Lecture 8 : AGRICULTURE AND THE MALAYSIAN ECONOMY

Malaysia : Contribution of sectors to the gross domestic product (GDP)

AGRICULTURE SYSTEM IN MALAYSIA PLANTATION SECTORSMALLHOLDERS Oil palm plantation in Sabah, Malaysia Oil palm smallholders for-indonesian-farmers/

Two systems Two systems i) Plantation sector Single crop cultivation (economic value crop) Single crop cultivation (economic value crop) Larger scale (more than 40 ha) Larger scale (more than 40 ha) Rubber, oil palm, coconuts, cocoa, pineapples, sugarcane and tea etc Rubber, oil palm, coconuts, cocoa, pineapples, sugarcane and tea etc Plantation management is more systematic Plantation management is more systematic Using modern technology and hired labour. Using modern technology and hired labour.

ii) Smallholder Cultivate small areas Cultivate small areas Production capacity is low Production capacity is low Limited technology Limited technology Disorganized farm management practices Disorganized farm management practices

SMALLHOLDERS 1) The subsistence farmers who cultivate their land for their own consumption 1) The subsistence farmers who cultivate their land for their own consumption sell the produce in the marketplace or to the middleman. sell the produce in the marketplace or to the middleman. practice mixed cropping systems (vegetables and fruit trees) practice mixed cropping systems (vegetables and fruit trees) others mixed cropping and livestock farming systems others mixed cropping and livestock farming systems 2) Those that practice monocropping type of subsistence farming. 2) Those that practice monocropping type of subsistence farming. farmers cultivate their land with commodity crops such as rubber, cocoa, or oil palm farmers cultivate their land with commodity crops such as rubber, cocoa, or oil palm

Plantation sector _formatted.pdf Smallholders: government had allocated RM297 million under NKEA for to assist smallholders to replant oil palm in the country (theborneopost.com – ‘RM297 mln to help oil palm smallholders ‘ - 18/3/2012) Photo: headwind/ long-queue-issue/ Federal Land Development Authority (FELDA) - an agency that oversees smallholder farms and is the world's largest plantation producer. (thejakartaglobe.com – 29/4/2012)

National Agricultural Policy (NAP) The latest Third NAP (NAP3)-( ) The latest Third NAP (NAP3)-( ) Development programmes Development programmes Aim: Aim: i) to improve the food trade balance (export balance the import) i) to improve the food trade balance (export balance the import) ii) increasing export of primary commodities ii) increasing export of primary commodities iii) ensuring supply of raw materials for local downstream industries. iii) ensuring supply of raw materials for local downstream industries.

National food security: Rice as staple crop is under pressure across the developing world – 3 rd NAP includes further development of agro- food sub-sector as well as agro-based industries. (

Agricultural Growth 7 th Malaysia Plan ( ): grew at 1.2% per annum, lower than the targeted 1.9% 8 th Malaysia Plan ( ): midterm review, grew only at 1.5% per annum, targeted 3.0% annually. clones-in-malaysia.html

Agricultural value of major commodities (USD million). Commodity Oil Palm 1,518 1,943 1,674 2,261 2,877 Forestry & Logging Rubber Cocoa Fisheries ,107 Livestock Rice Other Agriculture ,329

Self-sufficiency level (%) of food commodities. Commodity Rice Fruits Vegetables Fisheries Beef Mutton Poultry Eggs Pork Growth in livestock production is mainly attributed to the improvement in animal husbandry and the shifting from traditional to commercial farming practices Growth in livestock production is mainly attributed to the improvement in animal husbandry and the shifting from traditional to commercial farming practices Food commodities

FACTORS TO GROWTH IN LIVESTOCK PRODUCTION Shifting from traditional to commercial farming practices Shifting from traditional to commercial farming practices Increase integrated beef cattle farming in rubber and oil palm plantations. Increase integrated beef cattle farming in rubber and oil palm plantations. Poultry production: integrated poultry farming system introduced by fast-food chains such as Kentucky Fried Chicken. Poultry production: integrated poultry farming system introduced by fast-food chains such as Kentucky Fried Chicken. Poultry is the most popular meat consumed due to pricing and religious acceptability. Poultry is the most popular meat consumed due to pricing and religious acceptability. Fruits and vegetables: government efforts in consolidating small orchards into larger organized farms and instituting group farming projects. Fruits and vegetables: government efforts in consolidating small orchards into larger organized farms and instituting group farming projects.

