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From British Malaya to Modern Times: How did the introduction of palm oil change Malaysia's agricultural landscape?
The palm oil industry is an important pillar of Malaysia's economy. The country is the world's second largest palm oil producer after Indonesia. The Malaysian Palm Oil Board (MPOB) is responsible for promoting and developing the palm oil business in the country. The palm oil industry in Malaysia produces approximately 90 million tonnes of lignocellulosic biomass annually, including empty palm fruit bunches, palm wood and palm fronds, and oil mill effluent (POME). In 2010, in response to concerns about the social and environmental impacts of palm oil, the Malaysian government pledged to limit the expansion of palm oil cultivation and keep at least half of the country covered in forest.
Historical BackgroundBritish Malaya
The palm oil tree was introduced to British Malaya by the British government in the early 1870s as an ornamental plant from the eastern regions and West Africa. In 1917, the first commercial palm oil cultivation began at the Tennamaran plantation in Selangor. Initially, the government focused on rapidly increasing palm oil production and expanding palm oil cultivation land. This policy led directly to the Great Flood of December 1926, and by the 1920s, over 2.1 million acres of land had been deforested by the British Empire.
Malaysia
In the early 1960s, the government promoted the expansion of palm oil cultivation in order to reduce dependence on rubber and tin. The FELDA land resettlement program was launched in most palm oil growing areas with the aim of eliminating local poverty. During the same period, Malaysia became the world's largest exporter of palm oil. World Bank policies in the 1970s also encouraged the expansion of palm oil, and the International Monetary Fund's bailout program after the 1998 economic crisis further stimulated the promotion of palm cultivation. In the 1980s, the government nationalized the three major palm oil companies, Guthrie, Golden Hope and Sime Darby.
Tensions with the EU
In March 2019, the European Commission concluded that palm oil cultivation causes excessive deforestation and recommended phasing out its use in transport fuels by 2030. Mahathir accused the EU's policy of being "extremely unfair" and warned it could spark a trade war with Malaysia. Mahathir described the policies as an example of "the rich trying to impoverish the poor".
Export issues with India
India, the world's largest buyer of edible oils, imposed a de facto ban on refined palm oil from Malaysia, a move stemming from New Delhi's displeasure over Mahathir's criticism of India's new citizenship law. Traders in India have been told to steer clear of Malaysian palm oil and buy Indonesian palm oil instead. However, Mahathir said that even if he was affected, he should remain honest.
Labor exploitation issues
In late December 2020, the U.S. Customs and Border Protection (CBP) issued a ban on Sime Darby’s palm oil imports based on a forced labor investigation into the company. The ban was followed by a ban on FGV Holdings over forced labour issues. According to CBP reports, Malaysia accounted for 31% (about $41 billion) of U.S. palm oil imports in fiscal 2020.
Economic impact
As of 2016, the palm oil plantation area in Malaysia reached 57,400 square kilometers. In 2012, Malaysia's palm oil industry employed approximately 491,000 workers. Malaysia's Sime Darby is the world's largest listed palm oil company, while Felda Global Ventures Holdings, the world's second-largest oil palm plantation company, controls more than 850,000 hectares of land.
Research institutions
In the 1960s, the Malaysian Ministry of Agriculture began to establish exchange programs with West African economies to expand research and development in oil palm breeding. UPM, established by the Malaysian government, specializes in training agricultural and agricultural industrial engineers and conducting related research. In 1979, the Palm Oil Research Institute of Malaysia (PORIM) was established by doctors and industry, and eventually merged with the Palm Oil Registration and Licensing Authority in 2000 to form the current Palm Oil Board, which focuses on oil palm breeding and palm oil. Potential applications of oil.
The development of biofuels
The Malaysian government established a national biofuel policy in 2006, implementing the B5 regulation in certain areas, requiring all diesel to contain 5% palm oil biofuel. In 2014, the policy is expected to be implemented nationwide, with plans to increase the minimum proportion of palm oil biofuel to 10%. Still, Malaysia’s biofuel industry faces profitability challenges due to high crude oil prices.
Labor Practice Issues
A report by the Bureau of International Labor Affairs of the U.S. Department of Labor pointed out that child labor and forced labor exist in Malaysia's palm oil industry.
As the palm oil industry developed in Malaysia, it changed the country's agricultural landscape and social structure. However, such development also brings environmental, economic and social challenges. How should we balance the conflict between economic interests and environmental protection and further think about the future sustainable development direction of the palm oil industry?
