Commercial Agriculture: Cure or curse? Malaysian and African experience contrasted

Palm oil production could be key in solving rising food costs

Summary:

  • After many years of flat-lining, world food prices rose dramatically in the last years of the first decade of the twenty-first century. This applies to all the major world foodstuffs and the impact has been felt especially by the poor.
  • Increases in the world’s population and improvements in living standards are likely to put further pressure on food prices in coming decades.
  • An important potential solution to this problem is efficient, large-scale plantation agriculture which is feasible for crops such as soya, palm oil and sugar. Such agricultural practices often come under attack from NGO’s.
  • In recent decades there has been a stark contrast between the failure of plantation agriculture in Africa and the success in Asia – especially in Malaysia and Indonesia. Half a century ago Nigeria was the world’s largest exporter of palm oil whereas today it is the world’s 24th largest producer. In Malaysia, however, responding to strong market demand, the cultivation of oil palm trees rose from 46.2 per cent of all cultivated land in 1990 to 77.4 per cent by 2009. Nearly three-quarters of oil palm estates in Malaysia are privately owned.
  • The palm oil industry in Malaysia has a good record with regard to sustainability. Large agribusinesses are able to access capital for long-term investment and they finance a wide variety of environmental schemes. Whilst the state does not adopt an entirely non-interventionist approach, the basic preconditions for developing a successful business economy in this field exist in some Asian countries: property rights are reasonably well defined, as well as enforced, and the rule of law broadly prevails.
  • Currently, palm oil productivity