This article first appeared in The Edge Financial Daily on November 15, 2017

KUALA LUMPUR: Crude palm oil (CPO) production is expected to rise by two million tonnes to 19.5 million tonnes this year, said Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong.

Last year’s production was lower due to El Nino weather conditions, Mah told reporters after opening the International Palm Oil Congress and Exhibition.

As for prices, he said they will remain at this year’s level in 2018.

“On average, the average price would be maintained next year. The present price is RM2,600 to RM2,700. I forecast it to be around there in 2018,” he said.

The minister reiterated that the exports of palm oil and palm-based products would likely exceed RM70 billion after hitting RM51 billion in value between January and August, with the European Union (EU) topping the list at RM7.5 billion, followed by China (RM5.4 billion) and India (RM5.2 billion).

On the EU resolution to ban palm oil biofuel by 2020 and develop a single certification for sustainable palm oil, and how this could impact palm oil exports in future, Mah said he remained confident of a positive outcome from discussions with the European Commission and European Parliament.

“Europe will not implement (any) discriminatory policy, so it is not legislated yet. It is a resolution by the committee and we will want to discuss in the best way [with them] as a buyer and we as the exporter,” he said.

Mah said trade discussions work both ways whereby Malaysia and Indonesia — the other major palm oil producer — are also importers of many European products.

Therefore, the ministry reaffirmed that if the EU decides to carry on with the alleged “unfair and discriminatory” treatment against Malaysian palm oil products, Malaysia would be forced to react against the grouping.

“We can [make] similar restrictions against their products, but I do not want to go into so much detail. I am confident (as) we have had many rounds of talks so far, including a meeting with the European commissioners.

“I am confident that they will see our point of view. I will again impress European ambassadors with our point of view, when I meet all 16 of them again at the end of this month,” he added.

Mah also noted that Prime Minister Datuk Seri Najib Razak would be meeting with Indonesian President Joko Widodo next week, with the protection of the palm oil market as a main agenda, following a meeting by the council of palm oil-producing countries earlier this month, when the matter of the EU resolution was brought up.

Mah said Malaysia was exploring new markets to reduce the stress on the issue. He said the remaining Trans-Pacific Partnership (TPP) agreement members, after the withdrawal by the US, would still be a big market for Malaysian commodities.

“Without the US, the 11-nation market is still very big with 500 million people. Last year, our palm oil and palm-based exports to the 11 countries, including Japan and New Zealand, were RM8.4 billion. Total exports for these products were RM67 billion,” he said.

Mah said the new TPP deal, if implemented, would allow Malaysia to penetrate into new markets, including Chile, as well as raise commodity exports.