Palm oil has become one of the most contested agricultural commodities in developing countries. This commodity’s character should be viewed in the context of the transnational behavior of agribusiness capital and related industrial restructuring. This paper focuses on the globalization of agribusiness capital and its impact on the industrial structure in Malaysia as a leading country in palm oil development, based on the following viewpoints: the commodity chain perspective and transnationalization of agribusiness capital.
The major implications are as follows: Based on plantation development, Malaysian agribusiness capital has implemented strategies not only of vertical integration but also of transnationalization of upstream/downstream sectors. These global strategies of agribusinesses have, however, brought about the following consequences: (1) overseas plantation development has been accompanied by allegations of primitive accumulation and socio-political/environmental disruption, leading to Malaysia being limited as an investor country; (2) with the Malaysian refining industry having to purchase palm oil at relatively high prices from the domestic plantation sector, as well as Indonesia’s surge in production, the downstream sector in Malaysia has faced difficulties; (3) agribusiness capital has depended heavily on a foreign labor force to avoid paying fair wages for domestic workers, which has led to deepening agricultural vulnerability. In contrast to the growth of globalized agribusinesses, the Malaysian palm oil industry linking upstream and downstream sectors nationally is standing at a crossroads.
