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Rubber restriction
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the squeeze on smallholders (3)
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Rubber restriction and
the squeeze on smallholders (3) |
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MALAYAN
PEASANT SMALLHOLDERS AND THE STEVENSON RESTRICTION SCHEME, 1922 - 28 by Lim Teck Ghee (Part 4 - final) The Mechanics of Discrimination PLANTATIONS, on the other hand, were favoured in the restriction scheme. An analysis of production returns of 537 estates in the Federated Malay States in 1923 at a time when plantations were producing at full capacity found that in 426 cases the average output was 375 pounds.(35) Yet the original maximum standard production allowances permitted to this sector was 400 pounds. This allowance was raised to 500 pounds on 1 August 1925 and the maximum limit was removed in May 1926.(36) The. removal of the maxima was to make it possible for a plantation to obtain an assessment of any amount which it could prove capable of producing, but few plantations could avail themselves of this as they were already producing at peak capacity. Some indication can also be given of the extent of over-assessment of the plantation sector. The September 1921 census had found that plantations over 100 acres comprised 63.57 per cent of the total rubber area in bearing. In the first three years of restriction, plantations, although having mush lower planting densities and recording much lower yields per unit area than the other sectors of the industry, were alloted 66.25, 67.38 and 66.81 per cent of the total standard quota.(37) There were other flaws in the operation of restriction which favoured planters. In 1921 and 1922, just before the introduction of restriction, planters in Malacca and Singapore successfully agitated for a reduction in their land rents because of the poverty of the soils which resulted in lower yields. During restriction, however, the standard production allowances of these plantations were calculated on the basis of first class lands.(38) |
Benefit and Cost of Restriction The discrimination that smallholders suffered under the restriction scheme was mitigated to some extent by the benefits which the scheme brought to all rubber producers and which smallholders were able to share in. The most important benefit was the increase in the rubber price. During the first year of the scheme's operation, the average price was almost double that during the twelve months preceding restriction. The rubber price was to climb even higher in 1925 and 1926 so that the claim of the proponents of the scheme ù that restriction would restore profitablity into the industry ù was more than justified.(39) The high rubber price was mainly responsible for the return to prosperity of the Federated Malay States, a prosperity which the smallholder shared. In 1925 and 1926 when the rubber price was at its peak, the value of exports had reached new heights. Throughout the period of restriction the value of exports from the states was considerably in excess of imports.(40) Restriction not only brought back very large profits into the industry but also helped to improve the condition of the smallholding industry. The low price in 1920-22 had compelled many producers, including smallholders, to tap their trees excessively.(41) With the restriction on output this tendency disappeared; more conservative tapping systems became the rule and this resulted in preservation of the bark and the prolongation of the yielding capacity.(42) Prior to restriction, many smallholders had also pared the expenditure on their holdings to a minimum, and consequently there had been an increase in the incidence of disease. Restriction compelled them to restore their holdings to a better condition, especially since it was clear that unkempt holdings were discriminated against very much more than ordinarily. These fringe benefits of restriction were given much emphasis by the Malayan authorities and enabled them to put forward the claim that restriction had, in fact, been embarked upon to save the smallholders who would otherwise have 'become utterly destitute'.