The imposed ban on new planting of Oil Palm will create opportunities for the Oil Palm cultivators holding high extents of mature and immature area as new entries to the market will be blocked says First Capital Research in their report on the Oil Palm sector.
Although new planting of Oil Palm is banned, the existing plantations, especially the big three, (Watawala plantations, Elpitiya plantations, and Namunukula plantations) will continue to provide its higher yield for a longer period!
These existing cultivations will continue operations as usual. This cuts the opportunity for new companies or existing companies to enter the industry to reap the benefits of this high yield crop.
Giving the chance for the mature oil palm companies to dominate the market and enjoy the benefits! Oil Palm is currently the most productive plantation crop known to man, covering just 2% of total cultivated land globally, yet accounting for 35% of the world’s total vegetable oil requirement. “Oil Palm will continue its stance on generating the highest revenue percentage,” the report further adds.
“Palm oil is the largest agricultural contributor to Malaysia’s gross domestic product (GDP) with a total of RM44.8Bn or 3.8% of the GDP contribution in 2017. “The industry is one of Indonesia’s biggest earners of foreign exchange revenue, having contributed 2.46% to the country’s gross domestic product in 2017.”
Indonesia accounts for 47% of global Oil Palm production followed by Malaysia (37%) while the rest of the world produces only 16%.
