PRT 2008PRT 2008

Lecture 14Lecture 14

Approaches to agricultural Approaches to agricultural developmentdevelopment

Malaysian agricultural policyMalaysian agricultural policy

• Producer (1960s)Producer (1960s)

• Producer and downstream activities Producer and downstream activities (1980s)(1980s)

Agricultural developmentAgricultural development

• LifestyleLifestyle

• Source of incomeSource of income

• timetime

LifestyleLifestyle

• For subsistenceFor subsistence

• Work in the morningWork in the morning

• Relax in the afternoonRelax in the afternoon

Source of incomeSource of income

Emphasis on commercial Emphasis on commercial valuevalue

TimeTime

• 1960-1970. Bumiputra grew crops on < 5 ha 1960-1970. Bumiputra grew crops on < 5 ha of land (rubber, oil palm, orchard). Land of land (rubber, oil palm, orchard). Land inherited from their parents. Indian worked inherited from their parents. Indian worked as labor in rubber and oil palm plantations. as labor in rubber and oil palm plantations. Chinese worked as middlemen. The English Chinese worked as middlemen. The English owned estates owned estates

• 1070-1980. More Bumiputra became 1070-1980. More Bumiputra became smallholders, in settlement schemes smallholders, in settlement schemes (FELDA). Indians stilt worked as labor and in (FELDA). Indians stilt worked as labor and in livestock. Chinese started to open estates, livestock. Chinese started to open estates, rear chicken and pig.rear chicken and pig.

1980 to now1980 to now

Introduction of Malaysia incorporated, Introduction of Malaysia incorporated, buying over estates (Golden Hope, buying over estates (Golden Hope, Guthrie, Sime Darby) from British Guthrie, Sime Darby) from British

owners. Agriculture expanded. Industrial owners. Agriculture expanded. Industrial commodity became important. Food still commodity became important. Food still insufficient in the country. Aquaculture insufficient in the country. Aquaculture

and eco-tourism expand.and eco-tourism expand.

Cont.Cont.

Agriculture became one of the Agriculture became one of the engines of economic growth. GDP engines of economic growth. GDP

growth was high (> 8 %). growth was high (> 8 %). Manufacturing was the catalyst. Manufacturing was the catalyst.

Malaysia is going towards Malaysia is going towards industrialization.industrialization.

National Agricultural PolicyNational Agricultural Policy

• NAP 1 (1984-1991)NAP 1 (1984-1991)

• NAP 2 (1992-2010)NAP 2 (1992-2010)

• NAP 3 (1998-2010)NAP 3 (1998-2010)

NAP 1NAP 1

• Opening of new schemes for rubber, Opening of new schemes for rubber, oil palm and cocoa continued to oil palm and cocoa continued to increase export and job market, increase export and job market, reduction of poverty, support reduction of poverty, support manufacturing.manufacturing.

• Improvement of smallholders Improvement of smallholders (subsidy). Use of modern (subsidy). Use of modern technologies. Gave training.technologies. Gave training.

Cont.Cont.

• Increase incentive for manufacturing Increase incentive for manufacturing sector. Late 1980s, manufacturing sector. Late 1980s, manufacturing expanded. Investment in agriculture expanded. Investment in agriculture became less attractive. Contribution of became less attractive. Contribution of agriculture to GDP contracted from 23 agriculture to GDP contracted from 23 % (1980) to 8.7 % (2001) and 7.5 % % (1980) to 8.7 % (2001) and 7.5 % (2005). But absolute amount increased (2005). But absolute amount increased from RM 10.2 b (1980) to RM 17.9 b from RM 10.2 b (1980) to RM 17.9 b (2001). So agriculture is still important.(2001). So agriculture is still important.

NAP 2NAP 2

• Towards sustainable agricultureTowards sustainable agriculture• Expansion of agro-based industriesExpansion of agro-based industries• Less export of raw materialsLess export of raw materials• Increase the role of private sector in Increase the role of private sector in

the production (import then re-the production (import then re-exported)exported)

• Agro-forestry policy revised to Agro-forestry policy revised to maintain biodiversity. Conservation maintain biodiversity. Conservation genetic resourcesgenetic resources

Cont.Cont.

• 1997 – Southeast Asia economic 1997 – Southeast Asia economic crisis began. Structural changes in crisis began. Structural changes in the economy.the economy.

• Trade liberalization and globalization Trade liberalization and globalization lead to establishment of WTO and lead to establishment of WTO and AFTAAFTA

Cont.Cont.

• New issues and challengesNew issues and challenges

• Changing matrixes in the Changing matrixes in the environmental agricultural tradeenvironmental agricultural trade

Cont.Cont.

• Liberalization increases competitionLiberalization increases competition

• Trade without borderTrade without border

• Consumers emphasized on qualityConsumers emphasized on quality

• Biotechnology improved productionBiotechnology improved production

• ICT changed trade paradigmICT changed trade paradigm

Cont.Cont.

Malaysia was under threat due to Malaysia was under threat due to competition on production sources, competition on production sources,

consumer attitude, slow rate of consumer attitude, slow rate of adopting new technologies, competition adopting new technologies, competition

from cheap import the problem of from cheap import the problem of sustainabilitysustainability

Cont.Cont.

In agriculture, industrial commodity sub-In agriculture, industrial commodity sub-sector (oil palm) expanded, but food sector (oil palm) expanded, but food

commodity sub-sector not developed (a commodity sub-sector not developed (a lot of import). George Soros took the lot of import). George Soros took the opportunity to speculate currency.opportunity to speculate currency.

Cont.Cont.

