in logged-over areas.
"As a policy, we do not develop palm oil plantations in virgin forests and it is clear from the economic viewpoint that oil palm cannot be grown on very steep slopes and deep peat areas," he said.
He said Malaysia has 59.5 percent of total land area under natural forest cover.