By Abdul Hamid A Rahman
KUALA LUMPUR: The Malaysian Sustainable Palm Oil (MSPO) certification scheme has been introduced as an effort to enhance the sustainability of the palm oil industry in Malaysia, but its implementation has also presented various impacts and challenges, especially for smallholders.
MSPO is a national certification scheme introduced for oil palm plantations, smallholders and palm oil processing mills in Malaysia. Smallholders with less than 40.46 hectares (100 acres) of plantation are eligible for free MSPO certification incentives.
The MSPO aims to establish national standards in sustainable palm oil production, focusing on environmentally friendly agricultural practices, social responsibility and sustainable economic management.
In an interview with Bernama, the National Association of Smallholders Malaysia (NASH) highlighted the challenges smallholders face in meeting the certification requirements, as well as the benefits and potential advantages that certification brings, including better pricing opportunities for Malaysian palm oil on the international market
Main challenges in MSPO compliance
NASH president Adzmi Hassan noted that land ownership issues, labour shortages, and rising operational costs are among the primary obstacles preventing smallholders from obtaining MSPO certification.
He explained that the specific land-use requirements have made it difficult for smallholders who grow oil palm on land designated for rubber or rice crops to change the status of their farms.
“The state government imposes penalties on smallholders who violate land-use conditions when they attempt to change the type of crops they grow,” he said.
To address this, Adzmi suggested the land-use requirements for MSPO certification should focus only on private ownership of agricultural land, without specifying the type of crops, as agricultural land status alone should suffice for compliance.
Adzmi also identified specific challenges in regions like Sabah and Sarawak, where Native Customary Rights (NCR) land ownership issues remain a major concern, and the regulations vary from state to state.
“In Negeri Sembilan, for instance, customary land regulations do not allow rice fields to be converted into other crops,” he noted
Additionally, the labour shortage in remote plantation areas forces smallholders to rely on foreign workers, whose legal status is often unclear due to difficulties in sourcing local labour, he said.
He also pointed out that most smallholders, who are over 60 years old, struggle with the documentation of farm activities, which is required for certification.
“The situation is different for larger estates that have organised management systems in place, making the MSPO certification process easier to handle,” he said.
Adzmi expressed strong support for the government’s initiative to group smallholders into clusters, allowing them to be managed under a more organised economic system.
“If estate-style management is applied to smallholders, a ‘big data’ system can be created to track the source of palm oil, allowing consumers to identify smallholder products and potentially pay premium prices,” he said.
Impact on prices yet to be felt
Since the implementation of the Malaysian Sustainable Palm Oil (MSPO) certification in 2014, 96 per cent of smallholders have obtained certification, leading to improvements in both the quantity and quality of their production, said Adzmi.
“However, there has not yet been a corresponding rise in premium price offers from buyers. While costs have increased, the expected price benefits have not materialised,” he added.
Despite this, he said there remains optimism about the long-term potential of MSPO certification, especially when importing countries begin to offer premium prices for certified products.
“Since smallholders are MSPO-certified, we propose that the export market offer them premium prices and allow direct negotiations with mills on quality and price. We also recommend that palm oil traders obtain MSPO certification,” he suggested.
Testimony from smallholders
One certified smallholder, Mohd Sharul Haizam Shafei, 40, based in Kampung Bukit Changgang, Banting, Selangor shared how MSPO compliance has improved the management and yield of his eight-acre farm.
“In the past, we used pesticides excessively. Now, we are only allowed to spray the lanes, which has resulted in healthier, more productive trees,” said Mohd Sharul, who received MSPO certification in 2023.
He noted that adhering to MSPO practices has led to heavier, higher-quality palm fruits, enhancing the competitiveness of smallholders in the market.
“I hope that the government will continue to maintain price stability and offer more incentives for MSPO compliance,” he added.
Yahya Khamis, 65, a smallholder from Merlimau, Melaka, has managed his two-acre oil palm plantation for over 15 years but has yet to obtain MSPO certification.
“For people my age, we don’t fully understand MSPO, although I know its importance,” Yahya said.
He proposed that the government hold more seminars and informational programmes in rural areas to raise awareness about MSPO and its benefits.
“In my village and nearby areas, there are nearly 20 smallholders who haven’t obtained certification yet,” he noted.
Yahya hopes the government will play a more active role in supporting palm oil smallholders like himself.
NASH initiative to support smallholders
Adzmi stated that NASH is implementing various initiatives to assist smallholders, including negotiations with the government to simplify the certification process and offer free MSPO certification.
“We also organise programmes with small palm oil farmers in Peninsular Malaysia, working with agencies such as MPOB, MPOC, and MPOGCF to provide explanations about the criteria for MSPO implementation,” he said.
On the technical side, Adzmi said NASH provides training and technical support through instructors directly involved in MSPO certification. It also gathers smallholder concerns to be raised with the ministry or relevant agencies. – BERNAMA