Loss of foreign exchange. Import bill Loss of foreign exchange. Import bill increased. Agriculture labor reduced. increased. Agriculture labor reduced. Took in foreign labor (problem). Labor Took in foreign labor (problem). Labor productivity was down compared to productivity was down compared to

manufacturing. Rubber not tapped. Oil manufacturing. Rubber not tapped. Oil palm not harvested.palm not harvested.

Cont.Cont.

Limited land area for agriculture. Low Limited land area for agriculture. Low productivity for smallholders. productivity for smallholders.

Abandoned land increased (now > Abandoned land increased (now > 400,000 ha). Peripheral land changed 400,000 ha). Peripheral land changed

status to residential and industrial.status to residential and industrial.

Cont.Cont.

WTO and AFTA were on. High WTO and AFTA were on. High competition for Malaysian competition for Malaysian

agriculture. Cheap products from agriculture. Cheap products from Thailand and Indonesia. Thailand and Indonesia.

Investment risk was high.Investment risk was high.

Cont.Cont.

Increase in production cost. Food Increase in production cost. Food processing industries imported 70 % of processing industries imported 70 % of

their required raw materials. their required raw materials. Downstream factories were not Downstream factories were not

operated with full capacity. Pressure operated with full capacity. Pressure from GAP (hygienic)from GAP (hygienic)

Cont.Cont.

Gave negative pressure to Gave negative pressure to buying power, food security, buying power, food security, input cost and import cost of input cost and import cost of

food.food.

Cont.Cont.

By 1997, it was realized that NAP 2 was By 1997, it was realized that NAP 2 was not capable of realizing the plan. Not not capable of realizing the plan. Not

competitive. Without strategy. Could not competitive. Without strategy. Could not improve agriculture. Need to revise.improve agriculture. Need to revise.

NAP 3NAP 3

Agriculture as a big business Agriculture as a big business entity in response to market entity in response to market

demand, preference and demand, preference and potentialpotential

Strategic approachesStrategic approaches

• Agro-forestryAgro-forestry

• Product-basedProduct-based

Agro-forestry approachAgro-forestry approach

• Increase agro-forestry activityIncrease agro-forestry activity

• Same land can produce agricultural Same land can produce agricultural and forest productsand forest products

• Encourage private sector to get Encourage private sector to get involve on commercial agro-forestryinvolve on commercial agro-forestry

Product-based approachProduct-based approach

• Strengthen food security – reduce Strengthen food security – reduce import. Encourage private sector and import. Encourage private sector and state government to produce food state government to produce food commodities. Give incentive, commodities. Give incentive, support, infrastructure.support, infrastructure.

• Improve marketing efficiency – pasar Improve marketing efficiency – pasar tani, direct saletani, direct sale

• Contract farmingContract farming

Cont.Cont.

• Increase productivityIncrease productivity

• Focus on biotechnologyFocus on biotechnology

• Use all biomassUse all biomass

• Reduce laborReduce labor

• AutomationAutomation

• Increase value-added of productsIncrease value-added of products

• Maximize land resourceMaximize land resource

Cont.Cont.

• Encourage private sectorEncourage private sector

• Establish agro-technology parkEstablish agro-technology park

• Establish incubation centerEstablish incubation center

• Establish land bankEstablish land bank

• Encourage foreign investmentEncourage foreign investment

Cont.Cont.

• Strengthen agricultural exportStrengthen agricultural export

• Halal food hubHalal food hub

• Bilateral agreement (palm oil credit)Bilateral agreement (palm oil credit)

• Barter tradingBarter trading

• Regional distribution centerRegional distribution center

• Promotion of Malaysian productsPromotion of Malaysian products

Cont.Cont.

• Human developmentHuman development

• Trained laborTrained labor

• K-workers (biotechnology, K-workers (biotechnology, mechanization, automation, ISO)mechanization, automation, ISO)

Development institutionsDevelopment institutions

• EducationEducation

• ResearchResearch

• ExtensionExtension

EducationEducation

• IPTAIPTA• Colleges (RISDA)Colleges (RISDA)• Training centers (FELDA)Training centers (FELDA)• Agricultural Institute (DOA)Agricultural Institute (DOA)• Incorporated Society of Planters Incorporated Society of Planters

(Cadet Planters)(Cadet Planters)• Scientific and professionalScientific and professional

societies (MSSS, AIM, MAPPS)societies (MSSS, AIM, MAPPS)

ResearchResearch

• Public – MARDI, MRB, MPOB, MCB, Public – MARDI, MRB, MPOB, MCB, FRIM, FELDA (Sg TEKAM), VRIFRIM, FELDA (Sg TEKAM), VRI

• Private sectors – Golden Hope Private sectors – Golden Hope (OPRS), UP (Teluk Intan), Nestle (OPRS), UP (Teluk Intan), Nestle (coffee, Kedah), Applied Agricultural (coffee, Kedah), Applied Agricultural Research (Sg. Buloh), Guthrie Research (Sg. Buloh), Guthrie Research ChemaraResearch Chemara

Extension (TOT)Extension (TOT)

• DOADOA

• MARDIMARDI

• RISDARISDA

• MRBMRB

• MPOBMPOB

• KESEDARKESEDAR

• KETENGAHKETENGAH

• FAMAFAMA

Laws and StandardLaws and Standard

• DOA – GAP (crop and livestock), DOA – GAP (crop and livestock), integrated pest management, zero integrated pest management, zero burning, certification integrated burning, certification integrated pollution control, organic farming pollution control, organic farming certification schemecertification scheme

• Ministry of Health – Food Act 1983, Ministry of Health – Food Act 1983, GMO policy, Labor Health and Safe GMO policy, Labor Health and Safe Act, guideline for medical cropsAct, guideline for medical crops