KUALA LUMPUR: Finance Minister Lim Guan Eng, in tabling the 2020 Budget in Parliament today, expressed the government’s concern over the impact of low rubber and palm oil prices on planters’ livelihoods, especially smallholders.
He said the government was frustrated by the smear campaigns launched by the European Union (EU) and the United States on the palm oil industry.
In mitigating the farmers’ struggles, Lim said the government would provide RM550 million in soft loans for oil palm smallholders with a interest rate of two per cent.
The 12-year government loan allows oil palm smallholders to only begin repaying after the fourth year.
Planters are to subscribe to good agricultural practices, complying with the government’s Malaysian Sustainable Palm Oil (MSPO) standards to raise productivity and obtain better pricing in the export market.
Lim said the Malaysian Palm Oil Board (MPOB) will be allocated RM27 million to tackle the anti-palm oil campaign and dismantle trade barriers to improve market access for the country’s strategic export.
On the home front, Lim said the government would raise the mandate of biodiesel to B20 for the transport sector, by the end of next year.
MPOB had previously estimated this move would require an additional 500,000 tonnes of palm oil per year.
The government, said Lim, understood the difficulties caused by low rubber prices and decline in yields, especially during the monsoon season, at the end of the year.
Lim said the government, as in previous years, would allocate RM200 million to the Rubber Industry Smallholders Development Authority (Risda) and the Sabah Rubber Industry Board (LIGS) to help smallholders.
In addition, he said the government was allocating RM100 million to the Malaysian Rubber Board next year for the rubber production incentive scheme to support pricing.
This incentive is activated when the average monthly price for the Standard Malaysian Rubber (SMR) 20 Free on Board (FOB) dips below RM6.10 per kg or when the farmgate price falls below RM2.50 per kg.
Some 600,000 rubber smallholders account for about 90 per cent of the natural rubber produced in Malaysia.