Smallholders Transformation and Persistence in the Fast

Growing Economies of Malaysia

Khairul Hisyam Kamarudin, PhD [khisyam.kl@utm.my] & Ibrahim Ngah, PhD [b-ibrhim@utm.my]

Contents01

02

03

04

05

Introduction

Defining smallholders: Malaysian Context

The Story of Two Rice Farming Communities in Malaysia

Contributing Factors to Smallholders Transformation & Persistence

Conclusion

01

Introduction

This paper examines the transformation

of smallholders in the rural areas of

Malaysia and factors for their

persistence and sustainability, based on

the case studies of two villages in

different localities, having different

ethnic origins, historical and economic

background.

Information used in the study is based

on the fieldworks (in-depth interviews

of key informants) carried out in July &

August 2017

Study areas

Fieldwork 2017

09 July – arrival at

Merchong Chalet,

Pekan Pahang +

field visit

10-11 July –

household survey

at Merchong

13 July – arrival at Villa Gemilang

Homestay, Parit 6 (East) Sungai

Besar Selangor

13-14 July – household survey at

Kg. Parit 6 (East)

Defining Smallholder: Malaysian context

The term emerged during the era of British occupation in which the agricultural landscape can be divided into two: (1) small agricultural landscape of indigenous farmers which served as a source of staple food for the population of Malaya, and (2) large agricultural landscape based on the estate system which cultivated coffee, sugar, black pepper, tobacco and later rubber which were largely owned and operated by European capitalists and newcomers from China (Buang, 2007).

02

Small farmers represent an inferior and marginalised mode of production in the

formation of social capitalism of a laissez-faire economy during the colonial period.

They were characterised as small players who are relatively naïve and uneducated on advanced

money management for wealth creation, marketing strategy, usage of technology and

scientific research and development (R&D) methods.

The Malay farmers or peasantry were also described as contented, self-sufficient, rural

small-scale farmers and fishermen (Omar, 1986).

Defining Smallholder: Malaysian context

Defining Smallholder: Malaysian context

Smallholder literally means a small size of land holding, but to quantify the size of land considered as small is very subjective.

The traditional practices to divide the parcel of land between 1 to 2 hectares.

Sabak Bernam, Selangor, the standard lot size of a rice field is 3 acres (1.2 hectares) (Ngah, et al., 2013).

Parit Tengah, Johor, the Indonesian migrants who opened the village divided the land parcel into 5 acres (approximately 2 hectares) for each person.

Section 16(1)(b) defined smallholders as:

“… the owner or lawful occupier or lawful representative of the owner or lawful occupier of any land of an area of less

than one hundred acres, which is included in any scheme under this Part and the

aforesaid person continues so to participate for the duration of such

scheme;”

Rubber Industry Smallholders

Development Authority Act 1972 (Act 85)

Farmers Association Board defined that a farmer is:

“… any person who is a citizen of Malaysia, has

attained the age of 18 years and—

(a) is engaged in agricultural or livestock production;

(b) whose income is derived from agricultural or

livestock production; or

(c) is in command of any of the factors of agricultural

or livestock production,

shall, subject to any regulations made hereunder, be

eligible to be a member of a Farmers’ Organization.”

Farmer Organisation Act 1973 (Act 109)

Definition >> implications (if adopting the definition from Act 85)

The programme to assist the small farmers will only include those within the definition,

i.e. those with legal ownership of land area of any size less than 40.5 hectares. For

those without legal ownership of land, they will be excluded from government grant

schemes for small farmers/smallholders. Thus, this will lead to wealthy farmers

reaping the most out of the benefits from the subsidy scheme provided by the

government.

Landless farmers or workers in farm could not benefit from any government grant

schemes and/or subsidy for smallholders in any ways. Moreover, the definition allows

legal loopholes for farmer families who own more than 40.5 hectares or 100 acres to

benefit from subsidy schemes where they can divide the land title into smaller parcels

under different family members.

Supported or “scheme” smallholders

who are structurally bound by contract or

credit agreement to a particular mill or

agencies such as Federal Land

Development Authority (FELDA) and the

Federal Land Consolidation and

Rehabilitation Authority (FELCRA).

