The oil palm tree was first introduced to Malaya by the British as an ornamental plant in 1875 but it was only commercially planted in Tennamaran Estate, Selangor 1917 by Henri Fauconnier.
Crop Diversification Efforts
Despite threats of the Emergency during the 1960s, the oil palm expansion in Malaysia was rapid as its economic potential was recognised by the Malaysian Government as a complementary crop to rubber in the poverty eradication programme. The Federal Land Development Authority (FELDA) first introduced the oil palm in 1961 on an initial size of 375 ha to help the landless farmers. Due to the fall in rubber and tin prices, estate planting of oil palm tended to be on old rubber estate land when the prospects of high yields and profitability of palm oil were recognised. In 1966, Malaysia overtook Nigeria as the world’s leading exporter of palm oil. Compared to Malaysia, the Indonesia government only started to directly invest in state owned plantations in 1968.
Realising from historical experience with rubber and tin that dependence on narrow product lines can bring price downswings, the Malaysian government embraced diversification as a way to sustain production and exports.
Acting against the advice of international agencies, the Malaysian government began in the late 1970s to encourage a shift from CPO exports to refined products through taxation and incentive policies. The 1980s saw the “Malaysianisation” of 3 major plantation companies previously run by the British i.e. Sime Darby, Guthrie and Harrison & Crossfield (later Golden Hope Plantations) 1980 also saw the founding of the Kuala Lumpur Commodity Exchange (KLCE), a key instrument for price setting, hedging and dissemination of market information to reduce market risk in the trading of palm oil.