Oil palm nurseries will struggle to ramp up output overnight to meet strong demand as it takes more than a year to make a seedling.
“We can increase our capacity but it will take time… it will at least take one year before you can get (a) germinated seed. The shortage cannot be resolved fast,” said Ahmad Parveez Ghulam Kadir, director-general of Malaysian Palm Oil Board (MPOB).
Industry officials estimate Malaysia has the capacity to produce up to 80 million germinated sprouts a year and Indonesia 200 million sprouts.
Indonesia, however, can currently only produce half of that amount, or 110 million per year, said Hasril Hasan Siregar, head of research and productivity improvement at Indonesian Palm Oil Association (GAPKI).
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.
Indeed, demand for Malaysia’s germinated seeds surged 30% in Jan-Aug 2022 period from a year ago to nearly 38 million seeds, according to data compiled by the MPOB. For Indonesia’s sprouts, demand jumped nearly 24% over the same period.
Demand for Malaysia’s germinated seeds is so high, that some nurseries are having to reject orders, said Tan, adding that his nursery has a waiting list of around 6 months.
All of this is causing problems for India, which is aiming to rapidly expand its oil palm area.
“The world needs more and more palm oil. For many poor consumers, it’s the only option,” said a Mumbai-based dealer with a global trading firm. The dealers declined to be named because of company policy.
India needs 20 million sprouts in 2022 but only 75% of that demand has been met by imports from Indonesia, Malaysia, Thailand and Costa Rica so far this year, said an official with TS Oilfed, India’s biggest importer of oil palm sprouts, who declined to be named because of company policy.