Malaysia to trial jatropha in Sabah - replicating palm oil's poverty reduction power?

The palm oil industry is a corner stone of Malaysia's economy, generating export revenues only surpassed by oil and gas. It has become politically incorrect to say this, but over the past decades the sector has brought unprecedented wealth to hundreds of thousands of small farmers. Small holders retain a 41% share of the hectarage in the sector. The incidence of small holder poverty has dropped from 30% in the 1970s to nearly zero today, a stronger reduction than observed in any other agricultural segment. According to an analysis of the sector presented to an UNCTAD workshop:

the government of Malaysia, though its poverty redressal programs, in particular the organized smallholder programs involving oil palm, has been able to enhance the incomes of agricultural smallholders and lifted them from the vicious cycle of poverty.

Today, these strong social arguments in favor of palm oil have been clouded by environmental worries. Deforestation resulting from expanding plantations could carry a cost higher than the direct social and economic benefits from palm oil. Environmental economists are still studying the matter, but as things stand today, it may be more sensible to keep forests intact as carbon sinks, and compensate the farmers for doing so. However, the threat of ever rising oil prices may make this proposition untenable in the long run. With oil at a record $80 per barrel and rising, palm based biofuels may become more commercially attractive than the carbon value of forests.

Recently, two scientists writing in Nature urged conservationists to forget the idea of compensated reduction - which is a top-down, bureaucratic scheme unlikely to reach the small holders who need the money most - and instead suggested they should become palm oil farmers themselves. With the profits made from the plantations, conservationists could then buy forests to keep them intact (earlier post). To some the idea sounded bizarre ('join the enemy, to beat him') but it clearly illustrates the tension between direct socio-economic benefits from palm oil and more abstact benefits from environmental goods and services embodied in intact forests.

Malaysia is accutely aware of this tension, which has prompted it to show interest in diversifying its portfolio of biofuel crops by looking into Jatropha curcas. The shrub has been touted as an alternative to the large oil crops because it can be grown on poor soils, with limited inputs, away from forests.

The country's Plantation Industries and Commodities Ministry will therefor launch a pilot project in Kota Marudu in northern Sabah (map, click to enlarge) to cultivate jatropha, whose seeds contain up to 40 percent oil. Should the project prove to be viable, commercial cultivation of the plant will be carried out in the state, minister Datuk Peter Chin Fah Kui says.

But despite the environmental arguments in favor of jatropha, the same social logic which drove the government's efforts in the palm oil industry is still at work. After a dialogue with small holders in the region, the minister said:

We need to study the suitability of the [jatropha] crop in terms of soil and weather, and we chose Kota Marudu for the pilot project on the request of its MP, Datuk Dr Maximus Ongkili, as the area is among the least developed in Sabah, and we must do something to improve the lot of the people in the constituency.

Could jatropha replicate the poverty alleviating power of palm oil, while at the same time avoiding the environmental problems associated with palms?
energy :: sustainability :: biodiesel :: biomass :: bioenergy :: palm oil :: jatropha :: social development :: poverty alleviation :: Malaysia ::

Chin thinks so and hopes smallholders, especially those in Kota Marudu, will participate in the cultivation "as it is sure to provide good returns". The ministry regards jatropha as an alternative crop that could contribute to the production of biodiesel in Malaysia with the potential to become a full-blown commercial crop.

However, the question remains on what type of land the jatropha will be grown and what its effects will be on land competition and on indirect pressures on forests.

If the crop is planned on land that would be suitable for palm oil, it will be difficult to convince farmers to grow it, since jatropha can't compete qua productivity and is extremely labor intensive (earlier post). On the other hand, of marginal interest may be the role jatropha could play in crop diversification. Small farmers who produce for a market that is heavily dependent on global market forces often face strong price fluctuations, and thus often stand to benefit from a diversified crop portfolio.

The strongest arguments in favor of jatropha - the fact that it can be grown on marginal soils and in semi-arid environments requiring little inputs of water - probably don't make sensee in Sabah. After all, Sabah is a heavily forested, lush green region in Borneo, the largest island in the humid tropics. The extent of 'marginal' soils there is probably limited.

On oil palm cultivation in Sabah, Chin added the federal government will continue to support the sector in the state with the use of new methods including quality seedlings. And here too, the support schemes are directed at small holders, the traditional recipients of financial and agro-technical aid:

We want to ensure that it is not only the large plantations that benefit from the latest methods but also the smallholders, which is why we have the quality seedlings aid scheme

In recent years, improved palms have been developed with some cultivars showing a 30% increase in yield. In order to arrive at a more sustainable palm oil sector, it is crucial for small holders to have access to these cultivars, so that replanting opens a cycle of higher productivity.

In another development, Chin said his ministry will introduce a new system that saves time for rubber tappers. If the smallholders use the new method, which involves gas and chemical extraction techniques, they will only need to tap 11 days a month, but the latex they collect will be equivalent to the amount from tapping daily, he explained.

Some environmentalists from the West have done their best to discredit Malaysia's plantation sector as a whole. One of their strategies has been to focus on the large estates as if they are the only actors in the industry. Too often they gloss over the fact that millions of people derive their livelihoods from the sector and that it has had profoundly beneficial social effects for Malaysia's rural population. If managed well, the biofuel market is set to bring more wealth to the small holders once again.

References:
Bernama: Biofuel Crop Jatropha To Be Cultivated In Sabah - September 28, 2007.

Arif Simeh, "The Case Study on the Malaysian Palm Oil" [*.pdf], Regional workshop on commodity export diversification and poverty reductionin South and South-East Asia (Bangkok, 2001), UNCTAD.

Biopact: Jobs per joule: how much employment does each energy sector generate? - September 01, 2006

Biopact: Towards a truce: environmentalists should use palm oil as a lever for conservation - September 03, 2007