Improving quality of life

PALM oil tops the list of the world’s most consumed vegetable oil - ubiquitous in many of our daily sustenance, household products and cosmetics, among others.

However, there is little awareness on how the global palm oil boom has positively impacted welfare in rural communities in areas where it is grown.

Malaysia’s palm oil industry has grown into a major economic force in the country - the fourth largest contributor and an employer to nearly a million people, according to the United Nations Development Programme (UNDP).

Oil palm cultivation is associated with income gains for many smallholder farmers. These income gains likely translate into longer-term improvements in household living standards.

Enhancing quality of life

The Federal Land Development Authority (Felda) was established on July 1, 1956 under the Land Development Ordinance of 1956 for the development of land and relocation.

With a main objective to eradicate poverty through oil palm and rubber cultivation, Felda carried out projects of land development and agricultural activities, industrial and commercial social economy.

Many oil palm and rubber planters who hailed from extremely humble backgrounds became eligible to be part of the Felda scheme. Under the scheme, each successful applicant received 4.1ha of land. Natural rubber was initially cultivated as the core crop.

However, rubber tree plantations were later on converted into oil palm plantations given the fact that rubber prices were fluctuating widely, while yield and earnings were weather-based.

Poverty rates in Malaysia have dipped since the boom of oil palm production in the country.

These factors combined paved the way for the introduction of oil palm, which has solid demand and constant yields year-round.

It is estimated that a 4.1ha piece of land grown with matured trees can generate between 10 and 15 metric tonnes of oil palm fruit per hectare per year, and prices for a tonne of crude palm oil can go as high as RM 8,000 per tonne. (2 March 2022 – MPOB CPO daily price RM 8076.50).

The Felda scheme works in a way that in the first three years of planting (before the trees mature), each settler receives an advanced livelihood wage each month.

Once the planting reaches the fourth year, the trees would have matured enough to start producing fruits, and this translates to an increase in the settler’s wages.

Felda halted acceptance of new settlers in 1990, after 112,635 were placed in 317 schemes throughout the country.

Presently, Felda continues to play a major role in providing adequate and modern facilities on the schemes.

Shrinking poverty numbers

Given that oil palms thrive in tropical climates and can be harvested throughout the year in Malaysia, sustainable production of palm oil can provide farming families in tropical areas with a year-round income.

Additionally, sustainable palm oil production plays a key part in reducing poverty and providing rural infrastructure in the producing countries.

Roads, schools and healthcare facilities follow in the wake of the jobs it creates, leading to community development.

A report published on UNDP’s website stated that production of palm oil is intricately linked through land use systems and rural livelihood generation.

This means palm oil expansion districts experienced more rapid increases in household expenditures for people in agriculture and the bottom quintile.

Palm oil expansion also tends to coincide with a sustained boost to primary, industry, and total district outputs, but no discernible impact on services.

Besides providing livelihood for millions of smallholders worldwide, research shows that palm oil production helps support the economies of producing countries, based on data reported by the International Institute for Sustainable Development.

UNDP reported that a million jobs have been created in Malaysia thanks to palm oil production, while further data shows that Malaysia oil palm production has risen from 1.26 million tonnes in 1975 to 18.45 million tonnes in 2022.

Over the same period, palm oil product exports have climbed from 1.17 million tonnes in 1975 to 15.71 million tonnes in 2022. Oil palm plantations grew from 0.64 million hectares in 1975 to 5.67 million hectares in 2022. To date, 55.4% of these were located in Sabah and Sarawak.

In Sarawak, oil palm plantation cover expanded from 14,000 ha in 1975 to 1.62 million ha in 2022.

Meanwhile in Sabah, oil palm plantation cover grew from 59,000 ha in 1975 to 1.51 million ha in 2022.

Poverty rates have decreased since the beginning of the industry’s expansion - indicating that it’s unwise to assume that the palm oil industry had only left negative impacts on the society and economy.

Environmental concerns surrounding the palm oil industry will likely remain a hot topic in global policy debates about its future.

However, the Malaysian Palm Oil Council (MPOC) remains committed to leading the promotion of sustainable palm oil on behalf of the Malaysian palm oil industry.

“The efforts to raise awareness about palm oil and educate the current generation on the contributions and role of the palm oil industry in poverty eradication have helped create an appreciation of Malaysia’s achievements,” said MPOC.