The Emergence of an Export Cluster: Traders and Palm Oil in Early Twentieth-Century Southeast Asia

Abstract

Malaysia and Indonesia account for 90 percent of global exports of palm oil, forming one of the largest agricultural clusters in the world. This article uses archival sources to trace how this cluster emerged from the rubber business in the era of British and Dutch colonialism. Specifically, the rise of palm oil in this region was due to three interrelated factors: (1) the institutional environment of the existing rubber cluster; (2) an established community of foreign traders; and (3) a trading hub in Singapore that offered a multitude of advanced services. This analysis stresses the historical dimension of clusters, which has been neglected in the previous management and strategy works, by connecting cluster emergence to the business history of trading firms. The article also extends the current literature on cluster emergence by showing that the rise of this cluster occurred parallel, and intimately related, to the product specialization within international trading houses.

Cultivating “Care”: Colonial Botany and the Moral Lives of Oil Palm at the Twentieth Century’s Turn

“…It was while the offspring of these seeds were growing there almost two decades later that Adrien Hallet, a Belgian agro-economist with experience working among oil palms in the Congo Free State, recognized the uniqueness of the oil palms he saw lining avenues while scouting the possibility of making a profit from the palm in the region (Hartley 1988: 17;Berger and Martin 2000: 399;Robins 2020). He shared his information about these uniquely productive palms with his collaborator and friend, Henri Fauconnier, who took seeds from these original avenue palms (which in turn were bred from the original 1850 population from the Buitenzorg Gardens), to plant his first plantation in Malaysia in 1911-1912(Giacomin 2018a. When these came to full bearing in 1917, seedlings were planted in Selangor, on Tennamaram estate, now renowned as the first CSSH xx-x Rudge 28 commercially viable plantation in the region (Hartley 1988: 17).…”

“…Part of the oil palm’s eventual success in Malaysia can be attributed to how it was able to take over the existing research infrastructures, unfree labor forces, and mechanisms for colonial land-grabbing that were already in place for rubber (Giacomin 2018a: 273). Land, even when occupied by forest-reliant peoples, had been considered empty and available for plantations (Harper 1997).…”

Commentary: Oil Palm Boom and Farm Household Diets in the Tropics

“…However, villages that were mostly subsistence-based only experienced short-term economic gains and reported a rise in malnutrition (Santika et al, 2019b). Compared to other regions of Indonesia, Sumatra has a stronger market economy presence (Baudoin et al, 2017;Giacomin, 2018;Santika et al, 2020). Wellestablished markets and good infrastructure can provide access to foods by using income derived from commercial farming.…”

Complex relationships between soybean trade destination and tropical deforestation

“…For instance, Pendrill et al 21 have shown that the international agricultural commodity trade is responsible for up to 39% of greenhouse gas emissions related to tropical deforestation. Malaysia and Indonesia, responsible for 90% of the global exports of palm oil 22 , lost around 45 Mha of natural forest cover, 33% (15 Mha) due to the expansion of oil palm plantations 23 . Yet few studies have evaluated the influence of supply chain interventions on the spatio-temporal dynamics of natural forests 22 , nor whether agricultural production for international markets plays a different role from that of production for domestic markets in driving landscape change.…”

“…Malaysia and Indonesia, responsible for 90% of the global exports of palm oil 22 , lost around 45 Mha of natural forest cover, 33% (15 Mha) due to the expansion of oil palm plantations 23 . Yet few studies have evaluated the influence of supply chain interventions on the spatio-temporal dynamics of natural forests 22 , nor whether agricultural production for international markets plays a different role from that of production for domestic markets in driving landscape change. Additionally, for Brazil, zu Ermgassen et al 10 showed that agricultural commodities destined for international markets are more likely to be sourced from municipalities with a more consolidated land use system with few forest remnants, suggesting that municipalities with more extensive forest cover (more likely experiencing greater deforestation) may be producing agricultural commodities destined more for national than for international markets.…”