PALMOILMAGAZINE, KUALA LUMPUR – The future competitiveness and sustainability of Malaysia’s palm oil industry will increasingly hinge on its ability to raise productivity. Stagnant production growth is beginning to constrain supply—an issue industry players say has been looming for decades.
Malaysian Palm Oil Council (MPOC) Chairman Carl Bek-Nielsen said the industry has spent too long talking about higher yields without delivering meaningful progress. In some cases, productivity has even declined. For him, long-term sustainability will not be achieved by chasing overly ambitious numbers, but by setting realistic and achievable targets.
“If productivity is low and commodity prices fall, that is a recipe for disaster. But with high productivity, the industry has a cushion when prices weaken,” Bek-Nielsen said, as quoted by Palmoilmagazine.com from The Edge Markets, Monday (5 January 2026).
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The interview marked Bek-Nielsen’s first public discussion since assuming the role of MPOC chairman in May 2023. A Danish national and Malaysian permanent resident, he has spent more than 30 years in the palm oil sector. He began his career at United Plantations Bhd in 1993 as a cadet planter and has served as the group’s CEO since January 2013.
Bek-Nielsen described Malaysia’s national ambition of lifting yields to six to seven tons of crude palm oil (CPO) per hectare as unrealistic, given the dominance of ageing trees and the slow pace of replanting, particularly among smallholders. In 2024, Malaysia’s average CPO productivity stood at just 3.28 tons per hectare.
Instead, he proposed a gradual approach with a more attainable goal of around 4.5 tons per hectare by 2035. Such an improvement, he said, would already represent a major leap for the industry and significantly strengthen Malaysia’s position in addressing the European Union Deforestation Regulation (EUDR), as higher yields reduce the need for land expansion and directly address deforestation concerns.
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“We must move out of the 3.3-ton range and slowly climb to 4.5 tons. If Malaysia can achieve that, it would be extraordinary—and realistic to work toward collectively,” he stressed.
At a productivity level of 4.5 tons per hectare, the industry would use the same land, labour, and inputs, yet generate far greater output. The impact would extend beyond land efficiency to include higher incomes, stronger tax revenues, and improved corporate profitability.
“If we can add 1.2 tons per hectare, Malaysia would produce roughly seven million additional tons of oil compared with today—without opening new land. From a sustainability perspective, this is the most critical issue,” he said.
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Bek-Nielsen emphasised that there is no single solution to boosting productivity. What is needed is an integrated, long-term approach, starting with aggressive replanting using high-yielding planting materials, followed by stronger agronomic practices.
“We need a systematic and disciplined approach from top to bottom. Replanting must begin, supported by better agronomic understanding. Using superior seeds is non-negotiable—planting inferior material will only reproduce the same poor results,” he said.
The push for higher productivity comes amid tightening global supply. Indonesia, the world’s largest palm oil producer, continues to channel large volumes into its B40 biodiesel program and the planned B50 mandate, while also intensifying action against illegal plantations. If these trends persist, Bek-Nielsen warned of a potential global supply squeeze within the next six to nine months.
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“Ten years ago, Indonesia consumed about seven million tons of palm oil. Today it could reach 24 million tons, mostly for biodiesel. Market dynamics have changed because exportable vegetable oil volumes are no longer as abundant as they once were,” he said.
In 2024, Indonesia and Malaysia remained the world’s two largest palm oil producers, with output of 48.16 million tons and 19.34 million tons, respectively.
Additional pressure on the industry comes from rising input costs, particularly for fertilisers, spare parts, and logistics. Tighter land-transport regulations have reduced truck load capacities, forcing more vehicles to move the same volumes and significantly driving up logistics costs.
Against this backdrop, MPOC believes that raising productivity is no longer merely a strategic option, but an absolute requirement if Malaysia’s palm oil industry is to remain competitive, sustainable, and relevant in the global market. (P2)
