Wednesday, November 26, 2008

malaysiakini and the PALM OIL Barons

This malaysiakini article Palm oil farmers hit hard by price decline and the report in the Star should be read before we can evaluate the problems in the palm oil industry.
In the malaysiakini article, it is reported that farmers prefer to let the ripe fruit rot on the trees and this appears to be such a waste unless it is the millers who do not want to buy unless at steep discounts.
In the Star article, there is a United call for government help from the major plantation groups.
These companies are requesting that TNB burn their bio-diesel so that demand for palm oil is maintained. We know that TNB is already suffering from the lop-sided IPPs that benefitted BN cronies and taxing consumers more.
It reminds me of the comment made during the USA hearings on the Auto Big 3's request for US$billions to save the auto industry. One congressman said,
"It did not help their case when each of the CEOs flew to Washington in their executive jets."
Plantation companies have been reaping record profits in recent years and ironically on the same day, the Star published KL-Kepong's latest annual reports that showed significant increase in profits.
As a very minor stakeholder in Batu Kawan, I am glad to see the latest report but I feel these big companies should provision for bumper years as well as lean years.
For those small-holders, they should be encouraged to form co-ops so that they can achieve better economies of scale or perhaps FELDA or other large group can purchase the crops instead of wasting the fruits.
I am sure the fruits should be worth more then the cost of harvesting that is done by mostly foreign workers. Maybe all the details of this problem have not been discovered.

Photo: thanks to malaysiakini


I swear said...

Gomen hould not help the palm oil fellas. Also I think gomen should abolish windfall tax and cess for the palm oil industry.

In biz, there are certain level of risk and current situation is a risk that the ind got to face, like anyone else in current economic situation. Windfall tax should also be abolished 'cos it is unfair that certain ind is tax heavily just because they are enjoying a bull run. These coy pays incometax too like any other coy and biz.

In short, no special assistance and no special tax for them. The market will correct itself and filter out the bad ones.

Would it be fair for me go to the gomen if my biz make losses and demand that the gomen to make sure I make profits and lots of it too?

richard said...

In Sabah we have sales tax of 7.5% on cpo and this is passed down to the sale of ffb, the fruits of oil palm. Sales tax is on production costs, so even if you are losing money but you sell your fruits, gomen tax you. Cos our state gomen does not have head screwed on right. They penalise agriculture fellas, not subsidise, unlike developed countries. They killed the golden goose years ago with cocoa cess when cocoa prices were good. A Small holder will have paid RM2250 sales tax for the selling RM30,000( and I am not talking about profit) oil palm fruits a year .In comparison, like a salary man he will have to pay no income tax. The oil palm fellas are not asking for handouts just asking to be treated fair.

H J Angus said...

thanks for your comments and the info on Sabah sales tax.
Definitely not a good idea to tax just based on prices and not profit.
I suggest you should bring this up with your state authorities or MPs.