Palm Oil Industry

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  • Topic: Palm oil, Oil palm, Malaysia
  • Pages : 8 (3138 words )
  • Download(s) : 181
  • Published : August 19, 2010
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Palm oil is under increasing scrutiny in relation to its effects on the environment. Palm oil, produced from the oil palm, is a basic source of income for many of the world's rural poor in South East Asia, Central and West Africa, and Central America. An estimated 1.5 million small farmers grow the crop in Indonesia, whereas about 500,000 people are directly employed in the sector in Malaysia, plus those connected with spin offs.[1][2] Palm oil (from the African oil palm, Elaeis guineensis) is long recognized in West African countries, and is widely used as a cooking oil. European merchants trading with West Africa occasionally purchased palm oil for use in Europe, but as the oil was bulky and cheap, palm oil remained rare outside West Africa.[citation needed] In the Asante Confederacy, state-owned slaves built large plantations of oil palm trees, while in the neighbouring Kingdom of Dahomey, King Ghezo passed a law in 1856 forbidding his subjects from cutting down oil palms. Palm oil became a highly sought-after commodity by British traders, for use as an industrial lubricant for the machines of Britain's Industrial Revolution[citation needed]. Palm oil formed the basis of soap products, such as Lever Brothers' (now Unilever) "Sunlight Soap", and the American Palmolive brand.[11] By c. 1870, palm oil constituted the primary export of some West African countries such as Ghana and Nigeria, although this was overtaken by cocoa in the 1880s.[citation needed] Oil palms were introduced to Java by the Dutch in 1848[12] and Malaysia (then the British colony of Malaya) in 1910 by Scotsman William Sime and English banker Henry Darby. The first few plantations were established and operated by British plantation owners, such as Sime Darby and Boustead. The large plantation companies remained listed in London until the Malaysian government engineered the "Malaysianisation" policy throughout the 1960s and 1970s.[13] Federal Land Development Authority (Felda) was formed on 1 July 1956 when the Land Development Act came into force with the main aim of eradicating poverty. Settlers were each allocated 10 acres of land (about 4 hectares) planted either with oil palm or rubber, and given 20 years to pay off the debt for the land.[14] After Malaysia achieved independence in 1957, the government focused on value adding of rubber planting, boosting exports, and alleviating poverty through land schemes. In the 1960s and 1970s, the government encouraged planting of other crops, to cushion the economy when world prices of tin and rubber plunged. Rubber estates gave way to oil palm plantations. In 1961, Felda's first oil palm settlement opened, measuring only 375 hectares of land. As of 2000, 685,520 hectares of the land under Felda's programmes were devoted to oil palms.[14] By 2008, Felda's resettlement broadened to 112,635 families and they work on 853,313 hectares of agriculture land throughout Malaysia. Oil palm planting took up 84% of Felda's plantation landbank.[15] In December 2006, the Malaysian government initiated merger of Sime Darby Berhad, Golden Hope Plantations Berhad and Kumpulan Guthrie Berhad to create the world’s largest listed oil palm plantation player.[16] In a landmark deal valued at RM31 billion, the merger involved the businesses of eight listed companies controlled by Permodalan Nasional Berhad (PNB) and the Employees Provident Fund (EPF). A special purpose vehicle, Synergy Drive Sdn Bhd, offered to acquire all the businesses including assets and liabilities of the eight listed companies. With 543,000 hectares of plantation landbank, the merger resulted in the new oil palm plantation entity that could produce 2.5 million tonnes of palm oil or 5% of global production in 2006. A year later, the merger completed and the entity was renamed Sime Darby Berhad.[17]

As of 2006, the cumulative land area of palm oil plantations is approximately 11 million hectares.[3] In 2005 the Malaysian Palm Oil Association,...
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