Malaysia

Jeffrey R. Vincent and Yusuf Hadi

The tandem of commercial logging and shifting cultivation has been blamed as the leading cause of deforestation in the humid tropics (Lanly, 1982; Myers, 1978). (The term deforestation is used here in the strict sense favored by Lanly [1982]: conversion of forests to a nonforest land use. Thus, logging of a primary—that is, virgin or old-growth—forest is not regarded as deforestation unless the logging is so intensive that tree cover is essentially eliminated.) In several countries, however, other agricultural activities are more responsible. Peninsular Malaysia provides a notable example. In the late 1800s, the peninsula was virtually completely forested. Today, natural forests cover less than half of their original extent. Forests have been converted primarily to agricultural use, but not by a process of shifting cultivation. Shifting cultivation affected less than 0.1 percent of the peninsula's land area in 1966 (Wong, 1971) and the late 1980s (Rambo, 1988).

Instead, tree crops represent the principal agricultural land use in Peninsular Malaysia. Rubber, oil palm, coconut, and cacao accounted for 83 percent of the area devoted to agriculture in 1988 (Ministry of

Jeffrey R. Vincent is an institute associate at the Harvard Institute for International Development, Harvard University, Cambridge, Massachusetts; Yusuf Hadi is dean of Fakulti Perhutanan (Faculty of Forestry) at the Universiti Pertanian Malaysia, Selang-or, Malaysia.



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Sustainable Agriculture and the Environment in the HUMID TROPICS Malaysia Jeffrey R. Vincent and Yusuf Hadi The tandem of commercial logging and shifting cultivation has been blamed as the leading cause of deforestation in the humid tropics (Lanly, 1982; Myers, 1978). (The term deforestation is used here in the strict sense favored by Lanly [1982]: conversion of forests to a nonforest land use. Thus, logging of a primary—that is, virgin or old-growth—forest is not regarded as deforestation unless the logging is so intensive that tree cover is essentially eliminated.) In several countries, however, other agricultural activities are more responsible. Peninsular Malaysia provides a notable example. In the late 1800s, the peninsula was virtually completely forested. Today, natural forests cover less than half of their original extent. Forests have been converted primarily to agricultural use, but not by a process of shifting cultivation. Shifting cultivation affected less than 0.1 percent of the peninsula's land area in 1966 (Wong, 1971) and the late 1980s (Rambo, 1988). Instead, tree crops represent the principal agricultural land use in Peninsular Malaysia. Rubber, oil palm, coconut, and cacao accounted for 83 percent of the area devoted to agriculture in 1988 (Ministry of Jeffrey R. Vincent is an institute associate at the Harvard Institute for International Development, Harvard University, Cambridge, Massachusetts; Yusuf Hadi is dean of Fakulti Perhutanan (Faculty of Forestry) at the Universiti Pertanian Malaysia, Selang-or, Malaysia.

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Sustainable Agriculture and the Environment in the HUMID TROPICS Agriculture [Malaysia], 1991). Unlike shifting cultivation, the opening of new areas for tree crops has not been driven by the need to replace abandoned, exhausted lands. New plantations represent net additions to an essentially permanently productive agricultural land base. This profile analyzes the role played by tree crops in the conversion of forests in Peninsular Malaysia during the past century. It addresses four broad questions: (1) Are tree crop plantations a sustainable land use? (2) Are tree crop plantations economically feasible? (3) How have policies affected the expansion of tree crop plantations? (4) What are the environmental impacts of conversion of natural forests to tree crop plantations? In addition, deforestation projection rates up to the year 2030 are provided. It also highlights policy implications and identifies principal research needs. Under Malaysia's federal constitution, individual states retain substantial autonomy over land development and forestry policies. Policies are coordinated more among the states of Peninsular Malaysia than between Peninsular Malaysia and either Sabah or Sarawak (Vincent, 1988). Because of this autonomy and because there are profound differences among the three regions in demography (Peninsular Malaysia had 82 percent of the nation's population in 1990), economic activity (Peninsular Malaysia is more industrialized and accounted for 84 percent of Malaysia' s gross domestic product [GDP] in 1987), and agricultural activity (74 percent of Malaysian land in agricultural use was in Peninsular Malaysia in 1990), this profile focuses only on Peninsular Malaysia. DESCRIPTION OF PENINSULAR MALAYSIA AND ITS FORESTS Malaysia is a federation of 13 states. Eleven of the states comprise Peninsular Malaysia, which was the British colony of Malaya until it became independent in 1957. The other two states, Sabah and Sarawak, share the island of Borneo with Brunei and Kalimantan (part of Indonesia). Topography, Climate, and Soils Peninsular Malaysia is located entirely within the equatorial zone. It covers 13.2 million ha (40 percent of Malaysia's land area). Aiken et al. (1982) and Tija (1988) have summarized the peninsula's physical and climatic characteristics. Figure 1 shows how climate and topography vary within the peninsula. No part of the peninsula is more than about 150 km from the sea. The interior of the northern