(43) The circle of justification was now complete. They were, however, too quick to congratulate themselves as there were much deeper undercurrents in the industry which were soon to negate the benefits brought about by restriction and to place the predominant position of the Malayan industry in jeopardy. In February 1925, Edward Gent expressed his misgivings at the operation of the scheme. As secretary to the Stevenson Committee when it introduced its supplementary report advocating unilateral restriction, he was close enough to the centre of power to speak with authority on the past developments in the industry and to analyse it with some perception. Gent complained that restriction was not functioning for the purpose intended, that peasant rubber cultivation was growing at a much faster rate than expected and that the scheme was 'now operating not so much to restore the plantation industry in British territories to its predominant position but rather merely to restore the grower's profits'. Gent also accused the large companies of manipulating the scheme to maintain high profits and expressed regret that the integrity of the scheme was being jeopardised. His final query leaves little doubt as to what Gent saw as the original motives of the committee which proposed the scheme. |
He wrote: it seems open to doubt whether in the present changed conditions, especially as to the cost of production, the present scheme is likely to be still the best for restoring the plantation rubber industry in Ceylon and Malaya to its former predominating position...and not merely of maintaining for the present the price of the commodity and the profits of large producers everywhere.(44) There was another very much more important consequence of the restriction scheme which Gent had failed to discuss. This was the fact that the unilateral restriction embarked upon by Malaya and Ceylon, the two British colonies, had considerably weakened their positions and correspondingly strengthened that of the non-restricting rubber producing countries, notably the Netherlands East Indies, by encouraging producers to increase their output and, more importantly, to engage in new planting.(45) The 'less-informed' grassroots producers had realised for some time the danger in which the Malayan industry was placing itself. In 1924 a petition was forwarded by rubber planters and traders from Larut and Matang appealing for an end to restriction. The petition stated that the two years of restriction had been a fiasco and pointed out that smallholders, traders and labourers had all suffered because of the unilateral nature of the scheme. It asked that if no co-operation was forthcoming from other rubber producing countries, the scheme be scrapped.(46) Another petition from 250 smallholders in Kuala Langat,-Kaafe Seteagor and Klang argued that the benefits of restriction had disappeared because of increased production from the Netherlands East Indies. It advocated a return to free competition and expressed confidence in the local ability to overcome the overseas challenge.(47) Both these petitions reached the highest authorities but the contents were disregarded, both imperial and local governments preferring to cling to the myth of the unmitigated benefits of the restriction scheme. Restriction was finally brought to an end on 31 October 1928. Despite the prosperity it brought to Malaya it may be considered to have been the most important setback to the local rubber industry since its inception for it had immensely accelerated the growth of the Netherlands East Indies rubber industry which in 1928 was only a few thousand acres from displacing Malaya as the largest rubber growing country in the world.(48) (End) NOTES (35) HC to SS, Desp. 143 of 20 March 1923, CO 717/27/18721. The information was obtained following representations from plantations that their allowances were too low. (36) Report of the Rubber Restriction Department 1925; 1926, supplement to FMS Government Gazette 25 June 1926 and 19 August 1927. |
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(37) The figures below show the
amount of excess allowance allotted to the plantation sector during the
