Farmers across Asia are busy planting trees to boost palm oil production but nurseries are struggling to keep up with demand for sprouts and seedlings, risking a delay in the industry's recovery from the COVID-19 pandemic.
The seedlings shortfall could slow plantation, capping production growth and keeping palm oil prices elevated, industry officials said, as the world already grapples with lofty inflation. Asia produces more than 90% of the world's cheapest edible oil used in cooking, baking and cosmetics.
"A number of big Malaysian estates they want to replant, causing a shortage of availability of seedlings in the market," said Tan Kim Tun, a Malaysian nursery operator based in the state of Johor. Against this backdrop, palm oil prices hit a record high of 7,268 Malaysian ringgit per tonne this year and remain above the average seen in 2010-2020 despite a big downward correction recently.
"We can increase our capacity but it will take time... it will at least take one year before you can get germinated seed. The shortage cannot be resolved fast," said Ahmad Parveez Ghulam Kadir, director-general of Malaysian Palm Oil Board . Meanwhile, Indonesia uses around 95% of the seedlings it produces to meet domestic demand and exports only around 5%, Siregar said, forcing importers such as India and Myanmar to rely on Malaysia and Thailand.
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