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Annual Report 2016
ASIA MEDIA GROUP Berhad
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INDUSTRY OUTLOOK AND FUTURE PROSPECTS OF OUR GROUP (CONT’D)
III. Overview and outlook of the palm oil industry (cont’d)
The palm oil industry in Malaysia has performed positively over the years between 2000 and
2014. Total planted area in Malaysia, comprising both mature and immature planted area, grew
at a CAGR of 3.4% between 2000 and 2014, total planted area in Malaysia was 5.4 million Ha.
Mature oil palm plantations in Malaysia are located both in Peninsular Malaysia and East Malaysia.
Mature oil palm plantations grew at a faster pace in East Malaysia (CAGR 5.7%) compared to
Peninsular Malaysia (CAGR 1.6%) between the years 2000 and 2014 as a result of the higher
availability of arable land for agricultural purposes in the East Malaysia states of Sabah and
Sarawak. As at end December 2014, Malaysia had a total of 4.7 million Ha of mature oil palm
plantations, of which 2.3 million Ha were located in Peninsular Malaysia.
In line with the growth in mature plantation area leading to higher fresh fruit bunches (“FFB”)
yield, crude palm oil (“CPO”) production in Malaysia grew at a CAGR of 4.4% from 10.8 million
MT in 2000 to 19.7 million MT in 2014. CPO production volume is cyclical and correlates closely
to the volumes of FFB received by mills as a result of factors such as replanting cycles, weather
conditions and market forces, specifically pricing and availability of other vegetable oils. Malaysia
is the world’s second largest producer of CPO after Indonesia, with 19.7 million MT produced
in 2014, compared to Indonesia’s production approximately 30 million MT in the same year.
Malaysia’s exports of palm oil stood at 17.3 million MT in 2014, with the top three importing
countries India (3.3 million MT, 18.8%), China (2.8 million MT, 16.4%) and Netherlands (1.6
million MT, 9.2%) accounting for approximately 44.4% of total export volume. Palm oil export
volumes stood at 9.1 million MT in 2000, with top three importers India (2 million MT, 22.4%),
Pakistan (1.1 million MT, 12.1%) and China (1 million MT, 11.3%) accounting for 45.8% of total
export volume.
The demand for palm oil is driven by the following key factors:
•
Growing demand for food
The demand for palm oil is directly driven by the growing demand for food as a result of
the overall global population and economic growth.
•
Population growth
World population in 2014 was approximately 7.2 billion, having grown by 35.9% from 5.3
billion in 1990. Higher population growth rates were especially witnessed in developing
countries, pressuring the agricultural industry to produce sufficient food and fibres to feed
and clothe an increasing world population, as well as to increase the daily food intake
of the existing undernourished population in underdeveloped countries. As a result, the
agricultural industry has seen a general uptrend in all major crop production within the
last decade, and demand for food will increase significantly over the long term despite the
slower population growth rate in order to meet this demand.
Management Discussion and Analysis
(continued)