Structural Changes and relevance of organizations and persons in the plantation industry
It is pertinent and timely to record in MEOA’s 75th Year Souvenir Programme magazine cum 2005 Annual Report, the structural changes and relevance of organizations and persons in the plantation industry.
For many years natural rubber producers under the leadership of Malaysia have voiced their concern over prolonged periods of price depression. In 1976 the International Natural Rubber Agreement on Price Stabilization (INRAPS) was formed. This is an agreement formed by the main producers of natural rubber with the aim of making rubber growing a viable and expanding industry. The agreement was signed and sealed but never saw action. Instead it was kept in dormancy under the wings of the bigger Association of Natural Rubber Producing Countries (ANRPC). The ANRPC is headquartered in Kuala Lumpur and continues to operate in areas promoting the interest of natural rubber and collection and collation of rubber statistics.
Mr Heah Hock Khoon and Mr Tan Teo Kim have attended meetings locally and overseas as advisors and experts in the Malaysian delegation.
In 1978, the producing and consuming countries banded together and formed a comprehensive body called International Natural Rubber Organization (INRO) under The International Natural Rubber Agreement 1979. The broad aims are to ensure a balanced growth in supply and demand, to stabilize export earnings, to ensure fair and remunerative prices to growers and adequate supplies to meet the requirements of importing members.
The main area of operation was the Buffer Stock with buying and selling activities. It established warehouses in strategic countries. The Commercial activities are guided by a reference price formula with a reference price and a ‘may buy’ and ‘must buy’ level and a ‘may sell’ and ‘must sell’ level.
Three Agreements were enacted in 1979, in 1987 and finally in 1995. Two buffer stocks were built up and later on wound down when market prices went up, resulting in small profit margins to the Organization. Mr Heah Hock Khoon, Mr Tan Teo Kim and Mr Boon Weng Siew attended local and overseas meetings in the Malaysian delegation.
A consumer body the International Rubber Study Group (IRSG) had also collaborated with producer bodies, the active one being the Rubber Research Institute of Malaysia and the Malaysian Rubber Research and Development Board, now amalgamated to be the Malaysian Rubber Bureau. The scope initially was on supply and demand and on trading and commercial activities and formulation of contracts, shipping and packaging and quality control are other subjects of interest. Of late the IRSG has been active in rubber development and promoting round table discussions on sustainability under the Rubber Eco Project.
The IRSG conducts courses on disease control and manages the 1974 Clonal Exchange Trial amongst other activities. Mr Heah Hock Khoon and Mr Tan Teo Kim have attended local and overseas meetings and fields trips in the Malaysian delegation.
The MEOA in earlier days enjoyed the combined strength of two owner type bodies namely the North Malaya Asiatic Planters Association and the Indian Estate Owners Association. These two Associations carried on for about a generation of planting activities but are now inactive due to the younger generation selling off their land to non agricultural enterprises or to bigger companies to enjoy economy of scale. Many of the owners children prefer to be professional doctors, engineers, accountants etc. Very few of the second generation owners continue to practice their entrepreneurial skill of their fathers. The ones that continue to expand their hectarage have in fact branched further downstream, some overseas. The MEOA had in fact formed a sub-committee called ‘The Foreign Investment Committee’ under the convenorship of Y B Mr K B Lee.
There was much enthusiasm in rubber planting due to global need for rubber tyres rubbers boots and mattresses. During World War II, rubber was declared a strategic material and neglect of estates and smallholdings resulted in shortage of raw rubber. Consequently during the Korean War in the early 50’s a pound of RSSI was sold for over 5 Straits dollars. During this period the Government with the Collaboration of the rubber apex body, the Rubber Producers Council formed a statutory body called the Rubber Replanting Board to collect a cess borne by rubber growers (estates and smallholdings) for the purpose of financing the rejuvenation of trees in order to increase rubber production. This was given a push by the call of a ‘Dynamic Rubber Production Policy’ initiated by Dr B C Sekhar when he was the Director of the Rubber Research Institute of Malaya. The Rubber replanting policy is still ongoing. RISDA the successor body to the Rubber Replanting Board have further acquired and planted rubber to increase rubber production. Illustrious MEOA members who served on these statutory bodies on their committees included Mr Cheah Theram Swee, Mr Guna Lay Teik OBE, Y B Senator Tan Sri Gan Teck Yeow, Mr Quek Kiah Huat , Mr Ho Sim Guan, Mr B K Lim, Dr Chan Chin Cheong, Mr H L Tang, Mr George Lim, Mr Heah Hock Khoon, Dato Lee Oi Hian, Mr Boon Weng Siew, Mr Tan Teo Kim, Mr Patrick Tan and Dato’ Shahabudin bin Shafie.