first three restriction years on the basis of the September 1921 census. Restriction SP Allotted SP According to Excess Year to Plantations 1921 Census Allowance 1st 107,557 tons 103,206 tons 4,351 tons 2nd 95,854 90,437 4,427 3rd 108,816 101,632 5,184 Source: (a) AR CS1924-26. (b) September 1921 Census of Rubber Areas, FMS. (38) Minute by J. L., 10 April 1930 on Secretary, Planters' Association of Malaya to Under Secretary FMS, 20 March 1930 (39) In 1925 and 1926 the London annual average rubber price was 2s. lid. and Is. 11.74d. respectively. This compared with the average of 9.21 d. in 1922. There is, however, strong evidence that an increase in rubber price would have come about even if restriction had not been introduced. Restriction also failed to bring stability into the market and the constant price fluctuations posed a constant source of anxiety to the imperial authorities running the scheme. (40) Appendix 3 contains further details of the FMS export and import trade. 41 Excessive tapping occurs when a tree is tapped so frequently and in a manner which lowers the vitality of the tree or prevents bark renewal from keeping pace with bark consumption. (42) For some account of this see 'A Synopsis of Impressions with reference to restriction gained by members of Assessment Committee and Officers of the Restriction Department', enclosure in HC to SS, Desp. 29 of 14 January 1925, CO 717/41/6182. (43) Ibid. AR CS 1924 contains a similar opinion. (44) Minute by Edward Gent, 25 February 1925, on HC to SS, Desp. 29 of 14 January 1925, CO 717/42/ 6182. (45) Between 1922 and 1928, rubber production in the Netherlands East Indies jumped from 102,000 to 229,000 tons and the rubber area almost doubled from 1,480,000 to 2,699,000 acres. Further details of the world rubber production and acreage can be found in Whittlesley, Governmental Control of Crude Rubber, pp. 102 and 109 and Figart, The Plantation Rubber Industry m the Middle East, pp. 281 and 291. (46) HC to SS, Desp. 534 of 22 September 1924, CO 717/34/49354. (47) HC to SS, Desp. 733 of 30 December 1924, CO 717/34/3813. (48) Figures comparing the Malayan and Netherlands East Indies rubber area and production can be found in Appendix 1. |
| APPENDIX 2 Shares of Smallholdings and Plantations in Rubber Production of the Federated Malay States, 1920-40 Smallholdings Plantations Total % of total % of total production Year Tons production Tons production tons _________________________________________________ 1920 n.a. n.a. n.a. n.a. 101,300 1921 n.a. n.a. n.a. n.a. 94,500 1922 n.a. n.a. n.a. n.a. 128,500 Introduction of the Stevenson Restriction Scheme 1923 33,300 33 68,000 67 101,300 1924 30,900 33 62,600 67 93,500 1925 35,400 33 71,800 67 107,200 1926 52,900 33 107,300 67 160,200 1927 42,100 33 85,500 67 127,600 1928 57,600 33 * 116,900 67 174,500 End of Restriction 1929 110,300 42 151,100 58 261,400 1930 110,200 44 140,800 56 250,000 1931 105,400 43 141,400 57 246,800 1932 97,400 42 136,500 58 233,900 1933 110,800 45 137,400 55 248,200 Jan-May 1934 57,000 51.7 53,300 48.3 110,300 Regulation Introduced June-Dec 1934 56,900 40.3 84,400 59.7 141,300 1935 72,100 36 128,300 64 200,400 1936 . 67,700 36.1 119,900 63.9 187,600 1937 96,800 37.6 160,600 62.4 257,400 1938 58,730 31.9 125,400 68.1 184,100 1939 59,600 32.3 125,000 67.7 184,800 1940 109,800 39.2 170,200 60.8 280,000 Sources: The shares of production for 1923-28 were based on the figures of standard production during the first three restriction years. Shares for 1929-33 were obtained from AR Department of Agriculture, 1929-33 while those for 1934-40 were derived from estimates of the relative shares of the total Malayan production found in Bauer, The Rubber Industry, Table IV, p. 97. |
| APPENDIX 3 Exports, Imports, Revenue and Expenditure of the Federated Malay States, 1913-1938 ($ million) Year Exports Imports Revenue Expenditure _____________________________________________________ 1913 148.67 86.41 44.33 47.29 1914 123.44 73.78 37.31 55.01 1915 162.43 61.34 40.77 42.84 1916 220.55 71.47 51.12 31.97 1917 271.49 73.26 65.55 40.88 1918 223.07 74.75 68.45 45.29 1919 279.14 118.85 72.14 70.68 1920 289.11 175.92 72.28 100.43 1921 135.49 103.01 54.45 114.39 1922 140.43 78.82 52.49 49.81 1923 197.10 89.09 63.95 52.83 1924 212.88 97.44 70.72 54.16 1925 411.88 137.12 86.56 69.55 1926 445.60 173.89 102.54 87.66 1927 339.93 176.16 105.40 93.26 1928 278.52 191.47 95.66 109.00 1929 349.01 201.39 81.80 84.66 1930 213,65 168.02 65.56 82.47 1931 125.18 106.20 52.35 62.16 1932 87.85 71.13 43.82 53.74 1933 111.89 67.13 47.20 50.26 1934 202.73 84.73 58.93 47.21 1935 186.77 87.10 62.36 51.12 1936 246.95 96.80 68.09 52.70 1937 357.25 131.10 80.86 71.14 1938 174.80 123.38 63.05 101.58 Sources: AR Federal Secretary 1938, Appendix A. Go to the top Click here for Part two |
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