Oil Palm Industry Economic Journal Vol. 6 (1) March 2006 p. 1-17

Oil Palm : The Agricultural Producer of Food, Fibre and Fuel for Global Economy

Yusof Basiron and Chan Kook Weng
Received:    Accepted:    Available Online:


Oil palm industry has expanded from just an agricultural producer of edible oils and fats to fibre (material) and fuel (energy) as well for the global economy. In producing food, fibre and fuel (the 3Fs), the industry has also identified the enlarged environmental consequences that will now be involved. Arising from this, the science and technology (S&T) for the 3Fs production now falls squarely on the research and development (R&D) undertaken on land-use and land-use cover changes from forestry (LULUCF) with inclusion of the two latter products. Besides the best practices implemented to enhance the economic, environmental and social requirements, any change in the land-use pattern is prioritized with the environmental consequences identified and minimized. The S&T development in itself is not enough and must be applied together with business. It is critical that sustainability and poverty reduction remain the guiding principles for efficient use of resources, harness of intellect, and channel knowledge to benefit the rural poor and marginalized. As more plantation companies develop the potential to produce the 3Fs, there will be greater realization that both the policy and infrastructure support from the government is important. This must be accompanied by higher participation in activities by all the stakeholders over the whole value supply chain that involve the companies, industry and nation at all three levels to strengthen agricultural development to realize this 3Fs objective. The benefits of this new 3Fs approach are three-fold: firstly, greater promotion of value-addition and accomplishment of accelerated growth of agro-businesses in the food, material (fibre) and energy (fuel) subsectors. Secondly, creating more jobs in the rural sector with greater security for a fair standard of living for the smallholders and their families. Thirdly, discourage migration of people to the urban areas as the rural populace is better able to face the challenges coming from the economic liberalization and globalization resulting from more job opportunities created by the plantations and emerging agro-businesses. A total of 10 recommendations for policy refinement to enhance the 3Fs objective are discussed. They are aimed at achieving food security, fibre and fuel production by focusing on developmental and environmental consequences; continuing sustainable agriculture to improve the economic, social and environmental impacts of the companies in managing the 3Fs objective thereby hastening rural development when these new agro-businesses start to benefit not only the welfare of the people living in and around the plantations but also along the whole value chain.

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