Smallholder Farmers in Malaysia’s Oil Palm Industry: Issues and Challenges

Petani Pekebun Kecil dalam Industri Kelapa Sawit Malaysia: Isu dan Cabaran

Authors

  • Hassan Marzukhi KOLEJ UNIVERSITI ISLAM ANTARABANGSA SELANGOR (KUIS)
  • Murni Yunus Mawar KOLEJ UNIVERSITI ISLAM ANTARABANGSA SELANGOR (KUIS)
  • Latifa Bibi Musafar Hameed KOLEJ UNIVERSITI ISLAM ANTARABANGSA SELANGOR (KUIS)
  • Mohd Ridhuan Mohd Jamil Universiti Pendidikan Sultan Idris (UPSI)

Keywords:

Code of practices (COP), Fresh fruit bunches (FFB), Good agriculture practices (GAP), Malaysian Sustainable Palm Oil (MSPO), Competitiveness, Islamic Business Ethics (IBE)

Abstract

The oil palm sector is vital to the national economy. Smallholder farmers are an essential element of the supply chain for sustainable oil palm production, a large industry with several upstream and downstream players. The supply chain includes smallholders, fruit dealers, millers, refineries, and manufacturers of oil palm-based products. The livelihoods of smallholders are compromised due to a lack of industry knowledge and an inability to comprehend the authority’s appropriate code of practices (COP). The study focuses on the concerns and obstacles that smallholders encounter in the supply chain upstream in the oil palm sector when generating sustainable oil palm fresh fruit bunches (FFB). To satisfy the Malaysian Sustainable Palm Oil (MSPO) certification standards, it must adhere to the authority’s good agricultural practices (GAP) rules. The literature is drawn from current issues in journals and the media, utilising various databases accordingly. The study provides a better understanding of smallholders’ challenges in complying with the authority’s requirements for implementing the sustainability of the oil palm industry. It describes a systematic strategy to building a model for future endeavours using methodical methods that begin with comprehending the problem statement and includes the dimensions of Islamic business ethics (IBE) and competitiveness in the study. Expanding expertise in the oil palm business while effectively incorporating smallholders benefits the government, the MPOB (Malaysian Palm Oil Board), and academia.

Sektor kelapa sawit adalah penting kepada ekonomi negara. Petani pekebun kecil adalah elemen penting dalam rantaian bekalan untuk pengeluaran kelapa sawit yang mampan, sebuah industri besar dengan beberapa pemain huluan dan hiliran. Rantaian bekalan termasuk pekebun kecil, peniaga buah-buahan, pengilang, kilang penapisan dan pengeluar produk berasaskan kelapa sawit. Mata pencarian pekebun kecil terjejas kerana kekurangan pengetahuan industri dan ketidakupayaan untuk memahami kod amalan (COP) yang sesuai oleh pihak berkuasa. Kajian itu memberi tumpuan kepada kebimbangan dan halangan yang dihadapi pekebun kecil dalam rantaian bekalan huluan dalam sektor kelapa sawit apabila menjana buah tandan segar (BTS) kelapa sawit mampan. Untuk memenuhi piawaian pensijilan Minyak Sawit Lestari Malaysia (MSPO), ia mesti mematuhi peraturan amalan pertanian baik (GAP) pihak berkuasa. Literatur diambil daripada isu semasa dalam jurnal dan media, menggunakan pelbagai pangkalan data dengan sewajarnya. Kajian itu memberikan pemahaman yang lebih baik tentang cabaran pekebun kecil dalam mematuhi keperluan pihak berkuasa untuk melaksanakan kemampanan industri kelapa sawit. Ia menerangkan strategi sistematik untuk membina model untuk usaha masa depan menggunakan kaedah yang bermula dengan memahami penyataan masalah dan merangkumi dimensi etika perniagaan Islam (IBE) dan daya saing dalam kajian. Memperluas kepakaran dalam perniagaan kelapa sawit sambil menggabungkan pekebun kecil dengan berkesan memberi manfaat kepada kerajaan, MPOB (Lembaga Minyak Sawit Malaysia), dan ahli akademik.

