Oil palm smallholders want Govt to help in bad times
The Star
Saturday - November 15, 2008
by Hanim Adnan
The commodity slump is not just a concern for corporate Malaysia. With the plunge in crude palm oil (CPO) prices, thousands of oil palm smallholders and their families are feeling the pain as well. The smallholders’ average monthly income has eroded by almost 60% and they need the Government’s assistance.
There are 122,000 independent smallholders working 470,155ha of oil palm, accounting for about 11% of the country’s total oil palm-planted area of 4.3 million ha.
“We want the Government to provide a safety net for us during these bad times. Just help us to secure a reasonable selling price for our fresh fruit bunches (FFB),” says TR Boniface Banda Enjah, chairman of the Sarawak-based Subis Smallholders Organisation.
The organisation represents 5,000 smallholders, of whom 15% are oil palm growers. Adds Boniface: “We are seeking an FFB floor price of RM300 per tonne to enable us to cope with our commitments, especially the bank borrowings.”
Sarawak smallholders face tougher conditions than their counterparts in Peninsular Malaysia and Sabah. The former plant oil palm on peat soil. This demands an extra investment of about RM2,000 to RM3,000 per ha.
Another disadvantage suffered by smallholders is their dependence on the next links in the palm oil supply chain. Unlike the large plantation owners, who have the financial muscle and their own mills, smallholders have to sell their FFB to traders and mill operators.
The average FFB selling price has dropped 57.5% to about RM340 per tonne from RM800 per tonne seven months ago. However, it is important to note that the FFB prices varies in the central, south and north regions of Peninsular Malaysia and also, in Sabah and Sarawak.
The latest blow was the reluctance of palm oil millers to purchase FFB at the already low market price. There are complaints that smallholders are pressured to accept discounts of RM100 when they sell the FFB.
Oil palm smallholders are also plagued with the high fertiliser prices, which jumped 200% to RM3,000 per tonne over the past three years. Fertiliser and chemicals represent about 60% of the smallholders’ total cost of production.
Retired school principal Sivalingam Dharmayah, who owns 3.24 ha of oil palm in Paloh, Johor, produced about 32 tonnes of FFB per ha per year.
He is one of the 350 successful independent smallholders in the 30-tonne Club category recognised by the Malaysian Palm Oil Board (MPOB).
“No doubt MPOB has tremendously helped smallholders over the years in terms of research and development and also, quality palm seedlings,” he says.
However, different measures are needed to help smallholders through the current depressing situation.
Says Sivalingam: “We (smallholders) just cannot understand why the fertiliser price has not come down, despite the major drop in CPO and crude oil prices.”
While glad that the Government has asked fertiliser manufacturers to slash prices by 15%, the smallholders say the prices ought to be further lowered by 50%. “I believe most smallholders will not be able to buy fertilisers within the next two to three months, and this will affect our yield within the next six months,” adds Sivalingam.
He suggests the immediate formation of a national fertiliser board to counter irregularities in the local fertiliser prices. He also claims that smallholders are facing an influx of tainted or inferior fertilisers in the market.
“Since we cannot afford to buy those expensive brands, some of us had to resort to the cheaper fertilisers.
However, no matter how much we pump in (the fertilisers), our trees do not bear good yields,” he adds.
On average, a 50 kg bag of fertiliser is sold at about RM160 compared with RM35 three years ago. One palm tree will need about 12 kg of fertiliser per year.
Another member of the MPOB’s 30-tonne Club, Lim Yu Sai, who owns a 24.3ha estate in Kluang, wants the Government to initiate a special training programme for immigrant estate workers and provide assistance for smallholders to buy tractors for harvesting and transportation.
“During the hard times, a single loose palm fruit means money and should not be left on the ground. Good agriculture practices must be instilled among immigrant workers. For this, we need special training, with the help from Government,” says Lim.
According to him, a light truck can replace four estate workers in the harvest and transport of palm fruits. On average, a light truck is needed to service a 20.2-ha oil palm estate.
“Just imagine, when our foreign workers have to leave when their work permits expire or when they flee the country for some reasons, planters will be in a lurch,” he adds.
Aspiring planter Mu’ad Yahya had a bitter experience two years ago when his oil palm estate failed to bear a good yield. He blamed it on the poor quality seedlings provided by a certain government agency.
“I know good seedlings are very expensive. It can go as high as RM15 for an eight-month-old seedling, from RM5.50 some five years ago,” he says.
Undeterred by the failure, Mu’ad is now is developing a 2.02-ha demonstration plot in Bera, Pahang, under the guidance of MPOB.
“I am very satisfied with the quality of palm seedlings and fertiliser provided by MPOB for my demo plot. An MPOB officer has even set a target for my estate to bear at least one tonne per ha per year, which is good based on the small land size,” he adds.
