Malaysia oil palm replanting slows on rising costs of fuel, fertiliser
Malaysian palm oil producers are delaying replanting as fertiliser prices rose up to 60% and diesel costs more than doubled amid the Iran war. Higher palm oil prices also encouraged continued production. Industry officials warned reduced replanting could lower future yields and tighten global edible oil supplies.
KUALA LUMPUR (May 19): Malaysian palm oil producers are scaling back replanting as rising costs of fertiliser and fuel amid elevated prices of vegetable oil spur farmers to postpone the exercise crucial to sustaining supplies of the world’s most widely used edible oil.
Growers in No 2 producer Malaysia are grappling with fertiliser price increases of up to 60%, while diesel costs have more than doubled since the start of the Iran war, said farmers, industry officials and analysts.
As the near-closure of the Strait of Hormuz chokes off global energy supplies, benchmark prices of crude palm oil have risen about a tenth since late February, prompting farmers to produce rather than replant.
“I am not going to replant because the costs for labour, diesel, transport, and excavators are just too high,” said Mohd Sahman Duriat, who farms 30 acres (12 hectares) in the Malaysian state of Selangor.
“We don’t know yet when prices will come down, we will have to wait,” the 58-year-old, told Reuters.
Ageing oil palm plantations in top producers Malaysia and Indonesia are a key concern for supply, with the industry only beginning to step up long-delayed replanting efforts in 2025.
Unlike Malaysia, however, Indonesia has ample domestic supplies of fertiliser.
Palm oil, used in cooking oil and household products, accounts for more than half of traded edible oils.
Replanting is critical to maintaining yields at a time when supplies are pressured by stagnating output and Indonesia diverts more of its production to biodiesel.
Smallholders reduce replanting
Small farmers, who make up 40% of Malaysian output, are also scaling back replanting for lack of financial support, industry officials said.
In the Malaysian state of Sarawak on Borneo island, many smallholders cultivate land under Native Customary Rights which do not confer formal ownership, said Napoleon R Ningkos, president of a producer body.
“If they don’t replant, we will definitely see yields keep going down and this will affect volumes in coming years,” added Ningkos, the head of the Sarawak Dayak Oil Palm Planters Association.
Higher prices of palm oil spur producers to delay replacing older trees as oil palm trees take three to five years to produce fruit, unlike staple crops, such as rice and wheat, that needs three to six months to mature.
Oil palm trees typically reach peak production around 20 years of age, with yields declining after 25 years.
Fertiliser makes up about half the costs of field operational costs for palm oil production.
The impact so far appears largely confined to smallholders, with major producers operating without significant disruption, companies said.
Johor Plantations Group Bhd (KL:JPG), a leading producer, said it was largely insulated from near-term fertiliser cost pressures, having already locked in pricing and volumes for 2026.
Still, maintaining a healthy replanting rate of 3% to 4% in Malaysia this year may be challenging, because of the current uncertainties, said Roslin Azmy Hassan, chief executive of the Malaysian Palm Oil Association.
Malaysia’s replanting rate rose to 3.4% in 2025, surpassing the annual 2% rate over the previous five years, driven by accelerated replanting efforts by larger plantations and government support for smallholders.
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Source : The Edge Malaysia