Downloads

Download data is not yet available.

References

Ahmad, M., Nordin, Z. A., & Kamil, N. N. (1996). Labour Requirement in The Oil Palm Independent Smallholder Sector in Sabah, 1995, 37–45.

Ahmed Shaikh, S., Adib Ismail, M., Ghafar Ismail, A., Shahimi, S., & Hakimi Mohd Shafiai, M. (2017). Humanomics Towards an integrative framework for understanding Muslim consumption behaviour. Humanomics, 33(2). https://doi.org/10.1108/H-01-2017-0005

Al-Aidaros, A.-H., Shamsudin, F. M., & Idris, K. M. (2013). Ethics and Ethical Theories from an Islamic Perspective. International Journal of Islamic Thought, 4, 1. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=edb&AN=93517717&site=eds-live

Al-Qaradhawi, Y. (2009). Ekonomi Islam: Nilai dan Akhlak. (M. S. A. Ishak, Ed.) (First Edit). Kuala Lumpur: Yayasan Pembangunan EkonomiIslam (YaPEIM).

Alam Choudhury, M. (2011). Chapter 7 Endogeneity of Ethics: The Islamic Economic and Finance System. Islamic Economics and Finance: An Epistemological Inquiry (Vol. 291). Emerald Group Publishing Ltd. https://doi.org/10.1108/S0573-8555(2011)0000291017

Alam Choudhury, M. (2012). The “impossibility theorems” of Islamic economics. International Journal of Islamic and Middle Eastern Finance and Management, 5(3), 179–202. https://doi.org/10.1108/17538391211255197

Awad, I. M., & Amro, A. A. (2017). The effect of clustering on competitiveness improvement in Hebron: A structural equation modelling analysis. Journal of Manufacturing Technology Management, 28(5), 631–654. https://doi.org/10.1108/JMTM-12-2016-0181

Aznie, R., Lyndon, N., Azlan, M., Besar, J. A., & Rohizaq, M. (2018). Independent Oil Palm Smallholder’s Challenges in Malaysia Independent Oil Palm Smallholder’s Challenges in Malaysia, 8(13), 68–75. https://doi.org/10.6007/IJARBSS/v8-i13/4810

Bronkhorst, E., Cavallo, E., Medler, van D. tot, Klinghamme, S., Smit, H. ., Gijsenbergh, A., & van der Laan, C. (2017). Current practices and innovations in smallholder palm oil finance in Indonesia and Malaysia: Long-term financing solutions to promote sustainable supply chains. Center for International Forestry Research (CIFOR). https://doi.org/10.17528/cifor/006585

Chapra, M. U. (2009). Ethics and Economics: An Islamic Perspective. Islamic Economic Studies, 16(1 & 2), 1–24.

Che Omar, A. R., Ishak, S., Awang, A. H., & Hussain, M. Y. (2018). A Study on Costs, Risks and Competitiveness of Palm Oil Fruit Dealers’ Business in Malaysia. Studies in Asian Social Science, 5(2), 18. https://doi.org/10.5430/sass.v5n2p18

Che Omar, C. M. Z., & Saripuddin, A. S. S. (2015). Concept of Business Ethics in Islam - Approach To the Entrepreneur 2 . Sources of Islamic Business Ethics. Journal of Asian Business Strategy, 5(1), 13–18. https://doi.org/10.18488/journal.1006/2015.5.1/1006.1.13.18

Chong Tan, Y., & Oly Ndubisi, N. (2014). Evaluating supply chain relationship Quality, Organisational resources, technological innovation and enterprise performance in the Palm oil processing sector in Asia. Journal of Business and Industrial Marketing, 29(6), 487–498. https://doi.org/10.1108/JBIM-07-2013-0147

