Thursday 28 Mar 2024
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This article first appeared in Forum, The Edge Malaysia Weekly, on March 6 - 12, 2017.

 

If there is a single product we can put our finger on for Malaysia’s economic well-being the past half-century or so, without a shadow of a doubt, it is oil palm and palm oil. It has kept us motoring along — weathering the vagaries and vicissitudes of the global economy.

Today, on some 5.5 million hectares of arable land, awash with tropical sunshine and rain, stands a mighty green phalanx of oil palms, guarding over our prosperity from coast to coast and across the South China Sea in Sabah and Sarawak.

When oil palm, a native of West Africa, was first planted by private enterprise in 1917 as a monoculture crop in Tennamaram Estate, along the Selangor River, who in their right minds could have imagined this first commercial oil palm planting, with Deli dura palms from Sumatra, would become a multi-billion-dollar global business for Malaysia.

Today, Malaysia is a clear leader with about 10% share of the global supply of oil and fats and commanding over 20% of the global trade volume. Who have thought oil palm would have had a more profound effect on the lives of all Malaysians than even the mighty rubber industry that had held sway over our fortunes for much of the 20th century?

But, fortunately for Malaysians and the world, a handful of entrepreneurs, engineers, agronomists, companies, innovators and industrialists sensed that inside the small oil palm fruitlets — each containing a mere thimbleful of golden oil in their fleshy mesocarp — were the seeds of a mighty enterprise.

The story of the first 100 years of oil palm in Malaysia featured a vast cast of characters, companies and events that no scriptwriters could have put together. But at its heart, this story is about the remarkable African palm Elaeis guineensis; the astute and artistic planter-author Monsieur Henri Fauconnier; the plantation giant, Societe Financiere des Caoutchoucs, or Socfin — and its legendary contributions to the fledgling oil palm industry — and last but not least, the oil palm industry of Malaysia that the people and government can justly take pride in as being the best in the world.

But first the stage itself: a small spit of land, sticking out of the huge landmass of Asia — the Malayan Peninsula, positioned between the ancient civilisations of India and China and the sea routes connecting the East and West.

Over hundreds of years came the adventurers, settlers, traders, outlaws and refugees. Always few in number, they settled in the river mouths rich with fish, fruits and fowls. Later came subsistence rice farming and barter trading. Then came the kampung, the native villages — an idyllic cluster of thatched roof, wooden houses on stilts by the bend of a river set amid padi fields, fruit trees and coconut palms. A poetic art form unique to the Malays, the pantun, finds its early expression here. Then in the 15th century, rose the greatest emporium of the East — Melaka.

Fast forward four centuries. The British colonial administration held sway over the Malayan Peninsula, or the Malay states, as they termed it. The Malay states were a far cry from the glory days of the Melaka sultanate before its fall in 1511 to the Portuguese. In disrepair and disarray, these often warring states have still not come to terms with the loss of Melaka, their ancient patrimony.

There was little of commerce or cultivation in early British Malaya. But in the Straits Settlements of Penang, Singapore and Malacca it was boom time and everywhere was modernity — ports, steamships, telegraph, roads, newspapers, imposing public buildings, merchant houses, traders, schools, exporters and importers of the wares of the world — the stuff of empires! The colonial administration, convinced British Malaya should pay for itself, pushed for the cultivation of crops for the global market. Coffee, tapioca, tea, rubber, coconuts … anything at all that will turn around the fortunes of the Malay states.

Rubber! Hundreds of thousands of hectares wherever a land concession could be obtained.

It is now 1905. Entered Henri Fauconnier, a rubber planter who dared to differ. Young and with an intense and abiding artistic temperament, he was teaching French music in an English school when he chanced upon a journal article on the fortunes that could be made planting rubber. Surely a great pile of money would allow him all the time to pursue his artistic dreams! He arrived in Malaya to learn the ropes of rubber planting before setting out on his own at Rantau Panjang Estate, Selangor. Another chance meeting with perhaps the foremost agronomist in the East — the Belgian, Adrien Hallet, now planting oil palms in Sumatra and the Congo … and the die was cast.