Independent smallholders who are self-

organized, self-managed and self-finance,

and therefore can decide more freely with

regard to the management and cultivation of

crops + not contractually bound to any

particular agencies or mill but tend to face

more challenges such as less productive

and lower quality produce.

Category of smallholders

Nagiah & Azmi (2012)

42.7

33

28.4

19.117.7

25.2

30.5

40.7

36.2

40.142.3

45.4

0

5

10

15

20

25

30

35

40

45

50

1970 1980 1990 2000

Contribution Agrisector to GDP and Labour Force (%)

Contribution to GDP according to Sectors (%)

Primary sector/industry - natural products; agriculture, mining and forestry, gas etc.

Secondary sector/industry - processing; manufacturing & construction

Tertiary sector/industry - services; retail sales, entertainment, financial organizations etc.

1975 1988

23.3

12.8

9.1

53.2

26.0

12.2

0.0

10.0

20.0

30.0

40.0

50.0

60.0

19

70

19

71

19

72

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

%KDNK / GDP

% Labour force

NextR

Current issues / challenges

Study areas

Fieldwork 2017

09 July – arrival at

Merchong Chalet,

Pekan Pahang +

field visit

10-11 July –

household survey

at Merchong

13 July – arrival at Villa Gemilang

Homestay, Parit 6 (East) Sungai

Besar Selangor

13-14 July – household survey at

Kg. Parit 6 (East)

03The Story of Two Communities

Study Approach

Conducted in stages begin with Merchong village on 10th to 11th July 2017 (two days), followed by Parit 6 (East)

village (13th to 14th July 2017). Researchers have interviewed both the head of the village to better understand the

history of the village and development of socio-economic activities in the village with particular focus on smallholders’

issues and achievements

Photo 1: Interview session with (L) Tok Muda Abdul Halim at his home in Merchong village, 11 July 2017; interview with Tok

Sidang Mohamad Yasin and village secretary (R) at Parit 6 (East). Research fieldwork in 2017

CASE 1: Development of Merchong

1980s 1990-2000 1990-2000 1990-2000 Present

Appointed as the village head

At the age of 30, retired from armyRising the number of population (1993)

Primary school (from 52 students increased to >1000 students)

Need to construct new school buildings and classrooms

8000 acre of swamp area have been transformed into rice cultivation area

More immigrants and interstate migrants are coming in (1990)

Mostly the poor and landless families from Kedah (relatives to those coming from Myanmar)

Local people from Pahang

Did not undergone much transformation – maintain job in traditional economic sectors and fisherman

Interested in getting the land title but not keen to work with immigrants to develop rice cultivation area

1000 acre were granted TOL (no legal land title = no subsidy can be channeled by government)

Lack of government intervention (develop systematic irrigation and aided schemes, only rain water harvesting)

Total population of 3000 people (considered as large for rural/village)

Rice cultivation become seasonal (farming and crab fishing)

Serious de-population issue in Merchong

Marked the beginning of NEP in 1970s + establishment of FELDA

Group of immigrant workers from Myanmar arrived at nearby plantationInvited outsiders to work together with locals to transform vase swamp into rice cultivation area (85 families accepted) and resettled in “Permatang” area

Interview with Tok Muda Abd Halim

➢ The village (Kampung) is headed by Tok Sidang (head of village) Mohd Yasin + 80 families with population of 280 people

CASE 2: Development of Parit 6 (East)

➢ Is a systematic village divided into four sub-blocks (or sub-clusters) labelled as E9, E10, E11 and E12 (Figure) + 4 block leaders and they will be reporting to the head of village.

➢ 50-52 rice plots for each block and each rice plot come is size 3 acre.

➢ In total, the head of village will be responsible to monitor and regulate all activities in all four blocks or approximately 200 rice plots in total.

Pertinent role of state and government agencies in

supporting smallholders’ development and transformation

Monitoring of rice cultivation process,

controlling plant diseases, disseminating aids

/government subsidies and introducing new

variations of rice seeds.

