Media Statement (2) by Lim Kit Siang in Parliament on Monday, 24th November 2008:
Federal, Sabah and Sarawak governments should take immediate, urgent and effective measures to help oil palm smallholders and industry hard hit by two-thirds fall in palm oil prices since March
The Federal, Sabah and Sarawak state governments should immediately implement urgent and effective measures to help oil palm smallholders and industry hard hit by the two-thirds plunge in palm oil prices since March.
The price of crude palm oil (CPO) fell two-thirds from a March high of RM4,486 per tonne to current levels of about RM1,455 per tonne, creating a grave crisis for the oil palm industry.
On the one hand, oil palm fruits are being left to rot as mills are refusing to buy the fruits because of palm oils plunging price.
On the other hand, exporters are in a quandary as the global financial crisis and the plunge in CPO prices have led to many importers to default on their contracts as well as making it difficult for foreign importers to obtain letters of credit (LCs).
This is because prices of CPO quoted in contracts or LCs were much higher than the current market price of the commodity, making foreign banks in importing countries more cautious about extending credit facilities.
Many importers have opted to default on their contracts as the price of CPO had dropped sharply.
Whether banks or importers, nobody wants to receive goods that have lower current prices than that quoted in the LCs - especially when commodity prices are on a downward trend.
The urgent and effective measures the Federal, Sabah and Sarawak state governments should adopt to tide the oil palm smallholders and industry through their present crisis include:
Lim Kit Siang, DAP Parliamentary leader & MP for Ipoh Timor