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I. STATE OF THE ENVIRONMENT IN MALAYSIA
[ I-A | I-B | I-C ]
C. Agriculture
[ C | C-1 | C-2 | C-3]
1. Palm oil situation
During 1975-1985, production of crude palm oil in Malaysia rose from 1.3 million to 4.1 million tons. That expansion strengthened the industry, making it the world's largest producer and exporter in the 1980s and the country's second largest earner of foreign exchange by 1984. In 1989, oil palms (Elaeis guineansis) covered about one-third of the cultivated area in Malaysia, amounting to 1.95 million hectares and surpassing the area covered by rubber for the first time. Export earnings from palm oil and related products continue to increase, despite less favourable prices, as a result of higher export volume. Currently, the palm oil industry is the third largest export earner for Malaysia after petroleum and timber.
The contribution of palm oil to GDP increased from 4.3 per cent in 1980 to 8.4 per cent in 1989. The industry also provides a source of livelihood to about 200,000 rural families in government land schemes and individual small holdings, and employment to some 120,000 workers on estates. Additionally, a substantial number of people are employed in ancillary supporting industries (trading, milling, processing and manufacturing).
In global terms, palm oil has become the second most important vegetable oil after soybean oil in the world's oils and fats complex since 1982. Palm oil accounted for about 13.6 per cent of the world production of oils and fats in 1989. With the continuing expansion of oil palm principally in Malaysia and Indonesia, palm oil would have to strive for further increases in market share from the level of 30.7 per cent currently attained. Palm oil has the ability to do so given its versatility in a variety of food and non-food applications, its good nutritional quality and its competitive cost of production vis-à-vis other vegetable oils. Unfortunately, market distortions are still rampant in the world oils and fats trade, thus Malaysia has to contend with discriminatory tariff structures in certain markets as well as with extraordinarily large production and export subsidies of oils and oilseeds accorded by industrial countries, that is, the United States of America and the European Union. Based on its performance, the palm oil industry is expected to continue contributing significantly to the Malaysian economy in the 1990s.
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