An oil palm plantation worker doing a harvest of the fresh fruit bunches (FFB). File photo: Bernama

KUALA LUMPUR: The strong crude palm oil (CPO) prices in the near-term may be beneficial to compensate for any marginal decline in fresh fruit bunches (FFB) production of oil palm plantations, according to Matang Bhd.

In its Annual Report 2020, the plantation company said population growth and higher demand from key markets such as China and India, as well as the continued implementation of biodiesel mandate in Indonesia, Thailand and Malaysia should all set the scene for buoyant demands.

However, it said supply and productions of CPO might be restrictive due to the impact of lower fertiliser application, long period of dry weather in 2019 and a significant labour shortage for the plantation sector, leading to a slower growth of the palm oil industry this year compared to 2019.

It said the implementation of the movement control order (MCO) followed by the conditional MCO from March 18 to June 9, 2020 had disrupted and restricted certain activities in oil palm plantations, in particular upkeep and maintenance that include manuring/ fertilising, pruning and spraying.

Additionally, it said the industry also faced shortage of foreign workers with the regulatory freeze of new intake of foreign workers which started in June 2020 until year-end.

Matang said its FFB production yield for the financial year ended June 30, 2020 (FY20) declined to 20.13 tonnes per hectare compared to 23.39 tonnes per hectare in the previous financial year.

It said the drop in FFB production, which has also affected the industry, was believed to be due to the entry of oil palm into biological resting in the second half of 2019, which has also triggered plummeting production from October to December 2019.

Meanwhile, it said continued focus on yields and accelerated harvests in first half of 2020, despite the implementation of the MCO, have enabled the company to drive on the increase in FFB fruit bearing and enhanced FFB harvest and production from February 2020 until June 2020.

It said FFB production in June 2020 increased to 2,194.80 tonnes from 1,213.91 tonnes in January 2020 which was the lowest in the FY under review. – Bernama