RAHMAN Sarip is two years shy of his 80th birthday and does not see very well in his left eye.

He is the face of independent smallholders who grow about 40% of Malaysia’s oil palm, but who are seeing the sun set on their livelihood.

Rahman gets up every morning and drives to his 12ha estate to make sure his workers don’t steal his fruits, which he sells to supplement the small pension he gets as a retired teacher.

Then, he drives even further into Kuala Selangor to supervise about 60 other estates that are collectively owned by his siblings, and which also help them earn extra cash.

None of his children, who are in their 50s and 40s, is willing to take up the task, nor any grandchild.

The palm oil sector contributed 4.5% to Malaysia’s gross domestic product and RM67.5 billion, or 52.8%, of export earnings in 2018, according to the government.

Smallholder incomes benefit about two million people.

The youngest independent growers are in their 50s, while the average age of a smallholder is 70.

During the 1980s and 1990s, when Malaysia was the top producer of the edible oil – used in cosmetics, cookies and chocolates – people like Rahman used to earn tens of thousands per month from their harvests.

Today, changes in the world palm oil market, stricter regulations, a different labour market and changing consumer behaviour are causing the sun to set on smallholders and their livelihood.

Unless the government and industry assist them to adapt to these changes, smallholders believe that their way of life will die out with them.

“There has to be a new model for independent owners because the future is not on the side of the children and grandchildren who will inherit the plantations from my generation,” said Rahman, who is from Ijok, a plantation town outside the Klang Valley.

“For instance, I have 30 acres, but when I die, these 30 acres will have to be split between my five children. Each will have six acres each,” he said over coffee with The Malaysian Insight.

The problem is that it’s not cost-efficient to grow oil palm on such small plots.

To make the plots commercially viable, Rahman’s descendants will have to search for the owners of neighbouring estates and band together to create a plantation of up to 40ha.

“But we don’t yet have the legal and business expertise to organise smallholder plantations. This is something the government can help us do because many of our children don’t have any experience with planting.”

Larger is better   

Banding together and going big will also solve some of the most critical issues plaguing smallholders – the cost of replanting trees, and getting a stable and adequately paid workforce.

This will assist them in getting a share of the profits made from selling palm oil kernels, and help them use environmentally sustainable practices.

In order for their plantations to continue producing fruits, new trees must be planted every 20 to 25 years, said another smallholder, Sahman Duriat.

“With the small incomes that we make, there’s not enough to save up to cover the cost of replanting.

“If palm oil is to have a long-term future, the government must think of ways to help us with this,” said the 52-year-old, who is currently working on land inherited from his father.

Smallholders have also been lobbying unsuccessfully for years for fruit collectors to pay them a cut from the palm oil kernels sold, said Lehan Sayahan of the National Smallholders’ Association.

Kernels, the whitish seeds of the palm oil fruit, are sold together by growers in fresh fruit bunches (FFBs).

When collectors sell to mills, they are paid not just for the fruits they buy from growers, but the kernels as well. However, collectors do not pass on this extra income to growers.

Compared to FFBs, which currently fetch between RM500 and RM600 per tonne, kernels can be sold at up to RM1,900 per tonne.

“We’ve been lobbying hard for the government to set a rule so that we can get maybe 5% of the price for kernels. But the government says it’s a ‘sensitive subject’,” said Lehan.

“But if we can go big like a co-op, we can establish collectors that pay growers for kernels. When more and more growers sell their fruits to the co-ops because they pay for kernels, other independent collectors will follow suit.”

The government’s crackdown on undocumented migrant workers and the booming Indonesian palm oil industry are also making it difficult to hire competent help on a regular basis.

By organising, smallholders will be able to afford to hire legal Indonesian workers just like the big firms, said Sahman. – February 7, 2020.