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Sustainable Agriculture and the Environment in the HUMID TROPICS FIGURE 1 Climate and topography of Peninsular Malaysia. A. Mean annual rainfall in millimeters: <2,000, 2,000–2,500, 2,500–2,750, 2,750–3,000, 3,000–3,250, and >3,250. B. Mean annual bright sunshine in hours: <2,100, 2,100–2,200, 2,200–2,400, 2,400–2,500, and >2,500. C. Mean annual temperature in °C: <26.1, 26.1–26.6, 26.6–27.2, and >27.2. D. Elevation in meters: <300, 300–600, and >600. Source: Tija, H. D. 1988. The physical setting. Pp. 1–19 in Key Environments: Malaysia, Earl of Cranbrook, ed. Oxford, U.K.: Pergamon. Reprinted with permission from the publisher, © 1988 by Pergamon Press Ltd.

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Sustainable Agriculture and the Environment in the HUMID TROPICS two-thirds contains mountain ranges that run approximately north-south. The highest peak, Gunung Tahan, is 2,188 m in elevation. Mountains give way to low hills in the southern cone of the peninsula. Coastal plains extend along the Strait of Malacca on the west and the South China Sea on the east and are wider on the west. About two-thirds of the peninsula is less than 300 m above sea level. The combination of an equatorial location, proximity to the sea, and low relief results in a climate that varies relatively little during the year or within the peninsula. Most of the peninsula receives more than 2,400 hours of bright sunshine per year. The mean annual temperature ranges from 26.1° to 27.2°C and is highest in the low-lands just inland from the west coast. The mean annual rainfall ranges from less than 1,800 to more than 3,600 mm. The wettest regions are the foothills near the east and northwest coasts. The peninsula has a weak monsoonal climate. The peninsula's soils are heavily weathered (thus, they are often very deep), highly leached, and typically quite acidic (pH 4.2 to 4.8). They contain little organic matter and low levels of plant nutrients. Six of the 10 U.S. Department of Agriculture (USDA) soil orders occur: Entisols, Histosols, Spodosols, Oxisols, Ultisols, and Inceptisols (Tija, 1988). The last three types have good to excellent physical properties for agriculture. Lee and Panton (1971 [cited in Ariffin and Chan, 1978]), drawing on the work of Wong (1971) (according to Soong et al., 1980), proposed a soil suitability classification for Peninsular Malaysia that continues to be used for land use planning. The system divides the peninsula 's soils into five suitability classes (classes I–V), which are differentiated by the number of limitations in using the soils for agriculture. Ariffin and Chan (1978) suggest that potential agricultural land should best be confined to soils with, at most, one serious limitation for agriculture (classes I–III, which total 5.9 million ha). Barlow (1978), Lee (1978), and Aiken et al. (1982) suggest that 6.3 million to 6.5 million ha is suitable for agriculture. The Economic Planning Unit (Malaysia) (1980) of the Prime Minister 's Department favors an estimate of 6.3 million ha. Population Peninsular Malaysia's population was estimated to be 14.7 million in 1990 (Department of Statistics [Malaysia], various issues). Approximately half of the population is Malay, one-third is Chinese, and one-tenth is Indian. The remainder includes the aboriginal people who preceded the Malays, the Orang Asli, whose population totaled only about 60,000 in 1980 (Rambo, 1988).

