Diploma in planting industrial management PDF

DIPLOMA IN PLANTING INDUSTRY MANAGEMENT
FACULTY PLANTATION AND AGROTECHNOLOGY
CASE STUDY
AGR313:
PRINCIPLE OF AGRICULTURE MARKETING
NAME MUHAMMAD AFIQ SYAMIM BIN RAMLI
MATRIX.NO 2018414888
GROUP M3AT1105G
LECTURER
NAME
MISS SUZANA AGUS BT SALIM

TABLE OF CONTENT
NO DETAIL PAGES
1 INTRODUCTION 2
2 CURRENT ISSUES IN MALAYSIAN COMMODITY 3
3 CHALLENGES FACED BY MALAYSIAN COMMODITY 4
4 RECOMMENDATIONS AND CONCLUSION 5
5 REFERENCES 6
1

INTRODUCTION
Agriculture remains an important sector of Malaysia's economy, contributing 12 percent to
the national GDP and providing employment for 16 percent of the population. The British
established large-scale plantations and introduced new commercial crops (rubber in 1876,
palm oil in 1917, and cocoa in the 1950s). The 3 main crops rubber, palm oil, and cocoa
have dominated agricultural exports ever since, although the Malaysian share of the world's
production of these crops declined steadily during the last 2 decades. Next, Malaysia is the
second-largest producer of palm oil globally after its neighbour, Indonesia. Asian countries
account for 85% of global palm oil exports and Malaysia is the second-largest exporter with
a 32.6% market share, behind Indonesia which controls 51.7% of the global export market.
According to the Malaysian Palm Oil Council, the country accounts for 29% of world palm oil
production and 37% of the world exports. Malaysia has cultivated and commercialised oil
palm plantations long before the country gained independence, and 2017 marked the
commodity’s centennial. The Department of Statistics Malaysia noted that the palm oil sector
made up 46.9% of agriculture’s contribution to the national GDP in 2015. The industry’s
economy, which is heavily dependent on crop production, has been impacted by the world’s
dry spell and the increasing exports activities of palm oil and related products from
Indonesia. In 2016, Malaysia produced 29.4% of the global palm oil demand from only 0.1%
of global agricultural land. Palm oil is the most consumed vegetables oil in the world, with
60.96 million metric tonnes consumed globally between 2015 and 2016. After that, the
agriculture, fisheries and forestry sectors employ about 10 per cent of Malaysia's workforce
and account for about eight per cent of the country's GDP. Palm oil, rubber, cocoa, and
timber products account for about half of the output while other important contributors
include fruits and tropical rice. Malaysia is the second largest producer and exporter of palm
oil in the world after Indonesia. Malaysia's palm oil production accounted for 28 per cent of
world production and 33 per cent of world exports in 2019. As additional land for palm oil
production is not available, any increase in national production at this time should come from
yields and increased productivity. Malaysian palm oil companies also have a large presence
in Indonesia and have invested in palm oil mills in major markets such as Europe, India,
China, and the United States. Most of the largest and most successful companies in
Malaysia are oil palm plantation enterprises where the state has a share of ownership.
2