Fauconnier returned from Sumatra in 1911 with a few bags of the oil palm fruitlets, Elaeis guineensis, and planted them in long avenues leading up to his Minangkabau-style house, Maison des Palmes, in Rantau Panjang. Then in 1917, on his more recent concession further up from Rantau Panjang, he instructed his managers (for he was now a soldier serving France) to replant the coffee bushes with an even better stock of seedlings from the nursery in Rantau Panjang. South Indian labour mistook these seedlings for the coconut palm, “tennamaram” in Tamil.

Now came the real star of the show — this amazing palm out of West Africa. Over a commercial lifespan of some 25 to 30 years, it produces a high-yielding, healthy, cost-effective and versatile golden oil for a thousand and one uses. Like olive oil, it is a “fruit oil”, as described by a 15th century Portuguese explorer: “It has the scent of violets, the taste of olive oil and a colour which tinges food like saffron but is more attractive”.

Most peculiarly, this incomparable oil comes from the fleshy and fibrous external mesocarp covering the small hard nut. Inside this nut is a whitish kernel, which yields a smaller quantity of oil very different from that of the mesocarp. Truly, palm oil is a riddle wrapped in a mystery with an enigma inside! A palm wine is also made from its inflorescence. Among the Igbos of Nigeria, palm wine is a much-loved social lubricant, described by author Chinua Achebe in his classic tale Things Fall Apart as the “grease of conversation”.

The newly cultivated oil palms in Tennamaram Estate was a topic of much conversation, but few were convinced. Socfin was. The company, like so many others of the day, emerged into the corporate sunshine after a series of swaps, mergers, acquisitions and rationalisation plans first started by Fauconnier himself in 1919.

It began with the merger of Group Hallet with the Bunge-Grisar Group (today’s affluent and vibrant Bangsar township is a contraction of these two names, one Dutch and the other French), which, together with numerous British and Scandinavian plantation interests, formed a bewildering patchwork of estates and landholdings throughout the Malayan Peninsula.

It was Socfin that would set the pace in oil palm cultivation. Starting from 1930, Socfin embarked on an enormous expansion and planting programme under the dynamic leadership of RME Michaux, giving near equal emphasis to both rubber and oil palms, which marked it out from the rest of the plantation companies.

In 1934, the company set up a bulking installation in Port Swettenham, now Port Klang, to export palm oil in bulk directly to Europe. Previously, palm oil was shipped in expensive barrels made from the California fir, mainly for the American market. By end-1935, Socfin had a planted area of 20,510ha, of which 12,176ha were devoted to rubber and the rest to oil palm.

Socfin had found a happy home for oil palm and, more importantly, a cost-effective way to serve the emerging global market for its vegetable oil needs. At the plantation level, the company placed great emphasis on research, statistics, record keeping, innovation and a scientific approach to management, including mechanisation. True to its progressive creed, in 1936 the company began operating the country’s largest oil palm processing factory in Cha’ah, Johor. The oil palm industry was here to stay.

By 1941, there were 31,600ha of planted oil palm in Malaya. And yet this was only one-third the size of its counterpart in the Netherlands East Indies. But the rate of growth was faster and the quality of the produce, superior. But in Malaya, rubber was still king notwithstanding the groundbreaking contributions of Fauconnier and Socfin, the original French Connection.

To quote the annual report of the Department of Agriculture, Malaya, 1937: “The oil palm plantation industry has been established as an important minor industry conducted with a large degree of scientific skill … but expansion must wait upon the prospects of palm oil in the world market.”

It was a long wait for everyone involved in the industry. And what of the man whose pioneering efforts had started this industry in Malaysia? Fauconnier had settled down in Tunisia in 1925 after selling off his estates for a tidy fortune. But he still pined for the land whose charms had given him soul-nourishing adventure and inspiration. He published his first ­poems in 1910, perhaps influenced by the Malay ­pantun, described by Victor Hugo as “delicious originality”.