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Sustainable Agriculture and the Environment in the HUMID TROPICS TABLE 1 Total and Urban Population Growth in Peninsular Malaysia, 1835–1990   Total Population Urban Population Year Total (1,000s) Growth Rate (percent)a Total (1,000s) Growth Rate (percent)a 1835–1836b 281 — NAc — 1891 944d 2.2 NA — 1901 1,531d 4.8 NA — 1911 2,339 4.2 250 — 1921 2,907 2.2 407 4.9 1931 3,788 2.6 571 3.4 1947 4,908 1.6 930 3.0 1957 6,279 2.5 1,667 5.8 1970 9,182 2.9 2,635 3.5 1980 11,437 2.2 4,251 4.8 1990 14,667 2.5 6,870e 4.8 a This is the growth rate during the interval since the preceding point estimate of population. b Excludes Pinang, Melaka, and the Orang Asli. c NA, Not available. d Based on rates of growth for the Federated Malay States, given in Lim (1977: Appendix 1.2). e Estimated by the authors by using the growth rate for the previous decade. SOURCES: Aiken, S. R., C. H. Leigh, T. R. Leinbach, and M. R. Moss.1982. Table 8.10 in Development and Environment in Peninsula Malaysia.Singapore: McGraw-Hill International; Department of Statistics (Malaysia).Various issues. Monthly Statistical Bulletin: Peninsular Malaysia.Kuala Lumpur: Department of Statistics; Ooi Jin Bee. 1976. PeninsularMalaysia. London: Longman. Table 1 presents the growth trends for total and urban populations from 1883 to 1990. The rate of population growth in Peninsular Malaysia was 2.2 percent/year during 1989–1990. The World Bank (1990) projects the rate to remain at this level during 1988–2000 and to fall to 1.2 percent/year during 2000–2025. The urban population has been growing more rapidly than the rural population. Approximately 47 percent of the population lived in urban areas in 1990, up from 27 percent at the time of independence, 1957. Better economic opportunities (for example, manufacturing jobs) help to explain the trend toward urbanization. Only 8 percent of households in urban areas were classified as poor in 1984, whereas 25 percent of households in rural areas were classified as poor (Ministry of Agriculture [Malaysia], various issues). In 1987, the mean annual gross house-

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Sustainable Agriculture and the Environment in the HUMID TROPICS hold income was 72 percent higher in urban areas than it was in rural areas (Ministry of Agriculture [Malaysia], 1990). Peninsular Malaysia's population density is low compared to that of most developing countries. In 1988, total land per capita was 0.95 ha, agricultural land in use was 0.28 ha per capita, and forest area was 0.45 ha per capita (Ibu Pejabat Perhutanan, Semenanjung Malaysia, 1990; Ministry of Agriculture [Malaysia], 1990). Domestic Economy The Malaysian government does not report all economic statistics separately for Peninsular Malaysia. For this reason, much of the information in this section pertains to Malaysia as a whole. In 1988, Malaysia's gross national product (GNP) was 85.8 billion Malaysian dollars (M$; M$2.62 = US$1.00 in 1988). In per capita terms this was US$1,940, which makes Malaysia a middle-income developing country (World Bank, 1990). In 1988, exports equaled 64 percent (M$55.3 billion) of the GNP, while imports equaled 50 percent (M$43.3 billion) (Ministry of Agriculture [Malaysia], 1990). GNP per capita grew at an average rate of 4.0 percent/year during 1965–1988, which was tied for the highest rate among middle-income countries (World Bank, 1990). Continued strong economic performance is needed to enable Malaysia to service its debt. The country's long-term debt service as a percentage of GNP was 16.5 percent in 1988 (World Bank, 1990). AGRICULTURE Agriculture (including forestry and wood products) is a major sector of Peninsular Malaysia's economy and is important on a global basis as well. Malaysia is the world's largest producer and exporter of natural rubber (34 percent of global production and 40 percent of global exports in 1989), palm oil (59 percent of global production and 69 percent of global exports in 1989), and tropical logs and sawn wood (25 percent of global production and 78 percent of global exports in 1989) (Food and Agriculture Organization, 1991; Ministry of Primary Industries [Malaysia], 1990). With the exception of tropical logs, production and exports of these products are concentrated in Peninsular Malaysia. Agriculture, forestry, and fisheries accounted for 21 percent of Malaysia's GDP and employed 31 percent of Peninsular Malaysia's work force in 1988 (Ministry of Agriculture [Malaysia], 1990; World Bank, 1989). Peninsular Malaysia's agriculture is based overwhelmingly on exotic

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Sustainable Agriculture and the Environment in the HUMID TROPICS crops: rubber, oil palm, rice, and cacao and, to a lesser extent, coffee, pineapple, tobacco, sugarcane, and maize (Hill, 1982). This is because the peninsula was among the last regions in Asia to be settled by agriculturalists. Production, exports, imports, and consumption of major agricultural products in Malaysia in 1989 are summarized in Table 2. Malaysia is unique among countries in southeast Asia in that rice is not its most significant crop in terms of either area cultivated or tonnage of output (Barlow and Condie, 1986). Cereal production —almost entirely rice—was only 0.10 metric tons per capita in Malaysia during 1986–1988 (World Resources Institute, 1990). In 1988, Malaysia exported M$22.1 billion of food and agricultural products (including forestry and wood products) and imported M$7.8 billion of such products. This contributed to a net agricultural trade surplus of M$14.3 billion (Ministry of Agriculture [Malaysia], 1990), which was more than the country's total trade surplus in 1988. The export value of rubber and oil palm products alone totaled M$10.4 billion, more than the value of total imports of food and agricultural products. The export value of forestry and wood products totaled M$7.5 billion in 1988. Because of its diversified economy, food makes up a smaller share of Peninsular Malaysia's imports (8 percent in A farm that grows mixed crops is situated on land cleared by slash-and-burn techniques in Malaysia. Credit: James P. Blair © 1983 National Geographic Society.