CURRENT ISSUES IN MALAYSIAN COMMODITY
Labour Shortage
In the world is experiencing the problem of spreading the virus-19. Many problems arose
and economic activities could not be carried out including the agricultural sector. This is
because, the whole world imposes enforcement of movement control orders. Therefore, the
agricultural sector is the sector most affected due to the movement control order to
disconnect the covid-19 virus network. Among the issues that have arisen in Malaysia for the
agricultural sector is the shortage of manpower in the plantation sector. This is because,
Malaysia depends on the labour force of foreigners which is 70% in the plantation sector.
this is due to the fact that Malaysia had to send back to their country of origin due to the
spread of the covid-19 epidemic among foreign workers. Among the foreign workers hired by
Malaysia from neigh-boring countries such as Indonesia and south Asia. Meanwhile,
Malaysia is the second largest country in palm oil production after Indonesia. This, has a
huge impact on the plantation sector because manpower is an important resource for a
sector. To this day, the plantation sector has not received new workers after foreign workers
were deported by the Malaysian government. this is very worrying because of the shortage
of manpower many plantation activities could not be carried out especially in the harvesting
division. This is because, this part is done a lot by foreign workers. Therefore, the
government needs to take action or measures to overcome this problem so that the
agricultural sector can be carried out as usual and perfectly.
Deforestation and Oil Palm Expansion
In addition, issues that arise are related to deforestation related to the oil palm sector. this
statistic shows an increase in deforestation every year after finding that the oil palm sector is
growing in Malaysia. Forest areas cut down in Malaysia for the cultivation of oil palm trees,
have caused feelings of dissatisfaction by outsiders. but we also need to look at other
plantations such as rubber trees, cocoa trees and not forgetting the logging sector which is a
statistical contributor to deforestation. Therefore, we need to study carefully on this matter as
it can have adverse effects on our economic sector especially the plantation sector related to
crude palm oil.
Decreased Oil Palm Prices
Issues related to the decline in crude palm oil prices. This is very surprising to us that the
recent decline in oil palm prices is the worst price fall in 7 years. This is due to the worldwide
transmission of coronavirus. with the spread of the covid-19 virus outbreak has a detrimental
effect in terms of food demand. This is due to the fact that our country's palm oil importers,
India and China, have reduced orders for our palm oil crude oil to curb the spread of the
covid-19 epidemic. Next, Commodity contracts declined sharply and tracked down market
equity and crude oil prices. Due to the widespread transmission of coronavirus in countries
that import our palm oil, it has a very bad effect on Malaysian palm oil prices.
3

CHALLENGES FACED BY MALAYSIAN COMMODITY
Challenges or effects on labour shortages in the plantation sector are very bad if not
addressed as soon as possible. Among them, is hiring. This is the moment, the covid-19
epidemic in our country is increasing, with the hiring of new workers for the locals the
challenge that the plantation sector has to go through is to make swabs test on workers to
curb the spread of the covid-19 epidemic. prices for expensive test swabs are also a
challenge for the plantation sector. Apart from that, the challenge is that locals are less
interested in the plantation sector because the sector needs strong force and the locals see
the plantation sector only as a subordinate sector. this affects the recruitment of new
workers for the plantation sector who are short of workers after foreign workers are sent
back to their country of origin. in turn, it also affects the production of our country's palm oil
crude and affects the increase in the price of cooking oil due to lack of supply. With the
shortage of supplies due to lack of workers for oil palm harvesting, previously this work was
done by foreign workers.
Challenges and impact on issues related to deforestation due to the cultivation of oil palm
trees. Among the challenges that this issue has to go through is trust in foreign parties or
foreign countries about the real thing. This is because foreign countries, especially the
United States, do not believe in the explanation given by Malaysia on deforestation, not
because it is one hundred percent done by oil palm tree planters. Moreover, the United
States is trying to affect production Malaysian palm oil to the world crude palm oil market to
the world about with the emergence of the issue Malaysia has done deforestation to plant oil
palm trees. Indirectly, it adversely affects our palm oil market and can affect Malaysia's
economic sector because the plantation sector is the contributor to the country's export
earnings, it is because our country is the second largest palm oil production after Indonesia.
Furthermore, the challenge and impact on the decline in palm oil prices is the declining
demand for Malaysian palm oil, this is because due to the spread of Coronavirus worldwide,
especially the countries that import the most Malaysian palm oil, namely India and China,
and even India and China, one of the countries most severely affected by the virus-19.
Indirectly they will reduce the demand for our palm oil as their country is economically
affected by the virus-19 and global demand is also declining. In addition, the challenge in
lowering palm oil prices is also the resilience between China and the United States in seizing
world economic power. this affects the price of the global palm oil market. Furthermore, the
effect of the decline in crude palm oil prices is that the country's development will decline
due to the country's economic downturn, the oil palm sector is one of the biggest
contributors to the country's income. Apart from that, it affects the people, especially the
FELDA settlers. this is because, FELDA settlers depend on monthly money and money to
support the family on the sale of oil palm products. If the price of oil palm falls then the
money earned for family support is not enough due to the small monthly money due to the
price of crude palm oil falling.
4

