1. Lecture 8 : AGRICULTURE AND THE MALAYSIAN ECONOMY

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

3. AGRICULTURE SYSTEM IN MALAYSIA PLANTATION SECTORSMALLHOLDERS Oil palm plantation in Sabah, Malaysia http://travel.mongabay.com/jeremy_hance/malaysia/sabah_119.html Oil palm smallholders http://www.eastasiaforum.org/2010/11/13/oil-palm-and-agricultural-policy-boom-or-ruin- for-indonesian-farmers/

4. 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.

5. 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

6. 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

7. Plantation sector http://www.ifc.org/ifcext/agriconsultation.nsf/AttachmentsByTitle/FSG+Report/$FILE/FSG+report _formatted.pdf Smallholders: government had allocated RM297 million under NKEA for 2011-2013 to assist smallholders to replant oil palm in the country (theborneopost.com – ‘RM297 mln to help oil palm smallholders ‘ - 18/3/2012) Photo: http://www.thejakartaglobe.com/business/malaysia-plantation-giants-listing-faces- headwind/514774 http://www.theborneopost.com/2011/10/04/chamber-to-help-smallholders-solve- 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)

8. National Agricultural Policy (NAP) The latest Third NAP (NAP3)-(1998-2010) The latest Third NAP (NAP3)-(1998-2010) 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.

9. 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. (www.moa.gov.my) http://www.guardian.co.uk/environment/2008/apr/16/food.biofuels http://etp.pemandu.gov.my/Agriculture-@-Agriculture_.aspx http://cms.boloji.com/articlephotos/A%20Study%20on%20the%20Origin.jpg

10. Agricultural Growth 7 th Malaysia Plan (1995-2000): grew at 1.2% per annum, lower than the targeted 1.9% 8 th Malaysia Plan (2001-2005): midterm review, grew only at 1.5% per annum, targeted 3.0% annually. http://animhosnan.blogspot.com/2010/10/popular-fruit- clones-in-malaysia.html http://www.freshplaza.com/index_sector.asp?sector=11 http://jutawanternak.blogspot.com/

11. Agricultural value of major commodities (USD million). Commodity 1990 1995 2000 2005 2010 Oil Palm 1,518 1,943 1,674 2,261 2,877 Forestry & Logging 661 536 873 862 789 Rubber 584 499 534 647 730 Cocoa 351 234 71 24 39 Fisheries 438 571 712 683 1,107 Livestock 173 239 434 597 709 Rice 171 190 169 181 282 Other Agriculture340 475 865 914 1,329

12. Self-sufficiency level (%) of food commodities. Commodity 2000 2005 2007 2010 Rice 70 72 72 86 Fruits 94 117 105 106 Vegetables 95 74 89 91 Fisheries 86 91 97 103 Beef 15 23 25 28 Mutton 6 8 9 10 Poultry 113 121 121 122 Eggs 116 113 114 115 Pork 100 107 116 132 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

13. 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.

14. Integrated Beef Cattle Farming in Oil Palm Plantations: Integrated Brahman cattle in Lundu, Sarawak. http://cattlegrow.blogspot.com/

15. http://www.kfcholdings.com.my/English/Flashsite/BusinessUnits/BizU_Poultry_Integration.asp Integrated Poultry Farming System : the operation consists of breeder farms and hatchery, feedmills, poultry farms, contract broiler farming and processing and further processing plants.

16. INTERNATIONAL TRADE IN AGRICULTURE Table 4. Total agricultural imports and exports (USD million). Table 4. Total agricultural imports and exports (USD million). Item 1999200020012002 Item 1999200020012002Import Maize259255218262 Maize259255218262 Sugar255253286257 Sugar255253286257 Wheat215187206201 Wheat215187206201 Rice, milled181175134124 Rice, milled181175134124 Nat. rubber119214180185 Nat. rubber119214180185 Soybean145132150167 Soybean145132150167 Food prep.141148157150 Food prep.141148157150 Tobacco 89 96133199 Tobacco 89 96133199 Cocoa bean 63 77 93141 Cocoa bean 63 77 93141 Oil palm 92 15 46137 Oil palm 92 15 46137 TOTAL3733 37924028 4300 TOTAL3733 37924028 4300

17. Item 199920002001 2002 Export Export Palm oil 3738 2558 2534 3824 Palm oil 3738 2558 2534 3824 Rubber 521589427580 Rubber 521589427580 Fatty acid 422389322430 Fatty acid 422389322430 P.kernel oil 433285212277 P.kernel oil 433285212277 Food prep. 96106119142 Food prep. 96106119142 Shortening 99110111119 Shortening 99110111119 Cigarette 142141139117 Cigarette 142141139117 Sugar 50 64 76 99 Sugar 50 64 76 99 Pastry 87103 96 96 Pastry 87103 96 96 Cocoa butter 108 83 84 93 Cocoa butter 108 83 84 93 TOTAL 7117 5821 5521 7375 TOTAL 7117 5821 5521 7375 Table 4. Total agricultural imports and exports (USD million).

18. 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 418 156 262 Meat and Processed Meats 85 1,049 -964 Dairy Products and Bird’s Eggs 622 1,726 -1,104 Fish, Crustacean, Mollusks 2,328 1.934 394 Cereals and cereal preparations 912 2,260 -1,347 Vegetables 508 1,689 -1,182 Fruits 469 707 -238 Sugar, sugar products and honey 470 1,339 -869 Coffee, cocoa, tea, spices 2,446 2,211 235 Livestock Feed 492 2,868 -2,376 Processed Food Products 1,918 1,793 124 Agricultural Inputs 1,543 3,496 -1,953 Balance of Trade of Agricultural Products and Commodities in 2005 (RM million)

19. Employment Estimates of Agriculture by Activity (‘000) Category 2000 2001 2002 2003 2004 2005 Rice farmers 306 300 297 287 252 239 Other Farmers 277 254 238 244 222 191 Livestock farmers 39 35 37 36 36 33 Fishermen 116 121 104 103 125 114 Aquaculture Farmers 8 7 3 4 6 5 Smallholders 358 286 305 378 400 414

20. 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.

21. Tropical Fruits Paddy/Rice Cocoa Coconut

22. 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

23. http://www.aeret.eu/en/contents/news/ShowNews/kenaf-as-alternative-to-tobacco- govt-237 http://blog.cifor.org/8165/diversified-forest-gardens-can-reduce-food-security-risks-in- latin-america/ Reducing Labour Requirements Transforming Smallholders into a More Commercial Sector http://cdn5.wn.com/pd/25/48/88d991ece6a09be212bef0d0b955_grande.jpg http://cempaka-nature.blogspot.com/2011/05/malaysia-and-indonesia-bolster-defence.html

24. Thank you Thank you