Info, JAKARTA–The crude palm oil (CPO) price would globally be bullish after 2021. It may happen for the decresing projection of the production in2022 to 2025 in Indonesia and Malaysia as the two main CPO producer in the world.
The report of Rabobank thatInfoSAWIT got on Wednesday (6/5/2018) predicted that there would be decreasing production of fresh fruit bunch (FFB) in most palm oil plantations in Indonesia for being old, the limited areas to expand, and the inadequate replanting program in both countries.
Senior Analyst of Grains & Oilseeds, Food & Agribusiness, Oscar Tjakra, said, it usually takes four years so that the plantation could be commercially producing 10 tons of FFB per hectare.
The peak production would be about nine to seventeen years old within the production more than 25 tons of FFB per hectare. The production would be decreasing less than 15 tons per hectare because the trees are more than 25 years old. “We predicted, 36% of the palm oil trees in Malaysia and 9% in Indonesia may be about more than 25 years old,” he said.
In the report of Rabobank, it was found that the compound average growth rate (CAGR) to global CPO consumption reached2,8% in 2018 to 2030. The compound average production rate just reached 1,4%. It means, it would influence the price globally namely for the long term demand in the domestic markets in Southeast Asia, India, and Africa.
He also concluded, in this short period, the nowadays cheap CPO – before 2022 – could make palm oil companies do efficient operational to reduce the production costs, and accelerate the consolidation.
He advised, in the long period, it is crusial for the producers to do replanting program to increase the stocks sustainably. It is important too for the small scale plantations which contribute 39% and 33% of the total plantations in Indonesia and Malaysia.
But there would be challenges in short, such as, the potential loss of income in the first four years in the replanting program. “It could prevent the forest damage but increase the productivity and welfare the smallholders in long term,” Oscar said. (T2)