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Re-inventing agriculture:

business opportunities for

Malaysian companies

INTRODUCTION

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Introduction

• global environment of agricultural business is changing

• Borders are opening due to trade policy reforms at the unilateral, bilateral, regional and multilateral levels

• the rules governing international trade are also changing

Introduction

• Evolution in consumer tastes and preferences

• More science and knowledge-based products ⇒⇒⇒⇒⇒⇒⇒⇒ changes in the legal and market framework – IP (patents, blueprints etc.)

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Introduction

● ⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ need to change the way we do

things and also the kind of business we

need to be engaged

⇓⇓⇓⇓⇓⇓⇓⇓

● New economies:

– agriculture ⇒⇒⇒⇒ new agriculture??

- manufacturing ⇒⇒⇒⇒ new manufacturing??

Objectives

● Provide brief outlook and insights on some sub-sectors of the F&A bio-industry sector.

● Identify growth sectors

● Provide some technology-based ventures and investment possibilities

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MACRO OUTLOOK AND PROSPECTS

•••• The F&A sector of the bio-industry will

ALWAYS continue to grow as

population ↑↑↑↑

● Also opportunities in F&A expand

parallel with:

- population growth

- changes in lifestyle

- increase standard of living

- Evolution in consumer

tastes world-wide

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MACRO OUTLOOK AND PROSPECTS

● The F&A sector of the bio-industry will ALWAYS continue

to grow as population ↑↑↑↑

● Also opportunities in F&A expand parallel with:

- population growth

- changes in lifestyle

- increase standard of living

- Evolution in consumer tastes and

preferences world-wide

● liberalization of trade ⇒⇒⇒⇒⇒⇒⇒⇒

new opportunities

● opportunities from new

scientific discoveries

information, technology

and innovation

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Agricultural Value Added, 1995 – 2005(RM million in 1987 prices)

3.01.24.921,585100.018,662100.017,115Total

1.12.815.63,19812.23.02611.21,924Miscellaneous1

- 0.93.914.32,38913.12,49311.51,964Fisheries

3.53.16.92,0896.11,5205.6953Livestock

1.40.63.26322.95903.0516Paddy

- 19.8-1.65.7806.42507.31,225Cocoa

-0.3-3.914.53,01618.73,05524.24,139Forestry and Logging

6.27.935.07,91534.15,86024.74,235Palm Oil

3.9-11.24.92,2646.51,86812.42,129Rubber

8MP7MP

Average Annual Growth Rate (%)

%2005%2000%1995Commodity

•••• Almost all registered +ve growth except for forestry and fisheries,

•••• ⇒⇒⇒⇒ shows food sector still an expanding sector with growth prospects

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Agrobased Industries

• Another expanding sector

• Valve added ↑↑↑↑ from RM13.5 billion in 2000 →→→→RM16.9 billion in 2005

•→→→→ 4.5 % growth

International Trade

• Although known to be food importer, M’sia also exports foodstuffs

• Xports ↑↑↑↑ from RM4.5 billion in 2000 →→→→ RM8.6 billion in 2005

• →→→→ 13.9% growth

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TRENDSDEMAND-SIDE

TRENDSDEMAND-SIDE

TRENDS TRENDS -- DSDS

• Food needs will rise at extraordinarily high rates

due to:

– population increase

– rising levels of nutrition

– changing consumption patterns

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TRENDS TRENDS -- DSDS

● faster pace of life

⇒⇒⇒⇒ ↑↑↑↑ need for convenience food

→→→→ ↑↑↑↑ demand for processed food

● fitness and beauty needs of modern society

⇒ ↑↑↑↑ demand for diet foods/supplement

⇒⇒⇒⇒ ↑↑↑↑ demand for beauty products

TRENDS TRENDS -- DSDS

● greater awareness to health

⇒⇒⇒⇒ ↑↑↑↑ demand for nutritious food

that are ↓↓↓↓ in calories, fat and salts,

but

↑↑↑↑ in fibre, minerals and vitamins

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TRENDS TRENDS -- DSDS

●● ↑↑↑↑↑↑↑↑ in population of the elders due to in population of the elders due to

better healthbetter health--carecare

→→→→→→→→ special diet foods to cater for special diet foods to cater for

specific health problemsspecific health problems

TRENDS TRENDS -- DSDS

●● health awareness and fasthealth awareness and fast--pace pace

requirementsrequirements

⇒⇒⇒⇒⇒⇒⇒⇒ demand food that are demand food that are

convenient and healthy convenient and healthy

such as minimally processed such as minimally processed

food food

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TRENDS - DS

•• ↑↑↑↑↑↑↑↑ demand for competitiveness due demand for competitiveness due liberalization and globalization pressuresliberalization and globalization pressures

⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ society more hardworking and society more hardworking and productiveproductive

⇓⇓⇓⇓⇓⇓⇓⇓

↑↑↑↑↑↑↑↑ demand for "mental demand for "mental appeasers" and aesthetic appeasers" and aesthetic

products e.g. flowersproducts e.g. flowers

TRENDS -DS

• In int’l trade - DpCs provide the foundation for growth

•• ↑↑↑↑↑↑↑↑ Y growth and urbanizationY growth and urbanization

⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ ↑↑↑↑↑↑↑↑ demand for greater variety and demand for greater variety and quality foodsquality foods

•• Demand reinforced by Demand reinforced by ↑↑↑↑↑↑↑↑ in pop. GR which is 2X that in pop. GR which is 2X that of of DCsDCs..

