KUALA LUMPUR: National Association of Smallholders Malaysia (Nash) president Datuk Aliasak Ambia thanked the government today for resuming financial assistance for replanting of oil palms in 2017, after two years of "dry period."
Today, Prime Minister Datuk Seri Najib Razak, in tabling Budget 2017 at Parliament allocated RM30 million for smallholders to replant their unproductive trees.
"We're very grateful for the RM30 million oil palm replanting grant for next year. There was no budget for us to replant aging trees for the past two years," he told Business Times in a telephone interview.
"We hope this RM30 million is adequate because there is no mention of replanting area in 2017," he added.
Aliasak noted the oil palm replanting grant was previously set at RM7,500 per ha in Peninsular Malaysia and RM9,500 per ha over at Sabah and Sarawak.
He explained the oil palm replanting grant goes to payment for labour, chemical usage, high yielding seedlings and machinery rental.
Najib also announced the government will allocate RM250 million next year as an incentive for sustained rubber production.
From January to August of this year, rubber output only amounted to 457,954 tonnes. For the full year, the government estimated rubber output to shrink further by 10 per cent to 650,000 tonnes from last year's 722,122 tonnes.
So far, SMR 20 prices averaged at RM5.17 per kg with the lowest at RM4.27 per kg on 11 February 2016. This is due to weak demand from China following anti-dumping and countervailing duties by the US on select tyres.
Since the start of this year, the government is incentivising smallholders to go on tapping rubber by increasing the floor prices to RM5.50 per kg (free on board) and RM2.20 per kg. (farm-gate price)
Aliasak also thanked the government for heeding smallholders' call to further raise the floor price for rubber sales.
"The cost price is around RM3.20 per kg while the floor price is only set at RM2.20 per kg. We have been selling rubber below cost price. Hopefully, the RM250 million allocation is meant to raise the floor price above production cost level," he said.