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Sustainable Agriculture and the Environment in the HUMID TROPICS TABLE 2 Production, Consumption, and Trade of Major Agricultural Products in Malaysia, 1989   Metric Tons (1,000s) Product Production Exports Imports Consumption Palm oil 6,055 4,948 41 1,148 Rubber 1,419 1,487 122 54 Rice 1,094a 2a 97a 1,289a Palm kernel oil 965 634 0 331 Meat (including poultry) 438 6 53 485 Cacao 255 169 0 86 Pineapple 180 18 0 162 Copra and copra cake 91 42 6 55 Coconut oil 41 54 15 3 Edible vegetables, roots, tubersa NAb 134 280 NA Sugar and sugar productsa NA 209 647 NA Animal feeda NA 450 736 NA Cereals and cereal preparations other than ricea NA 34 2,012 NA a 1987 data. b NA, Not available. SOURCES: Department of Statistics (Malaysia). Various issues. Ministryof Agriculture (Malaysia). 1988. Import and Export Trade in Foodand Agricultural Products: Malaysia 1987. Kuala Lumpur: Ministryof Agriculture; Ministry of Agriculture (Malaysia). 1990. Agricultural,Livestock, and Fisheries Statistics for Management: Malaysia 1980–1988. Kuala Lumpur: Ministry of Agriculture; Ministry of PrimaryIndustries (Malaysia). 1990. Profile: Malaysia's Primary Industries(Malaysia). 1990. Profile: Malaysia's Primary Commodities. KualaLumpur: Ministry of Primary Industries. 1988) than in the case of the average middle-income country (11 percent) (Department of Statistics [Malaysia], various issues; World Bank, 1990). MANUFACTURING Peninsular Malaysia's economy is increasingly dominated by the output of manufacturing sectors. Although Malaysia's agricultural GDP grew 3.7 percent/year during 1980–1988, its manufacturing GDP grew 7.3 percent/year (World Bank, 1990). In 1988, manufacturing and services accounted for 64 percent of Malaysia's GDP (World Bank, 1989). Nearly all of Malaysia 's output of manufactured goods is produced in Peninsular Malaysia.

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Sustainable Agriculture and the Environment in the HUMID TROPICS Land Use Table 3 summarizes land use in Peninsular Malaysia in 1966, 1974–1975, and 1981 and provides information about land use for agriculture in 1988. The Ministry of Land and Cooperative Development (Malaysia) plans to carry out an updated land use survey under the Sixth Malaysia Development Plan (which covers the period 1991–1995). The area in agricultural use increased from 21 percent of the peninsula 's land area in 1966 to 31 percent in 1988. Most of the increase had occurred by 1981, and most was due to the expansion of tree crop plantations. The four major tree crops—rubber, oil palm, coconut, and cacao—covered 16 percent of the peninsula's land area in 1966 and 26 percent in 1988. The agricultural area in 1988—over 4 million ha—was about two-thirds of the area considered suitable for agriculture in the peninsula. Most of the agricultural conversion by the early 1970s had taken place in the southern and western lowlands, where rubber was concentrated. Since then, extensive conversion to oil palm has occurred in the eastern lowlands, and oil palm has replaced much of the rubber in the western lowlands. Forests The lowland forests of Malaysia, Brunei, the Philippines, and western Indonesia are dominated by tree species in the family Dipterocarpaceae. According to Whitmore (1988:21): “There are no other forests anywhere in the world which have so many genera and species of a single tree family growing together in the same place.” This ecologic characteristic, coupled with wood properties that allow the many species to be aggregated into a relatively small number of commercial groups with broadly similar properties, helps to explain why the timber harvested from these forests has dominated world trade in tropical timber since the end of World War II (Laarman, 1988). FOREST FORMATIONS Whitmore (1988) classified Peninsular Malaysia's forests into 10 forest formations. The small area of northwestern Peninsular Malaysia, which has a seasonally dry climate—climatically atypical for Peninsular Malaysia—is where (1) semievergreen rain forests, more common in Thailand and Burma, are found. Forests on permanently wet soils include (2) mangroves on the coasts and (3) freshwater swamp forests and (4) peat swamp forests

