Middlemen in the supply chain of oilpalm smallholders in Malaysia: A preliminary finding from Perak

Middlemen have long existed in the supply chain of Malaysia’s smallholders oil palm industry and emitting various serious impacts on the smallholder economic wellbeing. This study examined systematically this phenomenon of oil palm small holders-middlemen relationship. Primary data were obtained from a focus group discussion with eight oil palm smallholders from Felda Trolak Selatan and seven from Ulu Slim village, both in Perak. Our findings revealed a dual model of oil palm smallholders-middlemen relationship. The first model had been operating in such a way that the middlemen performed the role of a “factoring center” selling document to oil palm smallholders. Here, smallholders sold their crude palm fruit to the processing factory and did not receive cash payment on the spot from the factory. Farmers who did not want to wait for the payment day would “sell” the sale document to the middlemen and received cash for a lower amount than stated in the sale document. In the second model middlemen made bulk purchases of crude palm fruits of all grades from oil palm smallholders at a standardized average price. Either way the middlemen proved to be relevant in the Malaysia oil palm smallholders supply chain. The middlemen assisted the small holders in providing alternative cash as well as facilitated the process of handling the crude palm fruit for processing.