A replanting grant to boost national productivity in oil palm may be part of the goodies for planters, especially smallholders, in the 2017 Budget to be announced tomorrow.

Plantation Industries and Commodities Minister Mah Siew Keong said replanting in the oil palm industry was very crucial as a vast majority of areas under cultivation comprised matured palms at more than 30 years.

There was a need, he added, to replant and boost yields.

"This figure (the maturity) is too high for harvesting and is the cause for productivity to fall.

"We have requested the prime minister to have a replanting grant to encourage planters, especially smallholders to replant," he said.

Mah was speaking to reporters after officially opening the Oils and Fats International Congress 2016 in Kuala Lumpur today.

He said this year's production is expected to be slightly lower at less than 20 million tonnes due to the El Nino effect.

The oil palm industry is vital to Malaysia's economy, while being the world's second-largest producer of palm oil after Indonesia.

Together, both countries supply more than 85 percent of the global palm oil.

Last year, the oil palm industry's contribution to the agriculture sector in the country's gross domestic product, was 5.1 percent.

In terms of export earnings, the sector contributed RM63.2 billion and accounted for 8.1 percent of total merchandise exports.

- Bernama