The Oil Palm

Agricultural investment needed to tackle poverty and hunger

The UN has highlighted the need for greater investment in agriculture in order to tackle poverty and hunger in developing nations.

This is precisely the approach taken by the Malaysian palm oil industry, which invests significantly in rural development, smallholder cultivation, and agricultural productivity throughout South-East Asia and Africa.

This was one of the key messages in the UN Food and Agriculture Organization’s (FAO) annual report – State of Food and Agriculture – which argues that investing in agriculture is amongst the most effective strategies for reducing poverty and promoting sustainability.

According to the FAO, on-farm investment by farmers is currently the most significant source of agricultural investment; far greater than the contribution from overseas development aid.

Farmers must therefore be a central component of any strategy that aims to increase investment in the agricultural sector. Jakob Skoet, an FAO economist who co-authored the report, said that governments can help smallholder farmers by ensuring access to land and tenure, building rural infrastructure, and supporting producer organisations, such as cooperatives.

The report highlighted the need to facilitate smallholders operating in the agricultural sector. This has been a key strategy of the Malaysian palm oil industry since the 1950s when the first Malaysian smallholder cooperative scheme was established under the Federal Land Development Authority (FELDA). The Malaysian palm oil smallholder model has since become the benchmark for successful smallholder cooperative schemes throughout the developing world.

The Malaysian palm oil model is a prime example of how investment and support for smallholders can alleviate poverty and drive economic development. Notably, around 40 per cent of all palm oil cultivation in Malaysia is by small farmers and families on small scale plantations.

The establishment of processing facilities that allows small farmers to access local and international markets has been central to the success of Malaysia palm oil industry. At the same time, industry investment has facilitated rural development and lifted hundreds of thousands of households out of poverty.