Devaux, A., Torero, M., Donovan, J., & Horton, D. (2018). Agricultural innovation and inclusive value-chain development: a review. Journal of Agribusiness in Developing and Emerging Economies, 8(1), 99–123. https://doi.org/10.1108/JADEE-06-2017-0065

Distanont, A., & Khongmalai, O. (2018). The role of innovation in creating a competitive advantage. Kasetsart Journal of Social Sciences, 1–7. https://doi.org/10.1016/j.kjss.2018.07.009

Dzogbenuku, R. K., & Keelson, S. A. (2019). Marketing and entrepreneurial success in emerging markets: the nexus. Asia Pacific Journal of Innovation and Entrepreneurship, 13(2), 168–187. https://doi.org/10.1108/apjie-12-2018-0072

Guadalupe, G. A., Lerma-García, M. J., Fuentes, A., Barat, J. M., Bas, M. del C., & Fernández-Segovia, I. (2019). Presence of palm oil in foodstuffs: consumers’ perception. British Food Journal, 121(9), 2148–2162. https://doi.org/10.1108/BFJ-09-2018-0608

Guan, T. K., & Wooi, H. C. (2017). Does market integration promote firm information efficiency? Empirical evidence for Malaysia listed firms. Jurnal Ekonomi Malaysia, 51(2), 27–37.

Ibragimov, A., Sidique, S. F., & Tey, Y. S. (2019). Productivity for sustainable growth in Malaysian oil palm production: A system dynamics modelling approach. Journal of Cleaner Production, 213, 1051–1062. https://doi.org/10.1016/j.jclepro.2018.12.113

Ibrahim, A., Awang, A. H., & Manaf, A. A. (2018). Persepsi perkhidmatan pengembangan dan amalan pertanian baik pekebun kecil sawit persendirian (. Journal of Social Sciences and Humanities, 13(3), 68–83.

Indounas, K. (2018). Market structure and pricing objectives in the services sector. Journal of Services Marketing, 32(7), 792–804. https://doi.org/10.1108/JSM-03-2018-0087

Ishak, S. M. (2017). Influence of Knowledge, Attitude and Skill on Good Agriculture Practices of Seedling Assistance Scheme Participant toward Oil Palm Production in Sabah and Sarawak, 20(1), 12–20.

Ismail, M., Hamzah, S. R., & Bebenroth, R. (2018). Differentiating knowledge transfer and technology transfer: What should an organisational manager need to know? European Journal of Training and Development, 42(9), 611–628. https://doi.org/10.1108/EJTD-04-2018-0042

Jamian, R., Ab Rahman, M. N., Md Derus, B., Mohamed, M. S., & Nik Ismail, N. Z. (2014). A Conceptual Approach of 5S to Improving Quality and Environmental Performance of Malaysian Oil Palm Dealers. Jurnal Teknologi, 1, 65–73.

Khatun, R., Reza, M. I. H., Moniruzzaman, M., & Yaakob, Z. (2017). Sustainable oil palm industry: The possibilities. Renewable and Sustainable Energy Reviews. https://doi.org/10.1016/j.rser.2017.03.077

Kotler, P. (2000). Marketing Management. Prentice-Hall International, UK..p. 12, 17, 57, 289, 513. Kotler, P. (2000). Marketing Management. Prentice-Hall International, UK..p. 12, 17, 57, 289, 513.

Kushairi, A., Ong-Abdullah, M., Nambiappan, B., Hishamuddin, E., Bidin, M. N. I. Z., Ghazali, R., … Parveez, G. K. A. (2019a). Oil palm economic performance in Malaysia and r&d progress in 2018. Journal of Oil Palm Research. https://doi.org/10.21894/jopr.2019.0026

Kushairi, A., Ong-Abdullah, M., Nambiappan, B., Hishamuddin, E., Bidin, M. N. I. Z., Ghazali, R., … Parveez, G. K. A. (2019b). Oil palm economic performance in Malaysia and r&d progress in 2018. Journal of Oil Palm Research, 31(2), 165–194. https://doi.org/10.21894/jopr.2019.0026

