Analysis: Asian farmers plant to boost palm oil output, seedling shortage slows pace

By Rajendra Jadhav, Mei Mei Chu and Bernadette Christina MUMBAI/KUALA LUMPUR/JAKARTA (Reuters) - Farmers across Asia are busy planting trees to boost palm oil

production but nurseries are struggling to keep up with demand for sprouts and seedlings, risking a delay in the industry's recovery from the COVID-19 pandemic. The

seedlings shortfall could slow plantation, capping production growth and keeping palm oil prices elevated, industry officials said, as the world already grapples with lofty

inflation. Asia produces more than 90% of the world's cheapest edible oil used in cooking, baking and cosmetics. The production growth of palm oil stalled in recent

years, partly due to labour shortages during the COVID-19 pandemic, but farmers are now looking to replant or expand plantations amid rising prices. The demand surge

comes as supply for germinated sprouts, used to make seedlings, has fallen as oil palm nurseries scaled down production during the pandemic to adjust to weaker demand.

Traditional growers Indonesia and Malaysia, which account for more than 80% of the global palm oil output, are focusing on replacing old oil palm trees that are cumbersome to

harvest and less productive, while India and Thailand are trying to expand acreage, industry officials said. "A number of big Malaysian estates (have decided) they want

to replant, causing a shortage of availability of seedlings in the market," said Tan Kim Tun, a Malaysian nursery operator based in the state of Johor. Global annual palm

oil production growth slowed to 0.5% between 2018 and 2022 from a 4.8% pace in the previous four years, according to data compiled by the U.S. Department of Agriculture.