In Malaysia, a shift in trend has been witnessed, from palm oil plantation to cultivation of different food crops. Salahuddin Ayub, Agriculture, and Agro-based Industry Minister said that the farmers are clearing the plantation land to prepare it for growing vegetables and fruits since the palm oil demand and prices dropped significantly.
Salahuddin Ayub told The Strait Times, “We are not going to cut down all the trees.” According to the diversification plan, food crops would be grown by replacing old palm trees. The cultivation would be carried out in patches between the exiting palm plantation. The key focus of the government is to opt for more price fetching crops. The diversification plan also included cash crops.
The plan got into action after it got the approval of Ministry of Economic Affairs, which supervised Malaysia’s land development agency, Felda. Felda has played a key role in saving the country’s agriculture sector and have been proving the much needed assistance to the farmers in growing cash crops since 1956.
Agriculture sector contributes about 8% to the country’s gross domestic product, almost half of which was contributed by palm oil.
As per the nation’s second-quarter reports (ending in June 19) the palm oil prices slashed 15 percent as compared to last year.
The drop in the prices can be attributed to the Western nations, who decried the plantation practice as it involved excessive deforestation. On June 10, the European Union passed the Delegated Act to ban the use of palm oil in manufacturing biofuel for vehicles, by 2030. Malaysia, which is the second largest producer of palm oil, after Indonesia, called the move as discriminatory and unfair. The South Asian country has also planned to file a joint complaint (along with Indonesia) with World Trade Organisation against the EU’s ban, by November this year.
Malaysian foreign ministry released a statement earlier this year describing the EU ban as a “calculated political act” aimed at taking out palm oil imports from the EU market.
The statement read, “Such an aggressive trade barrier targeted at Malaysia’s national interests, and our 650,000 small farmers, cannot pass without a strong response.” Malaysian Prime Minister Mahathir Mohamad warned that the EU ‘grossly unfair’ decision could lead to a trade war between the two.