Lescaroux, F. (2009). On the excess co-movement of commodity prices- A note about the role of fundamental factors in short-run dynamics. Energy Policy, 37(10), 3906–3913. https://doi.org/10.1016/j.enpol.2009.05.013

Maletič, D., Maletič, M., Al-Najjar, B., & Gomišček, B. (2014). The role of maintenance in improving a company’s competitiveness and profitability. Journal of Manufacturing Technology Management, 25(4), 441–456. https://doi.org/10.1108/JMTM-04-2013-0033

Melan, M. (2019). Knowledge management of trade supply chain Thailand - Lao PDR. Vietnam and China to enhance its competitiveness in the agricultural entrepreneurs Loei Uttaradit and Nan, 2(1), 8–13. https://doi.org/10.26666/rmp.jssh.2019.1.2

Mohd Zulkifli, Z., Hashim, F. H., Raj, T., & Huddin, A. B. (2018). A Rapid and Non-Destructive Technique in Determining The Ripeness of Oil Palm Fresh Fruit Bunch ( FFB ), 30(1), 93–101.

Murphy, J. J. (1996). Technical Analysis of the Futures Markets - A comprehensive guide to trading methods and applications. New York Institute of Finance - A Prentice-Hall Company (First). New York: New York Institute of Finance - A Prentice-Hall Company.

Nag, B., Han, C., & Yao, D. Q. (2014). Mapping supply chain strategy: An industry analysis. Journal of Manufacturing Technology Management, 25(3), 351–370. https://doi.org/10.1108/JMTM-06-2012-0062

Ndlovu, C., & Alagidede, P. (2018). Industry structure, macroeconomic fundamentals and return on equity: Evidence from emerging market economies. International Journal of Emerging Markets, 13(6), 2047–2066. https://doi.org/10.1108/IJoEM-06-2017-0210

Oduniyi, O. S., & Tekana, S. S. (2019). Adoption of agroforestry practices and climate change mitigation strategies in North West province of South Africa. International Journal of Climate Change Strategies and Management, 11(5), 716–729. https://doi.org/10.1108/IJCCSM-02-2019-0009

Oghenewiroro Odu, G. (2017). Relationship between Nominal Group Techniques and Concurrent Engineering: A Review. International Journal of Latest Research in Engineering and Technology (IJLRET) Www.Ijlret.Com ||, 03(03), 47–62. Retrieved from www.ijlret.com

Oosterveer, P. (2015). Promoting sustainable palm oil: Viewed from global networks and flows perspective. Journal of Cleaner Production, 107, 146–153. https://doi.org/10.1016/j.jclepro.2014.01.019

Pakdeechoho, N., & Sukhotu, V. (2018). Sustainable supply chain collaboration: Incentives in emerging economies. Journal of Manufacturing Technology Management, 29(2), 273–294. https://doi.org/10.1108/JMTM-05-2017-0081

Peng, T. S., Hashim, K., Mansor, N. H., Kannan, P., Ariffin, A., Johari, M. A., & Isnin, K. A. (2019). Assessment of knowledge on fertiliser management among independent smallholders in Malaysia. Oil Palm Industry Economic Journal, (19(2)), 1–16.

Porter, M. E. (1980). Competitive Strategy - Technique for Analysing Industries and Competitors (First). New York: Free Press- Simon and Shuster Inc.

Porter, M. E. (2008). On Competition - Updated and Expanded Edition (2008th ed.). Boston: Harvard Business School Publishing Corporation.

Porter, M. E. (2010). Competitive strategy. In J. Seth (Ed.), Strategy - Process, Content, Context - An International Perspective (4th ed., p. 283). Hampshire: Cengage Learning EMEA.

Prasad, A., & Warrier, L. (2016). Mr . Porter and the New World of Increasing Returns to Scale. Journal of Management Research, 16(1), 3–15.

