The future competitiveness and sustainability of Malaysia’s palm oil industry is increasingly determined by its ability to improve productivity. Stagnant production growth has begun to constrain supply, a concern industry players say has been voiced for decades. The Chairman of the Malaysian Palm Oil Council (MPOC), Carl Bek-Nielsen, said the palm oil industry has spent too long discussing yield improvements without achieving significant progress. In some cases, productivity has even declined. According to him, sustainability lies not in chasing ambitious targets, but in setting realistic and achievable goals. “If productivity is low and commodity prices fall, that is a recipe for disaster. Conversely, with high productivity, the industry has a buffer when prices weaken,” Bek-Nielsen said, as quoted by InfoSAWIT from The Edge Markets on Monday (January 5, 2026). The interview marked Bek-Nielsen’s first since assuming the role of MPOC Chairman in May 2023. A Danish national and permanent resident of Malaysia, he has spent more than 30 years in the palm oil industry. He began his career at United Plantations Bhd in 1993 as a cadet planter and has served as the group’s CEO since January 2013. Bek-Nielsen described national targets of six to seven tonnes of crude palm oil (CPO) per hectare as unrealistic, given the dominance of aging trees and slow replanting, particularly among smallholders. In 2024, Malaysia’s average national CPO productivity stood at just 3.28 tonnes per hectare. Instead, he proposed a phased approach with a more attainable target of around 4.5 tonnes per hectare by 2035. Achieving this level, he said, would represent a major leap for the industry and strengthen Malaysia’s position in responding to the European Union Deforestation Regulation (EUDR), as higher productivity reduces the need for land expansion and addresses deforestation concerns. “We need to move out of the 3.3-tonne-per-hectare range and gradually rise to 4.5 tonnes. If Malaysia can achieve that, it would be an extraordinary and realistic achievement to work toward together,” he said. At 4.5 tonnes per hectare, Bek-Nielsen explained, the industry would use the same inputs and labor but generate significantly higher output. The impact would extend beyond land efficiency to increased income, tax revenues, and corporate profitability. “If we can add 1.2 tonnes per hectare, Malaysia would produce about seven million additional tonnes of oil compared to current levels—all without opening new land. From a sustainability perspective, this is the most critical issue,” he noted. He emphasized that there is no single solution to boosting productivity. A comprehensive and sustained approach is required, starting with replanting old trees using high-yield planting materials, followed by improved agronomic practices. “We need a systematic and disciplined approach from top to bottom. Replanting must begin, followed by better agronomic understanding. Using superior planting materials is essential—using inferior seeds will only reproduce the same results,” he said. The push to raise productivity comes amid tightening global supply. Indonesia, the world’s largest palm oil producer, continues to divert large volumes of output to its B40 biodiesel program and planned B50 rollout, while also intensifying enforcement against illegal plantations. If these trends continue, Bek-Nielsen warned of potential global supply tightness within the next six to nine months. “Ten years ago, Indonesia consumed around seven million tonnes of palm oil. Today, that figure could reach 24 million tonnes, largely for biodiesel. Market dynamics have changed because export volumes of vegetable oils are no longer as large as they once were,” he said. In 2024, Indonesia and Malaysia remained the world’s two largest palm oil producers, with outputs of 48.16 million tonnes and 19.34 million tonnes, respectively. Another challenge facing the industry is rising input costs, particularly for fertilizers, spare parts, and logistics. Stricter land transport regulations have reduced load capacities and forced the use of more vehicles for the same volumes, significantly increasing logistics costs. Amid these pressures, MPOC views productivity improvement not merely as a strategic option, but as an absolute prerequisite for Malaysia’s palm oil industry to remain competitive, sustainable, and relevant in the global market.