Trade, Development, and Immigration

Palm oil production could be key in solving rising food costs


Housing and Planning

Tinkering policies will do little for families struggling to make ends meet

Lifestyle Economics

Poorest fare the worst under consumption taxes

Palm oil may be the cure to high food costs

With the poor moving away from subsistence farming and a predicted world population increase from 7 billion to 9.3 billion by 2050, investment in commercial agriculture has never been more vital. In Commercial Agriculture: Cure or Curse? Malaysian and African Experience Contrasted, Keith Boyfield demonstrates the importance of palm oil as a resource in tackling hunger and poverty, and looks at the opportunities and challenges of plantation agriculture presented by the contrasting experiences of Malaysia and Nigeria.
The importance of palm oil:

  • Demand for palm oil has more than doubled since 2000. Its variety of uses makes it a lucrative resource and a vital source of nutrients for the world’s poorest. Evidence from Malaysia, where palm oil cultivation rose from just over 45% of all cultivated land in 1990 to over 75% by 2009 shows it can make an important contribution to poverty reduction.

  • Equatorial Africa is one of the few places in the world with the available and suitable space to cultivate the amount of palm oil that is desperately needed to meet global demand. Palm oil presents a huge opportunity for African countries’ growth, and food provision globally.

Obstacles to palm oil production:

Unhelpful lobbying by NGOs
Several NGOs have been highly critical of the palm oil industry for endangering the environment. These organisations are doing more harm than good. Evidence from Malaysia indicates these criticisms are highly exaggerated and the industry has conversely done much to support wildlife conservation.

A lack of property rights
The biggest obstacle to long-term agricultural development is uncertain property rights in developing countries. A lack of clear and legally binding rules regarding who owns what and where is a strong disincentive to private sector investment.

Lack of private investment
Poor infrastructure and erratic power supplies hinder large-scale food production. These problems can only be addressed through increased private investment, but this requires the establishment of secure property rights. Their absence is a major deterrent to potential investors.

Lack of cooperation
Large-scale plantation agriculture and encouragement of local cooperatives need not be mutually exclusive. Major producers can help small farmers by providing processing facilities and marketing expertise. Governments must work with both communities and governments to unleash the advantages of large-scale palm oil production.

Commenting on the research, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“With global food prices rising, there is an urgent need to facilitate the development of the palm oil industry. NGOs must realise the benefits of commercial agriculture in Africa greatly outweigh the costs. Governments must work together with businesses and communities to remove the barriers to the growth of this sector. The potential benefits of large-scale palm oil production for the impoverished not just in Africa but around the world must not be ignored.”

Notes to editors:

To arrange an interview about the report please contact Ruth Porter, Communications Director, [email protected] or 07751 717 781.

The full report, Commercial Agriculture: Cure or Curse? Malaysian and African Experience Contrasted, by Keith Boyfield, can be downloaded here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.