Russia-Ukraine War pushes high crude palm oil price to rocket further to over RM8,000 per tonne

Rita Insol

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By Lian Cheng

KUCHING, March 4: The Russia-Ukraine War contributes a major factor in pushing up the price of crude palm oil (CPO), which has broken the RM8,000 per tonne mark and will remain high in the near term.

Quoting Malaysian Palm Oil Board’s daily price, Dayak Oil Palm Planters Association (DOPPA) advisor Senator Rita Insol said on March 2, crude palm oil price rose to an all-time high of RM8,076.50 per tonne. 

“Going forward, most research houses said that the price will remain high in the near term, exceeding the RM4,100 per tonne forecast for 2022,” Rita told DayakDaily.

According to her, after many years of suffering from low prices, oil palm farmers have been breathing easy since 2021, when CPO price recorded a price increase to an average of RM4,407 per tonne compared to the average price of RM2,685.50 per tonne in 2020.  

“The tight supply of palm oil combined with a disruption in the supply of sunflower oil from Ukraine as a result of the ongoing conflict are major factors that caused the upsurge in CPO price,” said Rita.

She said although the high CPO price benefits smallholders, the high cost of fertilizer and chemicals, including the shortage of labour, has significantly reduced the bottom line.  

Fertilizer accounts for between 30 and 40 per cent of the total cost, and the almost 70 per cent increase in fertilizer price in 2021 has caused farmers to reduce fertilizer application, thereby impacting production, she explained. As for herbicide, the cost has tripled in 2021 and price spikes are forecasted to stay in 2022. 

Rita pointed out that the shortage of labour is also a major problem facing smallholders. While largely family-operated, most able-bodied family members shun farm work and prefer non-3D jobs. 

“With the price rally since 2021, and the price forecast for 2022, DOPPA expects its members to enhance production to reap the full benefit of price increase,” said Rita. — DayakDaily