The rising price of diesel and supply shortage has caused Southeast Asian palm harvesting to be disrupted.

The?harvesting of palm oil on Southeast Asia's Borneo and Sumatra islands is being disrupted by rising fuel prices and shortages in supply. This forces smallholders, who are the main producers of edible?oil around the world, to reduce their fruit collection.

El Nino is expected to reduce rain and lower yields in the top producing countries of Indonesia and Malaysia.

Fuel shortages have hit Sumatra farmers in Indonesia, according to industry officials.

Napolean R Ningkos, of the Sarawak Dayak Oil Palm Planters Association, said that financial constraints would make it impossible for smallholders in Sarawak to harvest their crops. This will lead to fields being abandoned and a decline in palm oil production.

Sabah and Sarawak combined accounted for 43.9% Malaysia's crude oil palm output of 20,28 million metric tonnes in 2025. This is a significant contribution to the world supply of palm, used in everything from household products to cooking oils.

Sumatra produces 55% of Indonesian palm oil, according to data from the Agriculture Ministry.

ROUGH TERRAIN, EXPENSIVE FUELS

Officials say that the remote location of Borneo’s palm plantations makes it difficult for farmers to collect and transport fresh?fruits to collection points or mills.

The association's president, Napolean, says that while Malaysia offers subsidised diesel for 2.10 ringgit a litre with a cap of 200 litres per month, this allocation is far below the average monthly operational needs of farmers, which are at least 500 litres.

He added that "farmers have reduced their harvesting round from about 2.5 rounds to only 1.5 rounds or one every month."

Their journey requires significant fuel consumption. "The current diesel subsidy quotas are designed for West Malaysia's relatively flat terrain and infrastructure, but they are not adequate for Sabah and Sarawak's rugged interior."

Global fuel prices are up and supplies are tightening since the U.S./Israeli war against Iran began in late February.

El Nino conditions in the second half of the year are a 'dark spot' in the forecast. In 2015 and 2016, severe El Nino conditions cut palm oil production in Malaysia by up to 18%. Meanwhile, Indonesia's output fell by 3%.

HIER TRANSPORT, POWER, AND MACHINERY FEES

Raphael Golout is the president of United Sabah Smallholders Association. He represents owners of small landholdings.

Napolean and Raphael urged for a revision of the?diesel subsidy policy in order to better reflect geographical and economic challenges that farmers face in Sabah and Sarawak.

Napolean stated that Sarawak's harvest could be reduced by 15 to 20 percent.

Since mid-July, the shortage of diesel has hampered operations of farmers in Sumatra. This is according to?GulatManurung, chairman of APKASINDO, an association of smallholders.

He said that the farmers' transportation of fruit bunches was impacted by diesel engines in all their vehicles and equipment. The problem was resolved when harvesting intervals were extended to eight to twelve days, instead of the normal eight to ten days. Reporting by Ashley Tang from Kuala Lumpur, and Bernadette Cristina in Jakarta. Editing by Naveen Thural and Clarence Fernandez.

(source: Reuters)