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Sustainable Agriculture and the Environment in the HUMID TROPICS TABLE 3 Land Use in Peninsular Malaysia, 1966–1988a   Hectares (1,000s) Land Use 1966 1974–1975 1981 1988 Urban and associated areas 134 199 251 — Agriculture 2,736 3,565 4,101 4,160 Perennial crops 2,092 2,782 3,340 3,485 Rubber 1,775 2,048 1,969 1,569 Oil palm 100 487 1,063 1,527 Coconut 176 203 179 210 Cacao <1 4 34 142 Others 41 41 95 37 Paddy 412 424 432 474 Horticulture 200 274 243 179 Miscellaneous crops 32 81 70 21 Improved permanent pasture <1 4 16 — Forest 9,036 8,254 8,460b — Dryland forest 7,852 7,182 7,437b — Swamp/wetland forestc 1,176 1,070 1,023 — Shifting cultivationd 8 2 — — Other 1,310 1,019 432e — Scrub forest 594 419 — — Grassland/scrub grassland 404 170 — — Recently cleared land 116 326 24 — Unused land 62 6 — — Unclassified land 134 98 190f — Total 13,215 13,037 13,244 — a Data for 1966, 1974–1975, and 1981 are based on land-use surveys. Data for 1988 are based on annual records on land alienation and development. b Includes scrub forest, grassland/scrub grassland, and shifting cultivation. c Includes mangroves. d The estimates for 1966 and 1974–1975 exclude areas classified as scrub forest and grassland/scrub grassland. One might speculate that some of these areas were affected by shifting cultivation. If so, this could help explain why the forest inventories reported larger areas as being affected by shifting cultivation (see Table 4). e Excludes scrub forest and grassland/scrub grassland. f Includes unused land. SOURCES: For 1966, Wong, I. F. T. 1971. The Present Land Use of WestMalaysia (1966). Kuala Lumpur: Ministry of Agriculture and Lands;for 1974–1975, Economic Planning Unit (Malaysia). 1980. Land ResourcesReport of Peninsular Malaysia, 1974/ 1975. Kuala Lumpur: Prime Minister's Department; for 1981, Ministry of Agriculture (Malaysia). 1990.Agricultural, Livestock, and Fisheries Statistics for Management:Malaysia 1980–1988. Kuala Lumpur: Ministry of Agriculture; For 1988,Ministry of Agriculture (Malaysia). 1991. Perangkaan siri masa sektorpertanian. January 19, 1991. Memorandum.

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Sustainable Agriculture and the Environment in the HUMID TROPICS in inland areas, depending on soil characteristics. (5) Woody beach vegetation is found in coastal areas. The other five formations are found in inland areas that are not permanently wet. Most restricted in area are the (6) heath and (7) limestone forests. The remaining three formations account for the majority of the peninsula's forest area. Their distribution is largely determined by elevation. (8) Lowland evergreen rainforests once covered most of the peninsula up to an elevation of 750 m. Two floristic zones can be distinguished within this formation: lowland dipterocarp forests, which are found at elevations up to 300 m, and hill dipterocarp forests, which are found above these elevations. The demarcation is based on the distribution of seraya (Shorea curtisiï), which dominates ridges in the hill dipterocarp zone. (9) Lower montane rain forests are found between elevations of 750 and 1,500 m. They have a smoother, lower canopy than do lowland rain forests. They, too, can be divided into two floristic zones: the upper dipterocarp forests, which are found at elevations up to 1,200 m, and the oak-laurel forests, which are found above 1,200 m but below 1,500 m. The final formation, (10) upper montane rain forests, is found above 1,500 m. BIODIVERSITY In terms of biodiversity, Peninsular Malaysia's rain forests are among the richest ecosystems in the world. Ng (1988) estimated that 2,650 tree species occur naturally in Peninsular Malaysia. The low-land dipterocarp forests are the richest of the peninsula's forest formations. Butterflies and moths provide one exception to this pattern: most of the peninsula's 1,014 species are found at elevations of 600–1,000 m, and only 23 species are endemic (Barlow, 1988). Many endemic plant species are found in limestone forests. Wells (1988) reported that 282 of the 370 bird species that make heavy or exclusive use of forests or the forest fringe are associated with lowland dipterocarp forests. He cited studies, carried out at the Pasoh Forest Reserve in the state of Negeri Sembilan and at the Kerau Game Reserve in the state of Pahang, that recorded 196 and 202 bird species, respectively, in areas of 2 km2 each. Yong (1988) reported that 33 families, 104 genera, and 203 species of mammals are native to Peninsular Malaysia. (In contrast, Denmark, which is also a peninsula and only slightly smaller in area, is home to only 13 families, 32 genera, and 45 species [Earl of Cranbrook, 1988].) Of the 203 mammal species, 194 have been sited in the forest, mainly the lowland dipterocarp forest (Earl of Cranbrook, 1988). According to Steven (1968

