Malaysia palm replanting slows due to rising fuel and fertiliser costs

Malaysian palm oil production is reducing replanting due to rising fuel and fertiliser costs, as well as the high price of vegetable oils. This has led to farmers postponing this vital exercise to maintain supplies of the world's most popular edible oil.

Farmers in Malaysia's?No. Farmers in?No.

The benchmark price of crude palm oil has risen by about a 10th since late Feburary, which is encouraging farmers to produce instead of replant.

Mohd. Sahman Duriat is a farmer in Selangor, Malaysia, who owns 30 acres (12 hectares).

The 58-year old said, "We do not know when the prices will drop, we'll have to wait."

Plantations that are older in the top producers?Malaysia, Indonesia and other countries pose a major concern to supply. The industry will only begin to replant in earnest in 2025.

Indonesia, unlike Malaysia, has a large supply of domestic?fertiliser.

More than half of all edible oils traded is palm oil, which is used for cooking oil and household items.

Replanting can be critical to maintaining yields, especially at a moment when the supply is under pressure due to stagnant output.

SMALLHOLDERS REDUCE REPLANTING

Officials in the industry said that small farmers, who account for 40% of Malaysia's output, have also reduced replanting due to a lack of financial assistance.

According to Napoleon R. Ningkos of a producer group, in the Malaysian state Sarawak, on Borneo Island, many smallholders farm land under Native Customary Rights, which do not confer ownership.

Ningkos, head of the Sarawak Dayak Oil Palm Planters Association, said: "If they do not replant we will see yields continue to go down and?this will impact volumes in the coming years."

Palm oil prices are higher, so producers delay replacing trees that have been in place for a while. This is because palm trees require three to five years to mature, unlike other staple crops like rice and wheat which only need three to six months to mature.

After 25 years, oil palms' yields begin to decline.

Fertiliser costs are about half of the field operating costs in palm oil production.

Companies said that the?impact to date appears to be mainly confined to smallholders. Major producers continue their operations without any significant disruption.

Johor Plantations - a leading fertiliser producer - said that it was protected from the near term cost pressures as they had already secured pricing and volume for 2026.

Roslin Azmy hassan, the?chief executive officer of the Malaysian Palm Oil Association, stated that maintaining a healthy rate of replanting of?3%-4% in Malaysia may be difficult this year due to the current uncertainty.

Malaysia's replanting rates rose to 3.4% by 2025. This is a significant increase from the annual 2% over the last five years. This was due to accelerated efforts by large plantations, and the government supporting smallholders. Reporting by Ashley Tang from Kuala Lumpur, and Bernadette Cristina in Jakarta. Editing by Naveen Thupkral and Tony Munroe.

(source: Reuters)