Wednesday, 14 June 2017

The Supply Chain of the Palm Oil Industry in Malaysia


6.1 Introduction

The Malaysian palm oil industry spans a full value chain of stakeholders (Figure 7), grouped as follows: upstream producers, downstream producers, exporters/importers, customers, industry organisations, government agencies, and other stakeholders such as NGOs and unions.1

Profiles of major players are provided in Part B and follow a standard template (Introduction; Vision/Mission; Role/Function; Organisation; Funding; Activities; Contact). Plantation company profiles use a two-page fact sheet format with triple-bottom-line performance, crop statements, 5-year productivity and production, and 5-year financials, based on public sources (annual reports, corporate websites, press).[^^1]

6.2 Upstream Producers

6.2.1 Plantation Companies / Private Estates

In 2000, Malaysia had 3.38 million ha of oil palm; 60% was privately owned. From 1980–2000, private-estate planted area grew >3.6× (557,659 ha → 2,024,286 ha), with most new developments in Sabah and Sarawak.2

Table 11: Distribution of Oil Palm Planted Area (Hectares)

Ownership 1980 Hectares (%) 1990 Hectares (%) 2000 Hectares (%)
Private Estates 557,659 (52.1%) 912,131 (44.9%) 2,024,286 (60.0%)
FELDA 316,550 (29.6%) 608,100 (30.0%) 598,190 (17.7%)
FELCRA 18,851 (1.8%) 118,512 (5.8%) 154,357 (4.6%)
RISDA 20,472 (1.9%) 32,582 (1.6%) 37,011 (1.1%)
State Schemes 67,281 (8.0%) 174,456 (8.6%) 242,002 (7.1%)
Smallholders 70,446 (6.6%) 183,683 (9.1%) 320,818 (9.5%)
TOTAL 1,051,259 2,029,464 3,376,664

Source: MPOB.2



Historical Perspective

Colonial-era pioneers include Sime Darby (1910), Guthrie (roots 1821), Golden Hope (origins in Harrisons & Crosfield, 1844), Kuala Lumpur Kepong (1906), and United Plantations (Jendarata Estate, 1906, founded by Aage Westenholz).3 A comprehensive early history is documented in Tate (1966) and Tate (1996).3

From the 1970s onward, “home-grown” companies—IOI, Hap Seng, IJM Plantations, Asiatic (now Genting Plantations), PPB Oil Palms, Tradewinds, Austral—expanded rapidly.4

  • IOI grew from zero base (1983) to >100,000 ha by 2002, notably via the 1990 Dunlop Estates acquisition; later moved downstream via Loders Croklaan.45

  • Austral expanded in Sarawak (14 estates; 31,588 ha).[^^4]

  • Asiatic built a large Sabah footprint (Kinabatangan).[^^4]

  • Hap Seng and IJM Plantations concentrated in Sabah.[^^4]

Ownership Categories

  • PNB-controlled: Sime Darby, Golden Hope, Kumpulan Guthrie, Austral (via parent). Equity realignment under the NEP (1970) led to Malaysianisation of plantation assets; the 1981 Guthrie “dawn raid” on the LSE is the most cited example.6

  • Malaysian non-PNB: KLK, IOI, Hap Seng, Asiatic/Genting, PPB Oil Palms.[^^6]

  • Foreign-controlled: United Plantations (significant Danish shareholding), Pamol (Unilever). Unilever later announced divestment of Malaysian plantations (est. 21,700 ha), reported 18 Sept 2002.7

Core Business

Many groups diversified beyond plantations:

  • Sime Darby—automotive, property, energy, trading; plantations contributed a smaller share of earnings in FY2000–2001 (segment mix effects).8

  • IJM—construction, infrastructure, property, manufacturing; plantations accounted for smaller revenue/profit shares (circa early 2000s).[^^8]

  • IOI—integrated across property, industrial gases, oleochemicals, specialty fats after Loders Croklaan acquisition.5