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Sustainable Agriculture and the Environment in the HUMID TROPICS ing scarcity of rural labor is perhaps the most important. Estates, particularly rubber estates (which are more labor intensive), have suffered increases in labor costs as rural people have migrated to urban areas (Barlow, 1984; Barlow and Condie, 1986; Barlow and Jayasurija, 1986; Ministry of Primary Industries [Malaysia], 1990). Immigrant workers from other Asian countries, Indonesia and the Philippines in particular, have provided an important source of replacement labor (Barlow and Jayasuriya, 1987; Tsuruoka, 1991). One source estimated that 300,000 Indonesians worked in the palm oil industry in Malaysia (mainly eastern Malaysia) in 1991 (Tsuruoka, 1991). FELDA and FELCRA schemes have also faced labor shortages (Barlow, 1986), as the migration of the population out of rural areas has reduced the number of potential new smallholders and reduced the work force in existing smallholder households. By the 1980s, rises in the opportunity cost of rural labor had cut the economic rates of return to rubber schemes to a borderline level (Barlow and Jayasuriya, 1987). Two additional factors are government revenue and commodity prices. Expansion of land development schemes in the 1970s benefited from a windfall of government revenue created by oil production (Malaysia is a net petroleum exporter). This source of funds was reduced sharply in the 1980s when oil prices fell. Government expenditure is also constrained by Malaysia's debt burden, although this is lightening because of continued strong economic performance and financial measures by the government. Although rubber and palm oil prices boomed after 1972, more recently they have dropped and appear to have resumed their long-term decline in real (inflation-adjusted), if not nominal, terms. Natural rubber faces competition from synthetic rubber, whose price is heavily dependent on the price of petroleum. Hence, low petroleum prices negatively affect the economics of rubber schemes in two ways. Malaysian palm oil faces competition not only from palm oil produced in Indonesia (where labor costs are much lower) but also from a host of other fats and oils. To some degree these three negative factors are offset by research that improves the economic returns to tree crop cultivation (Ministry of Primary Industries [Malaysia], 1990). Both RRIM and PORIM are conducting research on mechanization and other means of reducing labor needs, including less frequent tapping systems for rubber. Efforts are under way to reduce the period of immaturity for both crops and to develop intercropping systems that provide additional economic returns. Wood from rubber trees has become an internationally valuable furniture wood, so much so that the Malaysian govern-

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Sustainable Agriculture and the Environment in the HUMID TROPICS ment recently imposed levies to restrict the export of logs and lumber from rubber trees. The development of commercial uses of oil palm trunks is more difficult because of their monocotyledonous wood anatomy, but pilot projects are under way. More promising is the development of new industrial products from palm oil. By-products of palm oil processing are increasingly used as an inexpensive fertilizer, which also helps to reduce pollution problems. An oleochemical industry is developing; detergents, lubricants, pharmaceuticals, and polyurethane are among the products that can be made from palm oil (Tsuruoka, 1991). In spite of this, even the Malaysian government doubts that these research advances can fully offset the negative impacts of labor scarcity, limited public funds, and commodity price declines. The Ministry of Primary Industries (1990) projects that the area of rubber plantations will continue to decline marginally in both the estate and smallholder sectors. The Ministry expects growth in the area of oil palm plantations to slow as estates and smallholders emphasize upgrading existing plantations by replanting with improved varieties. The Ministry of Rural Development recently announced that the government will not open additional land for new agricultural schemes (New Straits Times [Kuala Lumpur], ca. July 15, 1991). In line with this new policy, the Ministry of Rural Development has proposed that FELDA, FELCRA, and the Rubber Industry Smallholder Development Authority (RISDA) be merged and reoriented toward land rehabilitation, market assistance, and enhancing the productivity of existing land development schemes. Although significant additional expansion of rubber and oil palm plantations is not anticipated, it is conceivable that a new tree crop could follow oil palm and lead a new burst of agricultural expansion. Cacao is the crop that has expanded most rapidly recently, partly because its price trend has been more favorable. Soils suitable for cacao, however, overlap those where rubber, oil palm, and coconut plantations are already established. In 1988, cacao covered only 142,000 ha (Table 3), and it is the optimal crop on only 708,000 ha (Ariffin and Chan, 1978). Because of the peninsula's rural labor shortage, it seems unlikely that there is a tree crop that could generate sufficient economic returns to justify the establishment of plantations in newly cleared areas of forests. Deforestation Projections Deforestation for the period 1990–2030 was forecast by using a regression equation that compared the area under agricultural use