RECOMMENDATIONS
I suggest the way to overcome the problem related to labour shortage is that the government
should offer high salaries to locals working as plantations. In addition, the government
should provide bonuses, housing and appreciation to those who work in the plantation
sector. this can attract locals to the interest of working in the plantation sector which is
currently in need of workers. Next, the government must also bear the cost of swabs test to
all locals who want to work or who are working. This can help employers to bear the cost of
the screening. In addition, the way to overcome the problem of deforestation due to oil palm
trees is that I propose to the existing land, the government should prioritize the cultivation of
oil palm trees with a large scale than trees because its value in the market is now higher
than rubber-like crops. with this we can reduce deforestation because we use the available
land by prioritizing the planting of oil palm trees. Other crops we need to plant on a small
scale. In addition, the government can also gazette more forest reserves. With this,
employers or oil palm companies not cut down forests at will and can avoid deforestation. In
addition, the government should increase the rate of summons or compound on employers
or oil palm companies that violate the law. In addition, the way to overcome the problem of
falling palm oil is that the government needs to explore other areas such as the development
of cost-based palm biofuels. In addition, the government should make it compulsory for
industry and smallholders to work together to further encourage the acceptance of MSPO as
a certified palm oil symbol. Furthermore, the Charter of the Establishment of the Council of
Palm Oil Producers Countries (CPOPC), namely Malaysia and Indonesia, should be
extended to other oil palm plantation countries, and CPOPC should provide a platform to
work together among palm oil producing countries towards creating greater market
opportunities. The effect could be to increase global crude oil prices.
CONCLUSION
The agricultural sector is very important for the region. It is undergoing a process of
transition to a market economy, with major changes in social regulation, legislation,
structure, productivity and supply, as with all other economic sectors. These changes are
accompanied by declining agricultural production such as the fall in global crude palm oil
prices, as well as the shortage of food supply in the region. The region has to deal with food
shortages and some countries need food aid. Due to the covid-19 pandemic plaguing the
world it is impossible to overcome the problem of food shortages in the region as a whole,
and even to use this region to provide food to other food shortages. Therefore, opportunities
must be created to achieve this result. To overcome the major constraints faced by the rest
of the world, especially in relation to the declining agricultural sector due to the covid-19
pandemic, the region requires concerted efforts by all national and international stakeholders
and institutions involved in curbing the spread of coronavirus. and the agricultural sector can
be restored immediately.
5

REFERENCES
1. The Star Online. (2020, April 9). Palm oil prices face large decline as pandemic
hammers exports. Retrieved January 30, 2021, from The Star Online website:
https://www.thestar.com.my/business/business-news/2020/04/09/palm-oil-prices-
face-large-decline-as-pandemic-hammers-exports
2. HANIM ADNAN. (2021, January 19). Labour shortage in plantations needs attention.
Retrieved January 30, 2021, from The Star Online website:
https://www.thestar.com.my/business/business-news/2021/01/20/labour-shortage-in-
plantations-needs-attention
3. (2019). Malaysia - Agricultural Sector. Retrieved January 30, 2021, from International
Trade Administration | Trade.gov website: https://www.trade.gov/knowledge-
product/malaysia-agricultural-sector
4. Austin, K. G., Mosnier, A., Pirker, J., McCallum, I., Fritz, S., & Kasibhatla, P. S.
(2017). Shifting patterns of oil palm driven deforestation in Indonesia and implications
for zero-deforestation commitments. Land Use Policy, 69, 41–48.
https://doi.org/10.1016/j.landusepol.2017.08.036
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