PNB Launches Report To Improve Livelihood Of Independent Oil Palm Smallholders
KUALA LUMPUR, Sept 12 (Bernama) — Permodalan Nasional Bhd’s (PNB) research arm PNB Research Institute Sdn Bhd (PNBRI) has released a report with actionable policy recommendations to guide the future of independent smallholders in Malaysia’s oil palm industry.
PNB group chairman Raja Tan Sri Arshad Raja Tun Uda said the report “The Realities and Prospects of Sustainability among Oil Palm Smallholders in Malaysia” is a culmination of nearly two years of research, extensive stakeholder engagement, and on-the-ground fieldwork across Malaysia.
“While it aims to amplify the voices of independent smallholders, its multi-perspective approach ensures that the findings do not merely reflect one narrative. Instead, it provides a balanced, evidence-driven view of the opportunities and constraints in making the Malaysian palm oil supply chain more sustainable, inclusive of, and profitable for, independent smallholders,” he said in his welcoming remarks at the report’s launch today.
The report offers various recommendations to uplift productivity and improve the livelihoods of over 210,000 independent smallholders.
He said findings from the study also support PNB Group’s efforts to drive automation and smart farming in palm oil under the government’s GEAR-uP initiative, and the 13th Malaysia Plan’s (13MP) emphasis on improving local sustainability certification standards.
“More broadly, they reflect the overarching aspirations of the MADANI Economy and the 13MP to reshape national development through technology-driven transformation, socioeconomic upliftment and sustainable prosperity for the nation as a whole,” he said.
Although independent smallholders only cultivate about 15 per cent of Malaysia’s oil palm planted area, they provide livelihoods for hundreds of thousands of families across the country, Raja Arshad said.
By end-2024, although 81 per cent of Malaysian independent smallholders were certified as sustainable under the Malaysian Sustainable Palm Oil (MSPO) standard, they risk being left behind in the global push for sustainability, he said.
“As found in this study, independent smallholders continue to face challenges. Rising input costs, compounded with the issues of ageing trees and pressures to sustain compliance with sustainability requirements, may have intensified the financial strain faced by smallholders,” he said.
The report sets out 15 recommendations to strengthen bargaining power, market access and improve the livelihoods of independent smallholders while balancing environmental, economic, and social imperatives.
Among the 15, the report said given the ageing profile of oil palm smallholders, the next generation of independent smallholders must be primed to continue the business via the “Agroproneur Sawit Muda technical and vocational education and training (TVET) programme” comprising key modules such as financial literacy, business acumen, and MSPO or good agricultural practices modules.
This is also expected to maintain Malaysia’s export competitiveness.
“Additionally, punitive fertiliser prices make the case for bulk purchasing of input materials, to optimise costs for smallholders who cannot achieve economies of scale.
“Alongside our recommendation on providing Koperasi Penanam Sawit Mampan (KPSM) with more working capital to compete with private collection centres, KPSMs can also be used as a vehicle for bulk purchasing of fertiliser,” the report said.
It also recommended raising smallholders’ bargaining power and reducing reliance on third-party collection centres by enhancing regulations, mandating transparency around their operations, and diversifying farming support available to smallholders.
“This can be done by expediting the MSPO certification process on these centres,” it said, adding that this was already mandated as of July 2025.
The report also reiterated the importance of good agricultural practices that go beyond fertilisation towards simple technology applications to increase adoption of other practices, such as record-keeping.
The study synthesises insights from over 30 focus group discussions with 250 respondents comprising independent smallholders and extension officers across 11 states, including East Malaysia.
The study was supplemented with a face-to-face structured interview among 425 independent smallholders.
The full report is available for download at www.pnbri.com.my.
-- BERNAMA