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Sustainable Agriculture and the Environment in the HUMID TROPICS TABLE 8 Deforestation Scenarios   Hectares (1,000)   Ending Decadal Scenario Beginning Forest Cover Annual Loss Decadal Loss Forest Cover Percent Loss Base casea 1990–2000 6,110 33 334 5,776 5.5 2000–2010 5,776 34 343 5,433 5.9 2010–2030 5,433 37 373 4,687 6.9 Worst caseb 1990–2000 6,110 62 622 5,488 10.2 2000–2010 5,488 64 637 4,851 11.6 2010–2030 4,851 69 694 3,463 14.3 Best casec 1990–2000 6,110 30 302 5,808 4.9 2000–2010 5,808 16 158 5,651 2.7 2010–2030 5,651 −3 −60 5,711 −0.5 a Rural population growth rate is assumed to equal 0.83 percent/year, and deforestation is assumed to equal agricultural expansion. b Rural population growth rate is assumed to equal 0.83 percent/year, and deforestation is assumed to be 1.86 times agricultural expansion. c Rural population growth rate is assumed to equal 0.53 percent/year during 1990–2000 and −0.45 percent/year during 2000–2030, and deforestation is assumed to equal agricultural expansion. from 1904 to 1988 to logged area and rural population growth rate (Vincent and Hadi, 1991). Three scenarios were considered: scenario 1, the base case, in which the rural population grows at 0.83 percent/ year and the area deforested equals the area of agricultural expansion; scenario 2, the worst case, in which the rural population grows at 0.83 percent/year and the area deforested equals 1.86 times the area of agricultural expansion; and scenario 3, the best case, in which the rural population grows at 0.53 percent/year from 1990 to 2000 and −0.45 percent/year from 2000 to 2030 and the area deforested equals the area of agricultural expansion. The 0.83 percent/year rural population growth rate is the rate during the 1980s. The 0.53 and −0.45 percent/year rates are based on the World Bank's (1990) projections of the overall population growth rate. The factor 1.86 is based on the ratio of the area deforested to the area of agricultural expansion during 1972–1982. The projections are presented in Table 8. The estimate of forest area in 1990, 6.11 million ha, is based on the Forestry Department's

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Sustainable Agriculture and the Environment in the HUMID TROPICS estimate for 1988, 6.288 million ha (Ibu Pejabat Perhutanan, Semenanjung Malaysia, 1990), reduced by the annual rate of deforestation (89,000 ha) during 1982–1988 calculated from the 1988 estimate of area and the estimate of Brown et al. (1991b) for area in 1981–1982. In the base-case scenario, annual deforestation during 1990–2030 is less than half that during 1982–1988. The level keeps rising, however, because of the steadily growing rural population. In 2030, the amount of remaining forest is comparable to the target area of the PFE (4.75 million ha). Because of continuing population growth, deforestation continues beyond 2030. In the worst-case scenario forests remain in 2030, but the area is less than three-fourths of the target area of the PFE. As in the basecase scenario, the level of deforestation keeps rising beyond 2030. The best-case scenario is similar to the base-case scenario until 2000. After 2000, the rate of deforestation slows and then goes to zero in 2016. Aggregate deforestation is negative during 2010–2030, indicating that forest area increases because of net abandonment of agricultural land. In 2030, Peninsular Malaysia would have only 6.5 percent less forest than it did in 1990. The best-case scenario is the most likely. Stabilization of Peninsular Malaysia's forest area is under way because of the region's sustainable tree crop industries, which make land developed for agriculture permanently productive, and because of the growth in its economy's nonagricultural sectors, which leads to urbanization and declines in rural population growth. This conclusion is in contrast to that of another recent study of Peninsular Malaysia by Brookfield et al. (1990), which warns that “It seems not improbable that worse is to come before improvement” (p. 507). SUMMARY Deforestation in Peninsular Malaysia during the twentieth century demonstrates that shifting cultivation is not a necessary ingredient for extensive conversion of forests in the humid tropics and that sustainable agriculture is possible even on nutrient-poor tropical soils. It also demonstrates that the creation and adoption of sustainable agricultural systems will not, on their own, forestall the expansion of agriculture into undisturbed forests. In fact, the sustainability of rubber and oil palm plantations is a fundamental reason why their area has expanded: their ability to produce ongoing yields increased the area where they earned minimum acceptable economic returns. Deforestation might have been even greater, however, if farmers in Peninsular Malaysia had not had the option of tree crop farming and

