14 April 2002 (Business Times) - The Primary Industries Ministry ispreparing a paper on the proposed restructuring of the oil palm and rubberindustries which are beset with oversupply and low prices.

Minister Datuk Seri Dr Lim Keng Yaik said the paper would, among others,provide solutions, strategies and proposals for the future of smallholdersand the industry.

It is expected to be submitted to the Cabinet soon.

Strategies include a land consolidation exercise where smallholders areencouraged to expand the size of their plots from the current two to fourhectares to between 8h and 10ha for rubber and 10ha and 12ha for oil palm.

If smallholders cannot afford to expand, the Government would formulateschemes, similar to unit trusts, for the consolidation exercise.

The restructuring exercise will also educate the unorganised andindividual smallholders and introduce modern technology to help increasepr oduction.

(Organised smallholders are under the Felda or other Government schemes).

Speaking to reporters after chairing the Perak Wushu Association annualgeneral meeting here today, Dr Lim who is the association president, saidthe change was necessary for the industry to survive in the newmillennium.

He said measures taken by the Government to reduce production and increasedemand for the commodities was only temporary and would not last.

Last year crude palm oil prices dipped to a 10-year low of below RM700 pertonne, while rubber was at RM1.80 per kg RSSI.

The replanting of oil palm and burning crude palm oil for electricitygeneration and fuel has seen an increase in the price at RM1,200 per tonnein the last three months.

While for rubber, the four per cent and 10 per cent reduction inproduction and exports respectively helped increase rubber prices toRM2.70 per kg RSSI as of last month.

"Even if rubber and oil palm prices rose, we still have to contend withrising production costs and a higher standard of living.

"There will come a time when the existing size of holdings will not beeconomically viable and smallholders will not be able to compete with theindustrial workers in terms of income and returns," he said.

Dr Lim said the land consolidation exercise would also encourage theyounger generation to venture into the industry because at present theaverage age of a smallholder is 60 years.

"If we do not make it attractive for the young, they will not beinterested and the rural sector will be left far behind in the nationalagriculture mainstream," he said.

There are currently 700,000 rubber and oil palm smallholders nationwide.

(The informations and opinions expressed in this article represent theviews of the author only. They should not be seen as necessarilyreflecting the views of Palm News)