FOR the past several years, crude palm oil prices as well as other commodities such as rubber and crude oil have been very weak and this has caused many hardships for the country’s 100,000 smallholders and their families.
A lot of smallholders have to live from hand to mouth pressured by the soft crude palm oil prices causing them to lead challenging lives due to the rising costs of living, of which some are unable to put food on the table.
But now things are getting better. as crude palm oil prices are strengthening once again from RM2,000 a tonne in September last year to RM2,700 a tonne currently due to steady demand from traditional buyers such as India and China.
And the once sad looking smallholders are now smiling once again.
Halim Abbas, 63 a settler from Felda Mempaga, Bentong, Pahang said due to the hard times, his income dropped as low as RM250 a month and this was tough as he still has school going children and grandchildren to feed.
“But now, CPO prices have gone up and I can afford to buy my family a good meal and I don’t have to worry so much on my family’s next meal,” Halim told this writer in a telephone interview.
“Last time, I could not even buy my children school books, colour pencils or pens and paper.
“Now that CPO prices are higher, I can afford to buy them a pencil box and take them to the pasar malam and buy them fried chicken,” said Haji Abdullah Selamat from Felda Sahabat in Sabah.
Let us not forget that all Felda smallholders are cooperative members.
When crude palm oil prices improve, Koperasi Permodalan Felda will also pay out higher dividends.
With higher dividends, smallholders can have a higher income and a better life.
“If CPO prices improve to RM3,000 a tonne, I can finally buy a new television set,” says Abdullah.
Halim and Abdullah’s optimism is supported by the corporate sector.
Last month, Felda Global Ventures Holdings Berhad posted a 35 percent rise in profit for the second quarter ended June to RM62 million from RM46 million previously supported by stronger crude palm oil production following measures to boost fruit yields.
Felda Global told Reuters on September 9, CPO prices are expected to remain solid for the rest of the year averaging RM2,400-RM2,600 a tonne on restocking in China and India which will need more palm in October to prepare for the Deepavali festival.
Crude palm oil prices are expected to rebound because palm oil is facing a production squeeze this year due to the on-going effects of a crop damaging El Nino weather event, which brings hot dry weather and lower fruit yields.
This is all good news as higher crude oil palm prices will give higher income for the smallholders.
And let us hope that crude palm oil prices continue with its bullish streak as this will help the smallholders tremendously.
Once they spend, they will also help boost the domestic economy which in turn will help the country defend itself from the global economic downturn.
Nik Haikal Nik Ibrahim is an independent economic analyst and Malaysian Access reader.