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Palm Oil Industry Face 3-5 Years Production Halt Due To Replanting Curbs

March 28, 2023

This will result in lower FFB yield and higher cost

Kenanga Research in a recent note cautioned that palm oil production could be put on hold for three to five years for the industry to replenish older palms with younger saplings. 

“Longer term, the growth for palm oil looks less rosy. Expansion in the form of new oil palm planting is slowing due to tighter regulations,” the research house said. 

It noted that Indonesia, which has 15 million ha area of oil palm trees has only three to four million ha left for the crop, while Malaysian oil palm area has been contracting even before reaching a voluntary cap of 6.5 million ha. 

“This implies fewer young and prime palms over the coming years while palms planted in the 1990s and 2000s are growing older and taller, slowing down harvest, lowering FFB yield and pushing up costs…Replanting will eventually be necessary leading to a production pause for three to five years,” it said.