KUALA LUMPUR: The Malaysian Palm Oil Board (MPOB) said the industry still has “a long way to go” before it can achieve the “very high” gross national income (GNI) contribution target of RM178 billion by 2020 under the government’s Economic Transformation Programme.

“It is a tall order to achieve the RM178 billion target. We are still talking about over RM60 billion [in GNI] a year.”

“We are trying to break the RM100 billion mark but it is still a challenge for the [industry] players and the government,” MPOB chairman Datuk Wan Mohammad Khair-il Anuar Wan Ahmad (pic) told reporters at the Palm Oil Economic Review and Outlook Seminar 2015 yesterday.

The palm oil sector is the largest component of Malaysia’s agricultural sector, with more than 70% of agricultural land in the country used for palm oil cultivation. Last year, the palm oil industry’s GNI contribution to the country stood at RM63.4 billion. For 2015, MPOB is “quite confident” the industry’s production will improve on 2014’s GNI achievements to RM66.7 billion.

Meanwhile, crude palm oil (CPO) price is estimated to range between RM1,820 per tonne and RM2,750 per tonne as volatility in CPO prices would continue this year.

Wan Muhammad said higher GNI would come on the back of the depreciation of the ringgit, lower stock levels after the flood situation in the peninsula, and the government’s export tax policies.

Domestically, the implementation of the government’s commitment to use biodiesel under the B7 mandate would contribute to the sector’s income. The B7 programme will sustain demand and reduce stock built up for palm oil locally. It is expected that 576,000 tonnes of CPO will be utilised under the B7 programme.

Despite acknowledging that the palm oil sector is still more than half way off the mark of its 2020 GNI target, Wan Muhammad said upstream and downstream players can do more to boost its contribution to national income.

For upstream production, he said that CPO production can be increased as some remaining 700,000ha of agricultural land left in the country for palm oil cultivation can be planted in the next few years.

This article first appeared in The Edge Financial Daily, on January 20, 2015.