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The smallholder sector which makes up 40 per cent of oil palm planted areas in Malaysia, is among crucial components in the country’s palm oil industry.

Palm oil is a ubiquitous product, found in everything from candy-bars, pharmaceuticals, detergents and even the fuel for our cars. This versatile product is critical to the everyday lives of billions throughout the world. But where does it come from?

Palm oil comes from the oil palm (Elaeis guineensis) a palm tree that originated from West Africa, where the oil palm had been cultivated for some 5,000 years. However, the plant’s introduction to South East Asia was for ornamental purposes at the end of the 19th century, with commercial production only established in the early 20th.

Following Malaysia’s independence from the United Kingdom, the country recognized the need to undertake an ambitious economic development policy to provide income to hundreds of thousands of Malaysians, many in rural communities unable to benefit from urban development. Palm oil was seen as an answer to this question, providing hundreds of thousands of producers with a crop to cultivate, and Malaysia a raw material to export to the world.

Today, more than 300,000 small farmers throughout Malaysia cultivate oil palms, contributing to the more than 18 million tonnes of palm oil exported to the world every year. These small farmers, in addition to earning an income from cultivating oil palms, have also adopted an entrepreneurial spirit, raising livestock and cultivating fruits and vegetables amid their oil palms. As a result, palm oil has directly contributed to the adoption of ingenious new practices that raise the productivity of agriculture production and the standard of living throughout the country.

Who are small farmers?

Malaysia’s small farmers are a robust and diverse group of individuals, all contributing to Malaysia’s national prosperity and cultural identity. With almost 40 per cent of land under oil palms cultivated by small farmers, they play an integral role in the success of the industry, and earn a significant share of the RM 53 billion (USD 16.57 billion) the palm oil industry contributes to Malaysia’s Gross National Income.

Cultivating plantations between 4 and 40 hectares in size, Malaysia’s small farmers are not the biggest players in the palm oil industry, and are often overlooked in the wider international debate over palm oil. But come to Malaysia and the small farmer is not only applauded, but widely recognized for their importance not just to palm oil production but to economic development as well.

After all, the palm oil industry was developed as a vehicle for increasing the wealth of Malaysians, particularly rural communities where agriculture would be the most effective. As the World Bank has noted, agriculture development is three times more effective at reducing poverty than any other sector – a fact made abundantly true by the Malaysian palm oil sector. Malaysian palm oil small farmers today enjoy incomes four times above the national poverty level!

Today, Malaysia is looking to the palm oil industry to assist the country in achieving high-income status by 2020, as outlined under the Economic Transformation Programme (ETP). As part of the ETP, Malaysia is assisting small farmers in replanting old plantations with new and improved seedlings, while new technologies and practices are being developed to increase yields and efficiencies of small farmers. This reflects Malaysia’s long standing recognition that in order for the country to prosper, Malaysia’s small farmers must prosper as well.