Palm oil sector fundamentally strong but more automation needed

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KUALA LUMPUR (Feb 21): The palm oil sector remains fundamentally strong but more focus should be placed on the greater adoption of mechanisation and automation to further improve productivity of both the big players and smallholders, said Dr Shariman Alwani, who is head of strategy, innovation and renewables at Sime Darby Plantation Bhd.

“The demand for palm is still there and our production continues to be strong. Fundamentally, the sector is still very strong. 

“Right now, we are working through some structural issues in terms of inventories and pricing. Once all these structural issues are sorted out — partly by itself but also via government policies such as the biodiesel mandate — I think the outlook is strong for this year,” Shariman told reporters on the sidelines of an industry seminar here today. 

However, he declined to make further comments on crude palm oil (CPO) prices.

Shariman also acknowledged there has been stagnant growth in yields for the palm oil industry, both in Malaysia and in Indonesia, over the past 10 years, but that it was in most parts due to impacts of adverse weather conditions.

"But it also means that there are opportunities for the industry to understand innovative actions to improve the yields — in particular by focusing on mechanisation, automation, digital innovation — to improve productivity of the industry not just for the big players, but also the smallholders who form a big component of the palm oil industry here and in Indonesia,” he said.

At 4pm today, the benchmark palm oil contact for May delivery was trading RM17 higher at RM2,262 per tonne.