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Sustainable Agriculture and the Environment in the HUMID TROPICS had resorted to shifting cultivation instead. In recent years, rapid industrialization has created off-farm employment opportunities that have led to labor shortages in rural areas and thus decreased agricultural expansion. The phase of land development marked by deforestation appears to be coming to a rapid close in Peninsular Malaysia. Expansion of plantations has not resulted from government policies that subsidized the expansion. Rather, it has been driven by the moderate to high financial returns (for estates and small landholdings) and economic returns (for land development schemes) earned by the plantations. The fundamental economic feasibility of plantations has been buttressed by government policies to develop infrastructure, promote secure land tenure, and support agricultural research. Although many policies probably discriminated against expansion by estates and small landholdings during most of the century, policies related to land development schemes have created economic inefficiencies. Although rubber and oil palm plantations appear to provide sustainable uses of converted forestland, environmental costs have been incurred during the conversion process. The failure of markets (for estates and small landholdings) and project appraisals (for land development schemes) to account for environmental impacts suggests that the area of plantations might have expanded too far. The economic data needed to evaluate these impacts and to determine whether overexpansion affected a significant area do not exist. Nevertheless, sufficient information is available to cast doubt on the contention of some authors that conversion of forests to tree crops in Peninsular Malaysia has been an environmental disaster (Aiken et al., 1982; Aiken and Leigh, 1985; Brookfield et al., 1990). Soil erosion and water-related problems have lessened over time because of better conservation practices (ground cover management, terracing) and increasingly stringent water pollution policies. Although populations of many species are shrinking as the few remaining areas of lowland rain forests are converted to other uses, there is little evidence of large-scale extinctions. Moreover, environmental impacts surely would have been greater if farmers in Peninsular Malaysia had lacked the option of sustainable tree crop plantations and had practiced shifting cultivation instead. Research Needs Several research needs emerge from the study of Peninsular Malaysia. First, the discrepancy between estimates of agricultural expansion from land use surveys and estimates of deforestation from

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Sustainable Agriculture and the Environment in the HUMID TROPICS forest inventories needs to be explained. Perhaps the next forest inventory will help in this regard, but what is truly needed is an updated, comprehensive, detailed land use inventory. Second, areas that were alienated for agriculture and then logged but never developed need to be studied to understand better the political economy of agricultural expansion, particularly in the case of land development schemes. Third, benefit-cost analyses that incorporate values for environmental impacts need to be carried out for private and public plantation investments. Such analyses would provide better estimates of the net benefits of past agricultural expansion and would help to ensure that future expansion creates net benefits. Replicating Peninsular Malaysia's Success The possibility of replicating Peninsular Malaysia's twofold success—enhancing rural standards of living from the use of perennial crops and slowing deforestation by the combination of sustainable agriculture technologies and reductions in rural population growth—needs to be studied by careful comparison of Peninsular Malaysia's ecologic, social, and economic conditions with those of other regions in the humid tropics. The factors involved in Peninsular Malaysia's success included an active research program that raised yields and reduced the costs of growing tree crops (and thereby offset declines in product prices), public investments in infrastructure that enabled growers to get latex and palm oil to markets efficiently and to purchase food and other supplies they did not produce themselves, and land tenure policies that enabled estates and smallholders to obtain secure, long-term leases or outright ownership. Although some might argue that other tropical countries lack the financial resources to replicate the first two factors, the research effort was financed by taxes paid by the tree crops sector itself. Land titling in Peninsular Malaysia was facilitated by the peninsula's low population density, but forested areas in many other humid tropical countries are also lightly populated. Other countries might also face stiffer competition in entering rubber and palm oil markets than did Peninsular Malaysia because Peninsular Malaysia entered the markets early on in their development. This timing issue is a less important factor in Peninsular Malaysia's success, however, than was the effort it put into research, infrastructure, and land titling. Moreover, market opportunities for other countries might be created as Peninsular Malaysia's competitive position in rubber and palm oil continues to be eroded by rising labor costs.

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