Ministry envisions feasible business model to help smallholders increase palm oil yield

KUALA LUMPUR: The Ministry of Plantation and Commodities envisions a feasible business model that can consolidate independent smallholders to increase palm oil yield, said its Minister Datuk Seri Johari Abdul Ghani.

The model aims to consolidate 214,680 independent smallholders with a total land area of 822,073 hectares into clusters spanning 8,000 to 10,000 hectares of oil palm estates and to be managed by medium or large estates, said Johari in his speech at the 35th Annual Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2024) yesterday.

“If we can consolidate even 30 per cent of independent smallholders, we would have an additional 250,000 hectares of land to be managed efficiently.

“I know it is not going to be easy to do this, but we have to start somewhere. We are looking at how big companies can help consolidate this,” he said.

Johari said out of the 5.7 million hectares of palm oil planted area, 27 per cent (1.5 million hectares) are managed on a small scale via smallholders and, on average, these smallholders manage plots of land of around four hectares.

“Indeed, many smallholders face difficulties increasing their yield,” he said, adding that a more pragmatic way to ensure replanting by smallholders for maximum yields would be to leverage the technical expertise of major industry players and the Malaysian Palm Oil Board.

This would include seeds, clones, fertilisers, as well as pest and disease management, said Johari.

Johari also noted that the replanting rate between 2014 and 2023 remained low at 1.8 per cent annually.