Focus: Asia’s Palm Oil Industry – Part 2

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Crop Brings Benefits to Smallholders

Access to finance will help farmers comply with improvement plans.

(Continued) But for the palm oil industry, over 3 million small farmers would have gone hungry worldwide. This group of farmers, producing around 9 percent of the global output, has been earning its livelihood from a commodity that is easier to grow than coffee or pepper and harvests faster than paddy. Palm oil is also hardier and less prone to diseases and pests.

In Indonesia and Malaysia, which together account for 85 percent of the global production, smallholders farm 40 percent of the plantations. In Malaysia alone, they number over 175,000.

“In Malaysia, around 30 to 40 percent of palm oil is derived from small farmers in one way or another,” says Reza Azmi, founder and executive director of Wild Asia, a Kuala Lumpur-based social enterprise that promotes sustainable tourism and agriculture.

“Oil palm cultivation has provided a higher source of income compared to other commodities such as paddy or rubber. Small farmers can harvest (oil palm fruit bunches) twice a month as opposed to twice a year for paddy. Oil palm has the highest producing yield compared to other crops, so they are able to maximize a smaller land area and earn a comfortable income.”

Besides boosting the rural economy directly, the crop also produces indirect benefi ts, like improvements to infrastructure that benefit farmers and non-farmers alike.

“When larger oil palm companies develop rural areas, roads are built, which benefit local communities (by providing) access,” Azmi says. “The local communities could then start new businesses such as canteens or grocery shops or provide services to oil palm workers, which also promote higher incomes and develop the rural economy.

“In some cases, these companies also provide clean (drinking) water to the communities.”

In Thailand, the palm oil sector has more smallholders than large plantation companies. In Indonesia, the growing number of oil mills has led to a spurt in the number of small farmers.

The palm oil industry is the main driver of the local economy in Papua New Guinea (PNG), with people migrating from rural areas to work on plantations, says George Curry, professor at Curtin University in Western Australia and an expert on palm oil plantations in PNG.

Currently, around 140,000 hectares are under cultivation in PNG with nearly 200,000 people working in the industry. Curry explains that women in particular have benefited.

“From 2007 there has been a separate payment system for women who were earlier not guaranteed payment for labor, which was distributed at the discretion of the male household head,” he explains.

“Now about 26 percent of oil palm income is paid directly into the bank accounts of the women, providing them earnings well above the minimum wage.”

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Crop Brings Benefits to Smallholders was written by Sudeshna Sarkar, China Daily Asia Weekly, August 2 – 8, 2013.

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