THE plantation industry has always been an important economic asset for the country. Rubber and oil palm have been the dominant crops.
Though rubber has lost some of its shine, it still offers the potential to remain a vibrant source of economic wealth. Oil palm, now more than 105 years old, is still riding high.
Between the two, oil palm has been under a lot of pressure from competition, as it continues to displace other oils in the global edible oils business. As for rubber, competition comes only from its synthetic counterpart. Palm oil has to compete with 17 other edible oils.
Thankfully, government institutions tasked to support the industry, including the Malaysian Palm Oil Board and Malaysian Palm Oil Council for palm oil, and Malaysian Rubber Board and Malaysian Rubber Council for rubber have coped well with the market challenges.
Palm oil is still attacked left and right, mostly on the issue of the environment. This is despite the crop's positive carbon emission data. The industry continues to engage and educate critics on the matter.
The Russia-Ukraine war provides some breather. As a result of the weakened supply chain logistics of sunflower oil, there are fewer critics of palm oil . The anti-palm oil movement, which has been active for years in the European Union region, is now a pale shadow of its former self.
Companies, which once shied away from using palm oil, are now scrambling for supply.
Fortunately for the palm oil industry, in both Malaysia and Indonesia, the disruption in the supply and demand equation has helped push global palm oil prices northwards, far exceeding the usual prices.
It is a pity that this good fortune comes at a time when production, at least in Malaysia, is severely reduced because of labour shortage. It is estimated that billions of ringgit have been lost on account of unharvested fruits.
The pandemic has been largely responsible for the cut down in labour availability.
But, industry watchers have also singled out other factors for the labour dilemma. One concerns the constant change in leadership at the institutions in charge of the plantations sector.
Since the last general election, the government has changed hands three times at least. And with that, the plantation industries and commodities minister has changed three times as well, creating some instability to the sector.
What is of greater concern is that every time a new minister is put in charge, there would be changes to the people leading key plantation institutions under the ministry. This is unhealthy for governance. It creates uncertainty in the policy and decision making.
In the early days, chief executive officers were all selected from professionals who had spent years working in the plantation sector. And the chairmen were appointed among experienced industry captains. They understand the issues better and are able to use their experiences to steer the policy directions for the concerned institutions and, therefore, the sector.
The industry has urged the government to rethink the strategy of filling leadership positions.
This unfortunate situation is happening when both palm oil and rubber are in need of new directions. Palm oil, despite its recent buoyant performance, still faces business threats. Labour shortage is one. Production is also reaching a limit with no more land to expand beyond the current six million hectares. One way to grow value is through downstream expansion.
It desperately needs guidance from people with industry knowledge and experience.
Rubber is in even more dire straits. Except for the fortunes made in rubber gloves, the rest of the industry is not in the best of shape. Rubber smallholders face the most grim task of all. They need a good strategy.
But, even a good strategy will not work if the governance keeps changing. Stability in governance is what the plantation industry is asking for.
Good knowledge of the industry issues and trends is of utmost importance. Otherwise, the future of the plantation industry will continue to be uncertain.
The writer is a professor at the Tan Sri Omar Centre for STI Policy, UCSI University