Contributions and Challenges of Palm Oil to Smallholders in Malaysia

This paper highlights the important contribution of the palm oil industry to the country by providing employment opportunities to more than four million people mostly among the rural community. Smallholders are able to own their land and earn fixed income from palm oil and enjoy the perfect infrastructure facilities. However, there are many obstacles in the global palm oil production such price fluctuations, competition and anti-oil palm campaigns. Therefore, Malaysian smallholders face lack of income from their plantation yields caused by these macroeconomic factors such as rising cost of farming and size of land that is not economical. Therefore, it is a necessity for the smallholders to go into business. An exploratory study among 70 smallholders was done to investigate their interest in doing business. The finding shows that the main reason for their involvement in business activities is to increase their income level. Also, the most widely implemented business type is retailing.

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