Geographic footprint: Numerous Malaysian groups pursued land in Indonesia in the 1990s; actual developed areas lagged proposals after the 1997–98 Asian Financial Crisis. Guthrie was the notable exception, enlarging its Indonesian footprint via Minamas Plantations (2001).9

6.2.2 Government Schemes

FELDA

Established 1956 for resettlement and land development; later shifted to commercial plantation management. By 2000, FELDA managed ~598,190 ha (17.7%) and produced ~20–21% of Malaysia’s palm oil (2001).[^^2]10 FELDA is vertically integrated: ~258 plantations, 72 mills, 6 kernel crushers, 7 refineries, 2 margarine plants, plus overseas refining (Egypt, China) and an oleochemicals JV with Procter & Gamble (FPG).10
Corporate structure: Felda Holdings Sdn Bhd (36 subsidiaries/associates); settlers’ cooperative KPF holds 51% of Felda Holdings.[^^10]
Replanting to 2000 totaled 117,676 ha.[^^10]

FELCRA

Formed under the 1966 Act, corporatised 1997; manages ~154,357 ha (4.6%) and balances socio-economic mandates with upstream/downstream ventures.11

RISDA

Created under the Rubber Industry Smallholders Development Authority Act; later extended into oil palm. By 2000, RISDA-managed oil palm area was 37,011 ha (1.1%).12

6.2.3 Smallholders

Individual smallholders manage ~320,818 ha (9.5%) of oil palm. Under the RISDA definition, a smallholding is ≤100 acres (40.5 ha). A 1992 census recorded 420,193 smallholders managing 1.289 million ha (avg. 3.05 ha). Representation is through NASH.13

6.3 Downstream Producers

Downstream activities include milling, refining/fractionation, edible oils/fats, specialty fats, and oleochemicals.14

  • Major refiners: PGEO Edible Oils (PPB group), Ngo Chew Hong, Pan-Century (Birla Group).14

  • Cooking oil & food products: FELDA, Golden Hope, PPB Oil Palms/FFM/Kuok Oils & Grains, Sime Darby, United Plantations, Lam Soon, Intercontinental Specialty Fats.[^^14]

  • Specialty fats: IOI (Loders Croklaan), PPB Oil Palms, Sime Darby, United Plantations, Intercontinental Specialty Fats, Southern Edible Oil, Cargill Specialty.514

  • Oleochemicals: Palmco (IOI), KLK’s Palm-Oleo, Southern Acids, and multinational JVs (Cognis–Golden Hope, FPG (P&G–FELDA), Akzo Nobel, Uniqema).[^^14]

SME-scale palm kernel crushers supply CPKO to refiners and oleochemical plants (≈44 companies listed circa 2002).[^^14]

6.4 Exporters & Importers

Malaysia’s key destination markets: India, China, EU, Pakistan, Egypt.114 Historically, exports focused on refined products due to high CPO export duty; to reduce stockpiles, the government temporarily allowed duty-free CPO quotas (e.g., 1.0 million t in 2001). Exporters included Austral, Golden Hope, KLK, IOI.15

A non-exhaustive list of major importing firms across 20+ countries is recorded in MPOPC directories (1999–2002).[^^14]

6.5 Industry Organisations

Plantations

  • MPOA (1999 merger of UPAM, RGA, MEOA, MOPGC) represents >70% of private estates; seats on MPOB Board and MPOPC Trustees; active on sustainability (e.g., WWF dialogues, BMPs).[^^1]

  • EMPA continues to represent Sabah/Sarawak estates; collaborates with state agencies on environmental issues (e.g., Lower Kinabatangan).[^^1]

Planters

  • ISP (est. 1919): >4,350 members; professional exams/qualifications (Diploma → MSc with UPM), The Planter journal (since 1920), conferences and training.16

Processors

  • POMA: independent millers; mediation on FFB supply disputes.17

  • PORAM: refiners; members account for >75% of processed palm oil exports.18

  • MEOMA: broader edible-oils value chain; ~80% industry coverage.19

  • MOMG (under CICM): 12 members producing fatty acids, esters, glycerine, fatty alcohols.20

Promotion

  • MPOPC (formed 1990 to counter the 1980s US anti-tropical-oil campaign) leads marketing and technical promotion; established POFTE in 2001 to coordinate environmental positioning across MPOB/DOE and industry bodies.21

Footnotes

If you’d like, I can also produce a 1-page infographic brief (clusters, top orgs, and a mini-timeline) or a company fact-sheet template you can reuse for Part B.

