TECHNOLOGICAL CHANGE IN THE MALAYSIAN PLANTATION CROP AGRICULTURAL SUB‐SECTOR: BENEFITS TO RURAL HOUSEHOLDS

Oil palm, natural rubber and cocoa are the three major plantation crops planted accounting for about 4.5 million hectares of cultivated land in 1995 (4.41 million hectares in 1993 (Table 1)). These crops are grown mainly for exports. But with resource‐based industrialization, a rising proportion of output is processed domestically in the manufacture of food and industrial products. Smallholder participation in the production of these crops, mainly from rural areas, is significant. Small‐holdings accounted for 83.5% of natural rubber planted area, 51% of oil palm area, and 53% of cocoa planted area. The estate sector's shares in total area and production of the three crops are declining because estates are moving out of agriculture. Estates are diversifying their output mix, in particular replacing rubber with oil palm. The shift is induced by the downtrend in rubber prices in the 1980s except for the recovery in 1988, and the observed better returns from oil palm production. On the other hand, the area of small‐holdings planted with rubber has remained relatively stable. Both cocoa and oil palm area under small‐holdings have increased.