In the periodic price cycles for commodities, rubber, as a perennial crop, does not enjoy flexibility of land use. Oil Palm which matures in 3 years compared to 6 years for rubber has become a popular choice with estate owners. Over the 75 years of MEOA’s existence, the main crop mix of members is now 91% oil palm to 5% rubber and 4% other crops. The present price of tyre grade SMR 20 at around RM 6.00 per/kg however rekindled hopes of better times for rubber growers who can look forward to a bonus when his old trees become valuable timber for furniture manufacturers.
Prompted mainly by unremunerative rubber prices, the switch to oil palm was mainly on the flat coastal areas from Province Wellesley in the north to Johore in the south. Later on when FELDA the biggest owner of oil palm and rubber land planted on inland mineral soils the interest in acquiring new land for planting oil palm increased and spilled over to Sabah and Sarawak. An early member Socfin had been popularizing planting of oil palm in coastal and inland mineral soils.
As the rubber industry expanded into rubber goods manufacture and global reach in their sale of finished products rubber estate owners continue to suffer low prices for their produce. Top grade rubber however continues to enjoy niche market prices. The volume tyre grade rubber now produced at source has in recent years become market favourites and concentrate latex and SMR CV prices have reached historic highs.
From the 60’s estate owners have been looking for alternative crops from rubber planting. After World War II years, when rubber trees age it was natural for owners to rejuvenate the rubber trees with rubber trees. Thus the RRIM and PB clones have come into popularity together with GT 1 and PR107 from Indonesia. Members who played prominent soles during this period were the late Mr Chen Jan Jee and the late Mr S K Chan, the late Mr Heah Hock Khoon and Mr Ho Sim Guan and Mr Boon Weng Siew were also pioneers in the move towards rejuvenation of their estates. This renewal process was carried on into the building of technically specified rubber factories, with Tai Tak Estate being amongst pioneering factories.
The momentum for the growth of the oil palm planting undertakings initiated in the 60’s took off in the seventies when large scale opening up of land in various states in Peninsular Malaya and later on spilling over into Sabah, then Sarawak and Indonesia. When refining margins increased a few members took advantage and created another business line. Refined, bleached and deodorized palm and kernel have now filled the supermarkets in place of coconut oil as cooking oil. It is also the main component in the detergent formula. An important breakthrough in the vegetable oil market is the interest shown by the automotive industry in biodiesel. It would therefore be appropriate in celebrating the 75th Anniversary with a call for a Dynamic Production Policy for the growing and manufacturing of Malaysian’s golden crops.
The MEOA in the course of its history has attracted a wide spectrum of professionals into individual memberships. Mr Ho Sim Guan is a prominent banker being a practical planter and horticulturist. SK Chan was an early mechanical planting expert excelling in construction of wide terracing in hilly terrain. He is the mentor of Mr Boon Weng Siew who developed mechanical clearing into a means to control root disease which was quite rampant after the war years. Incidentally Mr Boon is still an active planter and plantation leader in several statutory boards and companies.
Mr Heah Hock Khoon holds the record for Chairmanship of the MEOA for a straight 19 year term from 1967 to 1986 besides managing his family owned estate.
Mr Mark Chang is currently working on a biodiesel project having planted up about 20,000 hectares of oil palm.
Individuals who contributed in accordance with their specialty or expertise are Dr M. M. Guha in agronomic practices and systems, Mr Robert Khoo in estate development, Mr H L Tang as State assemblyman in Johore., Mr K B Lee as trustee in the Malaysian Estate Staff Provident Fund Board, Dr Ng Siew Kee a prominent soils chemist and oil palm tissue culturist. Dr Chee Kheng Hoy a plant pathologist turned agricultural researcher and writer and En Mahbob Abdullah, a planter, cooking oil manufacturer turned author and currently Editor of the MEOA bulletin.
Mr Teo Soon Huat of Lee Rubber (Selangor) has generously contributed funds for the operation of the MEOA Education Fund.