Falling Palm Oil Yields Among Planters’ Concerns

The oil palm industry is facing a significant challenge of declining palm oil yields, with concerns raised by industry players and addressed by the government. The government has committed to conducting spot checks to ensure the quality of seedlings sold, with the aim of increasing yields and productivity without expanding land-use. However, the industry is also struggling with a price gap between crude palm oil and other seed oils, which could lead to a drop in structural demand. The replanting of oil palm trees in Malaysia is not meeting the recommended annual target, with only 2% of the total planted area being replanted in 2024. Despite these challenges, there is interest from potential investors in converting palm oil waste to renewable electricity.

The oil palm industry will need to urgently address the issue of falling palm oil yields, according to palm oil players. They have expressed concerns and are relieved that the issue has been recognised by the government. Also discussed at the annual Palm and Lauric Oils Price Outlook Conference and Exhibition 2025 (POC 2025, the players said the price gap between crude palm oil and other competing seed oils such as soy or canola oil, was at a historically wide gap. According to them, the gap would cause structural demand for palm oil to drop even as the industry faces fierce scrutiny from sustainability advocates. To encourage greater oil palm yields, the government had pledged to conduct spot checks on the palm oil supply chain to ensure seedlings being sold at nurseries were of high quality. Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said this would ensure the countrywide effort to increase palm oil yields would bear fruit eventually. “The government ...