Constructing and updating physical infrastructure

(irrigation system and organising specific projects

related to rice farming communities).

Controlling canal/irrigation system, monitoring of

flood gates and disseminating irrigation schedule

before new cultivation season begin.

End of July

(End of harvesting

season)

10 days later

Refining plot / check

on the remaining of

straw

14 days later

Ploughing

(Round 1)

1st October

(Channelling of water

to rice plots/opening

of water gates by

DID)

9th October: Refining

plot/ploughing (Round

5 – optional)

10th October

(Beginning of

cultivation)

1st August (3-4 days)

(Clearing rice straw and

burning of straw)

10 days later14 days later

Ploughing

(Round 2)

3 to 4 days later

Ploughing

(Round 3)

Ploughing (Round 4)

– end of September

Schedule for new cultivation season

released by Agriculture Department

11th October (weeding

and pest control) –

“pracambah”

7 to 10 days later

Weeding and

pest control –

“rumpai”

Flooding of cultivation plots

15 days later

Fertilizer Round 1

(mix fertilizer)

15 days later

Fertilizer Round 2

(urea)

15 days later

Fertilizer Round 3

(organic fertilizer)

60 days after cultivation

Fertilizer Round 4

(fruit fertilizer)

Mid of November

(Day-110)

(Beginning of

harvesting season)

The whole process took approximately 100 to 110 days

In Parit 6, rental for

one rice plot (3

acre) is RM3000

per season (or

RM500/month) or

RM6000 per year,

and it is considered

as lucrative

business for many

people with/inherit

large amount of rice

plots.

Operational cost = RM3000/plot/season + Plot rental = RM3000/plot/season

RM3000 = USD770 l USD770 x 2 = 1540 x 2 = 3080/12m = 257 (RM1000/m) & net income = RM4000-7000/plot/season

Contributing Factors to Smallholders Transformation and Persistence – Merchong village

04

(1) Possession of multi-skills; (2) strong

networks of family relations/kinship support

and; (3) active participation in varieties of non-

agriculture economic activities

Adoption of local knowledge in strengthening

local economic system based on rotation of

activities (majority of farmers) to sustain

livelihood (rice cultivation only 1 season/year)

“Rich farmers” investing in swift nests project

as a long term investment (provide continuous

income and located near to their house)

Contributing Factors to Smallholders Transformation and Persistence – Parit 6 (East) village

04

(1)Self-realization that their livelihood and the

community is shaped by rice cultivation +

farming with multiple functions (agro-tourism

etc.)

(2)Symbiotic relationship and pertinent role

played by various government agencies/local

cooperatives to ensure rice farmers received

proper assistance.

05 Conclusionkey findings…… Failure to obtain land status could deny much needed assistance and incentives

provided by state & government agencies responsible for smallholders

The legality of land is important in smallholding activities, and this is

clearly showed while observing both cases

They are able to diversify source of income through involvement in both farming (diversification

of crops) and non-farming projects (agrotourism, swift nest projects, crab fishing, etc.)

Farmers or smallholders in both villages gained higher socio-economic status by

utilizing multiple skills

Through strengthening local institutional support and extension services, promote training and agropreneur

development, and improve market access and logistic support

Role and commitment of state government and other government agencies are crucial to ensure

continuous support are available for modernizing the agriculture sector, particularly the smallholders

Where their relatives / children will contribute back to their parents in terms of financial/supplementary income and man

power support have positive implications to smallholders’ persistence.

Presence of internal support system through kinship assistance and the success of their children

This research concluded that smallholders in both study areas seems to remain determined, should they are able to get hold totheir land regardless of the challenges they might face in the future. Smallholders would also benefit greatly, following the arrival of interested newcomers in the agriculture sector and the government’s continuous effort to provide assistance and subsidy.

THANK YOUTerima Kasih

Website: khairulhkamarudin.wordpress.com

Khairul Hisyam Kamarudin, PhD [khisyam.kl@utm.my] & Ibrahim Ngah, PhD [b-ibrhim@utm.my]