September 2, 2008

Oil Palm Planters Enjoy Big Drop in Fertiliser Bill

By Ooi Tee Ching

OIL palm planters can expect their fertiliser bill to fall from today, following the government's decision to abolish import duty on the product.

The tax exemption on fertilisers takes effect from September 1 2008, Plantation Industries and Commodities Minister Datuk Peter Chin said.

Last year, Malaysia's import bill of 3.4 million tonnes of mineral fertilisers totalled RM2.6 billion, the bulk of it paid by oil palm planters.

Fertiliser cost accounts for about 60 per cent of oil palm planters' production cost.

"Budget 2009 seeks to ease farmers' burden and that includes oil palm planters," he told Business Times in a telephone interview yesterday.

Oil palm planters have had to contend with a sudden spike in fertiliser costs in the last 12 months because of higher crude oil prices.

The price of nitrogen-based fertiliser is normally benchmarked against natural gas prices as gas is used to make fertiliser. The price of gas in turn, follows the price of oil.

On the RM50 million allocation to his ministry under Budget 2009, Chin said it is meant to help oil palm planters implement conservation programmes.

"This allocation is not just limited to big companies pursuing the RSPO (Roundtable on Sustainable Palm Oil) certification.

"It is for all oil palm planters, whether smallholders or estate owners, who are implementing conservation programmes and enhancing biodiversity at their oil palm plantations in Malaysia," he said.

The RSPO is a group of global parties promoting the growth and usage of sustainable palm oil. Its members including oil palm planters, supermarkets, fastfood operators, bankers, environmental activists and social groupings.

RSPO's sustainability criteria promotes a balanced development between people, planet and profits.

"This money can also be used to help plantation companies upgrade the school facilities at their estates," he added.

Chin said the detailed guidelines on eligibility will only be finalised with the Finance Ministry in October.

Separately, the Malaysian Palm Oil Council (MPOC) has set up a RM20 million revolving fund for wildlife conservation.

MPOC is now collaborating with state-mandated non-governmental organisation Borneo Conservation Trust to gauge the welfare of Sabah's orang utan population. The country's exchange holding company Bursa Malaysia Bhd is also supporting this cause.

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