Regnier, E. (2007). Oil and energy price volatility. Energy Economics, 29(3), 405–427. https://doi.org/10.1016/j.eneco.2005.11.003

Rice, G. (1999). Islamic Ethics and the Implications for Business. Journal of Business Ethics, 18(4), 345–358. https://doi.org/papers2://publication/uuid/B0E5CE58-3D5F-4BFC-A271-F0782F2D10A5

Rohmah, W. G., Mustaniroh, S. A., Deoranto, P., & Nharawasthu, D. A. (2019). An Interpretive Structural Modelling (ISM) Approach for Institutional Analysis of Gadung Yam (Dioscorea Hispida Dennst) Chips Supply Chain in SMEs Tulungagung, East Java, Indonesia. Journal of Management, Economics, and Industrial Organization, (August), 27–45. https://doi.org/10.31039/jomeino.2019.3.3.3

Salami, M. A., & Haron, R. (2018). Long-term relationship of crude palm oil commodity pricing under the structural break. Journal of Capital Markets Studies, 2(2), 162–174. https://doi.org/10.1108/jcms-09-2018-0032

Sarkar, S. (2020). Coronavirus thumps palm oil demand. Eco-Business, 2020. Retrieved from https://www.eco-business.com/news/coronavirus-thumps-palm-oil-demand/

Senawi, R., Rahman, N. K., Mansor, N., & Kuntom, A. (2019). Transformation of oil palm independent smallholders through Malaysian sustainable palm oil. Journal of Oil Palm Research, 31(3), 496–507. https://doi.org/10.21894/jopr.2019.0038

Shahida, S., Hafizuddin-Syah, B. A. ., & Fuad, S. H. (2018). The Effect of Sustainability Certification for Export on Operational Profitability of Malaysian Palm Oil Companies, 52(2).

Srivastava, P., Iyer, K. N. S., & Rawwas, M. Y. A. (2017). Performance impact of supply chain partnership, 37(7), 927–949. https://doi.org/10.1108/IJOPM-09-2015-0586

Syahza, A. (2019). The potential of environmental impact as a result of the development of palm oil plantation. Management of Environmental Quality: An International Journal, 30(5), 1072–1094. https://doi.org/10.1108/MEQ-11-2018-0190

Tambade, H., Singh, R. K., & Modgil, S. (2019). Identification and evaluation of determinants of competitiveness in the Indian auto-component industry. Benchmarking, 26(3), 922–950. https://doi.org/10.1108/BIJ-09-2017-0260

Vergura, D. T., Zerbini, C., & Luceri, B. (2019). “Palm oil-free” vs “sustainable palm oil”: the impact of claims on consumer perception. British Food Journal, 121(9), 2027–2035. https://doi.org/10.1108/BFJ-01-2019-0020

Vermeulen, S., & Goad, N. (2006). Towards better practice in smallholder palm oil production. London, UK: Sonja Vermeulen Natural Resources Group International Institute for Environment and Development 3 Endsleigh Street London WC1H 0DD UK.

Wilson, J. (2012). Looking at Islamic marketing, branding and Muslim consumer behaviour beyond the 7P’s: the call for supportive course content and more P’s, please. Journal of Islamic Marketing, 3(3), 212–216. https://doi.org/10.1108/17590831211259718

Zhang, Y.-J., Fan, Y., Tsai, H.-T., & Wei, Y.-M. (2008). The spillover effect of US dollar exchange rate on oil prices. Journal of Policy Modeling, 30(6), 973–991. https://doi.org/10.1016/j.jpolmod.2008.02.002

Published

2021-11-30

How to Cite

Smallholder Farmers in Malaysia’s Oil Palm Industry: Issues and Challenges : Petani Pekebun Kecil dalam Industri Kelapa Sawit Malaysia: Isu dan Cabaran. (2021). Journal of Management and Muamalah , 11(2), 157-170. https://www.jmm.uis.edu.my.kuisjournal.com/index.php/jurnal/article/view/111

Similar Articles

1-10 of 105

You may also start an advanced similarity search for this article.