Footnotes

  1. Malaysian Palm Oil Promotion Council (MPOPC). Malaysia Palm Oil Directory (1999–2000; 2002, interactive CD-ROM). ↩ ↩2

  2. Malaysian Palm Oil Board (MPOB). National planted area statistics by ownership, 1980–2000 (as reproduced in Table 11). ↩ ↩2

  3. Tate, D. J. M. (1966). The RGA History of the Plantation Industry in the Malay Peninsula; Tate, D. (1996). Historical notes on early planters (incl. Tan Chay Yan’s 1896 estate and European/Chinese pioneers). ↩ ↩2

  4. Company annual reports (1980s–2002) and Bursa filings for IOI, Austral, Asiatic (Genting Plantations), Hap Seng, IJM Plantations, PPB Oil Palms, Tradewinds. ↩ ↩2

  5. IOI Corporation Berhad. Announcements and annual reports on the acquisition and integration of Loders Croklaan BV (specialty fats). ↩ ↩2 ↩3

  6. Permodalan Nasional Berhad (PNB) history and NEP implementation; Malaysianisation of plantation assets; 1981 Guthrie “dawn raid” coverage in official histories and press archives. ↩

  7. New Straits Times, 18 Sept 2002. Report on Unilever’s intended divestment of Malaysian plantation assets (≈21,700 ha; indicative valuation RM500–800m). ↩

  8. Sime Darby Berhad and IJM Corporation Berhad annual reports (segmental analysis FY2000–2001). ↩

  9. Kumpulan Guthrie Berhad. 2001 acquisition of Minamas Plantations; landbank expansion disclosures. ↩

  10. FELDA Annual Report (2000) and group publications: replanting (117,676 ha to 2000); structure of Felda Holdings Sdn Bhd (36 companies); operating footprint (plantations, mills, crushers, refineries, margarine plants), overseas refineries; KPF 51% shareholding. ↩ ↩2

  11. FELCRA Act (1966), corporatisation (1997), and area statistics in annual reports (to 2000). ↩

  12. RISDA Act (1972) and subsequent agency publications; oil palm area under RISDA (to 2000). ↩

  13. Information Malaysia 2000 Yearbook: 1992 smallholder census (counts, areas, average size, definition ≤100 acres). ↩

  14. MPOPC (2002) directory listings for refiners, kernel crushers, edible-oil manufacturers, and oleochemical producers; company brochures and annual reports. ↩ ↩2 ↩3 ↩4

  15. Ministry of Finance/MPOB circulars and industry releases on duty-free CPO export quotas (e.g., 1.0 Mt in 2001); exporter examples from company disclosures. ↩

  16. Incorporated Society of Planters (ISP): history (1919), The Planter (since 1920), membership and qualifications (with UPM MSc). ↩

  17. Palm Oil Millers Association (POMA): establishment (1985), role with independent millers and FFB supply mediation. ↩

  18. Palm Oil Refiners Association of Malaysia (PORAM): membership coverage (>75% processed exports), policy/standards roles. ↩

  19. Malaysian Edible Oil Manufacturers’ Association (MEOMA): scope across milling, crushing, refining, retail packing, oleochemicals; estimated ~80% industry coverage. ↩

  20. Malaysian Oleochemical Manufacturers Group (MOMG) under CICM: member base and product slate (fatty acids, methyl esters, glycerine, fatty alcohols). ↩

  21. Malaysian Palm Oil Promotion Council (MPOPC): formation (1990), remit, and POFTE launch (2001) with MPOB/DOE/industry representation. ↩

#palmoilmill #miller #sawit #upstream #downstream #refinery #mpob #mpoc #mpoa #blog #blogger #kembarainsan #poma #poram #meoma 
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