Integrated Beef Cattle Farming in Oil Palm Plantations: Integrated Brahman cattle in Lundu, Sarawak.

Integrated Poultry Farming System : the operation consists of breeder farms and hatchery, feedmills, poultry farms, contract broiler farming and processing and further processing plants.

INTERNATIONAL TRADE IN AGRICULTURE Table 4. Total agricultural imports and exports (USD million). Table 4. Total agricultural imports and exports (USD million). Item Item Import Maize Maize Sugar Sugar Wheat Wheat Rice, milled Rice, milled Nat. rubber Nat. rubber Soybean Soybean Food prep Food prep Tobacco Tobacco Cocoa bean Cocoa bean Oil palm Oil palm TOTAL TOTAL

Item Export Export Palm oil Palm oil Rubber Rubber Fatty acid Fatty acid P.kernel oil P.kernel oil Food prep Food prep Shortening Shortening Cigarette Cigarette Sugar Sugar Pastry Pastry Cocoa butter Cocoa butter TOTAL TOTAL Table 4. Total agricultural imports and exports (USD million).

COMMODITY 2005 EXPORT 1 IMPORT BALANCE EXPORT 1 IMPORT BALANCE TOTAL AGRICULTURAL SECTOR 62,596 36,250 26,346 TOTAL FOOD ITEMS 10,669 17,733 -7,065 Live animals Meat and Processed Meats 85 1, Dairy Products and Bird’s Eggs 622 1,726 -1,104 Fish, Crustacean, Mollusks 2, Cereals and cereal preparations 912 2,260 -1,347 Vegetables 508 1,689 -1,182 Fruits Sugar, sugar products and honey 470 1, Coffee, cocoa, tea, spices 2,446 2, Livestock Feed 492 2,868 -2,376 Processed Food Products 1,918 1, Agricultural Inputs 1,543 3,496 -1,953 Balance of Trade of Agricultural Products and Commodities in 2005 (RM million)

Employment Estimates of Agriculture by Activity (‘000) Category Rice farmers Other Farmers Livestock farmers Fishermen Aquaculture Farmers Smallholders

CROP DIVERSIFICATION IN MALAYSIA 1) Horizontal diversification 1) Horizontal diversification Oil palm, rubber, cocoa and rice have been and continue to be the major crops grown by the private and public sectors. However, other crops such as coconut, tropical fruits, vegetables, flowers, annual crops etc., are being grown by the smallholders and the private sector. Oil palm, rubber, cocoa and rice have been and continue to be the major crops grown by the private and public sectors. However, other crops such as coconut, tropical fruits, vegetables, flowers, annual crops etc., are being grown by the smallholders and the private sector. 2) Vertical diversification 2) Vertical diversification Refers to the upstream and downstream activities of a particular crop/crops Refers to the upstream and downstream activities of a particular crop/crops Primary production (farm products)  primary and secondary processing  finished products. Primary production (farm products)  primary and secondary processing  finished products. The vertical variant gives increasing emphasis to intra and inter-sector linkages thereby developing the relevant value chain in order to be competitive. The vertical variant gives increasing emphasis to intra and inter-sector linkages thereby developing the relevant value chain in order to be competitive.

Tropical Fruits Paddy/Rice Cocoa Coconut

of CROP DIVERSIFICATION CHALLENGES of CROP DIVERSIFICATION Need to reduce labour requirements in agriculture. Need to reduce labour requirements in agriculture. Need to maximize land utilization. Need to maximize land utilization. Strengthen the competitiveness of Malaysian agriculture. The implementation of the agreements under WTO & CEPT scheme of the ASEAN Free Trade Area (AFTA) have created greater competition for Malaysian agriculture. Strengthen the competitiveness of Malaysian agriculture. The implementation of the agreements under WTO & CEPT scheme of the ASEAN Free Trade Area (AFTA) have created greater competition for Malaysian agriculture. Need to enhance private sector investment in food production Need to enhance private sector investment in food production Smallholders need to be transformed into a more commercial sector Smallholders need to be transformed into a more commercial sector More innovative and efficient agricultural practices More innovative and efficient agricultural practices

govt latin-america/ Reducing Labour Requirements Transforming Smallholders into a More Commercial Sector

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