Then in 1931, Fauconnier took the French literary world by storm, with the publication of Malaisie. It won the Prix Goncourt award — the foremost prize in French literature, given to the author of the “the best and most imaginative prose work of the year”. His reputation was now established. In his book, he crafted a delicate portrayal of the land and its people. Eric Sutton translated this classic novel into English in 1931 as The Soul of Malaya. Malaisie was translated into Bahasa Malaysia as Nurani Tanah Melayu by Muhammad Haji Saleh and published by Institut Terjemahan & Buku Malaysia in 2015.

The war years — 1941 to 1945 — brought the palm oil industry to its knees. Recovery was slow and agonising. Eight years later, palm oil production was still 10% below the pre-war level, but there was a glimmer of hope that the prospects for palm oil in the world market would now be better. Demand spiked with the outbreak of the Korean War.

By 1960, there were 55,000ha of oil palm producing some 92,000 tonnes of palm oil but, in the power corridors of plantation agency houses and head offices, something was definitely stirring. Old planters and their even older accountants were sharpening their pencils and looking hard at columns of numbers over and over again. In government ministries, officials kept reworking and revising budgets for the umpteenth time to match revenues that fluctuated wildly. Rubber was in trouble. Again! If only they had access to the carefully kept records of the United Plantations in Perak. In the 1935-39 period, margins stood at 55% for rubber and 54% for oil palm plantations as a proportion of sales revenue. However, by 1965-69, margins for rubber had fallen to 27%. But a series of innovations in planting materials and processing methods had allowed oil palm margins to remain high at 53%.

A good part of the post-war era world was now experiencing an explosion in population growth and rapid economic development. Fats and oils consumption was rising rapidly. Significantly, three countries that were large producers of palm oil — Indonesia, Nigeria and Congo — were all experiencing political turmoil, if not instability. There were also the natural advantages of oil palm over rubber: speedier maturity, half the labour requirements, fewer disease problems and relatively more stable prices.

First came the slow realisation that numbers do not lie and that sentiments count for little in global markets. Then the inevitable conclusion, almost heretical: Oil palm was ready to succeed rubber and it was not only a worthy successor but also better suited to take us to the promised land of prosperity. The understudy had come of age. The infrastructure built for rubber and tin was well in place. Let the great expansion begin! Let us begin the campaign of replanting rubber with oil palm! The government, the industry and the research bodies seized the moment, like in that French classic by Alexandre Dumas, The Three Musketeers whose motto was “One for all, and all for one” (Un pour tous, tous pour un). The French DNA of our oil palm industry was showing up again!

And Socfin had now become a byword for progressive things both in business and the civic spheres of Malaysian life. The company operated a retirement gratuity long before the Employees Provident Fund was mooted. In later years, it would also play a key role in helping set up the National Zoo, The Outward Bound Trust and the Commonwealth Club. There was a strong esprit de corps among its ranks, who often described themselves as “Socfiners”. It had trained generations of managers, researchers, engineers and executives who saw themselves as planter-gentlemen who truly understood the soul of Malaysia and Malaysians of all races.

Many old Socfiners still actively contributed to the industry they helped establish in Malaysia. Perhaps as a consequence, Socfin did not suffer the ignominy of a “dawn raid” or of being forced to sell. It exited with French grace and style in 2004 after weathering the storm of economic nationalisation, by selling its properties at a time and a price of its own choosing. Adieu Socfin, with many thanks!

A 100 years of history, French connection and ­5.64 million hectares of cultivated oil palm producing some 20 million tonnes of golden palm oil from Felda settler plots, independent smallholdings, private estates and large plantations — it is a history worth celebrating every day and in every way.


M R Chandran was former director and head of Plantations, Socfin Company Bhd

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