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TRENDS

SUPPLY-SIDE

TRENDS - SS

• land, labor, capital and other inputs will increasingly become more competitive

⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ limiting factors

• But new discoveries ⇒⇒⇒⇒⇒⇒⇒⇒ new opportunitiesnew opportunities

⇒⇒⇒⇒⇒⇒⇒⇒ post genomic era offers great potentialpost genomic era offers great potential

• Technology-push & embodiment of knowledge in products

⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ main driving force to main driving force to ↑↑↑↑↑↑↑↑ agric and food agric and food growthgrowth

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TRENDS - SS

• Liberalization ⇒⇒⇒⇒⇒⇒⇒⇒ ↓↓↓↓ subsidies esp. in

DCs ⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ ↑↑↑↑↑↑↑↑ prices prices

⇓⇓⇓⇓⇓⇓⇓⇓

↑↑↑↑↑↑↑↑ opportunities for opportunities for DpCsDpCs to fill the gapto fill the gap

THE WINDOWS OF THE WINDOWS OF

OPPORTUNITIESOPPORTUNITIES

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THE WINDOWS OF OPPORTUNITIESTHE WINDOWS OF OPPORTUNITIES

• Unlikely any country can produce, be competitive and capitalize on all demand opportunities

⇓⇓⇓⇓⇓⇓⇓⇓

⇓⇓⇓⇓⇓⇓⇓⇓

need to focus on selectedneed to focus on selected

windows of opportunitieswindows of opportunities

Critical Technologies Along The Value Chain (From Farm To Table)

Critical Technologies Along The Value Chain (From Farm To Table)

Breed/Variety

Production System

Handling of Produce

Processing & Product Development

Packaging & Storage

Marketing & Distribution

Farm

Consumer

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FRESH AND PROCESSED FRESH AND PROCESSED

TROPICAL FRUITSTROPICAL FRUITS

• An expanding market

• Fresh per capita expected to ↑↑↑↑ from 54kg/yr to 59 kg/yr in 2005

• Xports ↑↑↑↑ from RM496 mil in 1995

to RM701 mil. in 2000

• World imports expand from 1.4 - 2 mil. Tonnes

• Value at >>>> US$2 billion

New fruit varieties

� Pineapple- Josapine and Maspine

� Papaya - Eksotika I & II

� Durian - MDUR 88, 78, 79

�Pomelo - Melomas

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• Technology on handling and exportation of agricultural produce by sea shipment

• Technology on production of all-green melon

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VEGETABLES

• Rainshelter

• Netting Structure

• Technology on production of vegetables under rain-shelter structures

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Organic VegetablesOrganic Vegetables

•• Study conducted showed about 90% Study conducted showed about 90%

willing to pay higher prices for CFV.willing to pay higher prices for CFV.

•• 50% of consumers willing to pay 2 50% of consumers willing to pay 2 -- 4 4

times the price of conventional times the price of conventional

vegetablesvegetables

Spinach: Willingness to purchase VS priceSpinach: Willingness to purchase VS price

NW WPrice

RM Frequency Percentage Frequency Percentage

1.50

2.70

3.80

4

31

41

3.33

25.83

34.17

116

89

79

96.67

74.17

65.83

5.00 68 56.67 52 43.33

6.20

7.30

77

85

64.17

70.83

43

35

35.83

29.17

8.50

9.60

10.70

12.00

95

98

95

96

79.17

81.67

79.17

79.34

25

22

25

25

20.83

18.33

20.83

20.6670.83

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Cucumber: Willingness to purchase VS Cucumber: Willingness to purchase VS

pricepriceNW WPrice

RM Frequency Percentage Frequency Percentage

0.80

1.60

2.40

3.20

3

13

30

43

2.5

10.83

25.00

35.83

117

107

90

77

97.5

89.17

75.00

64.17

4.00 64 53.33 56 46.67

4.80

5.60

71

80

59.17

66.67

49

40

40.83

33.33

6.40

7.20

8.00

89

88

85

74.17

73.33

70.83

31

32

35

25.83

26.67

29.17

ORGANIC VEGETABLES

• In advance countries market for organic food fast ↑↑↑↑↑↑↑↑

•• In the US the market In the US the market ↑↑↑↑↑↑↑↑ from US$2.1 billion to from US$2.1 billion to

US$3.3 billionUS$3.3 billion

-- expected to grow at 20 expected to grow at 20 -- 24 % per annum24 % per annum

⇒⇒⇒⇒⇒⇒⇒⇒ ⇒⇒⇒⇒⇒⇒⇒⇒ Malaysia the same trend?Malaysia the same trend?

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FLORICULTURE AND

LANDSCAPE

• Another industry that exhibited impressive growth

• Production ↑↑↑↑↑↑↑↑ by almost 38% in the last 5 yrsby almost 38% in the last 5 yrs

•• Exports now RM256 million growing at Exports now RM256 million growing at

>>>> 8 % per annum

� Tissue culture and vegetative propagation of planting materials

�New MARDI orchid varieties

� Landscape plants

�� Tissue culture and Tissue culture and

vegetative propagation of vegetative propagation of

planting materialsplanting materials

�� New MARDI orchid varietiesNew MARDI orchid varieties

�� Landscape plantsLandscape plants

FLORICULTURE AND

LANDSCAPE

FLORICULTURE AND

LANDSCAPE

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• New orchid varieties- Mokara Puan Sri Norainee

- Mokara Datin Seri Endon

- Ascocenda Puan Sri Suslita

- Dendrobium Datin Zakiyah

- Dendrobium Doctor Sharif

- Kagawara Tuanku Syed Sirajuddin

- Dendrobium Abdullah Badawi

• Development of new high yielding varieties

• Development of cost-effective, sustainable and environment-friendly production systems

Rice and Industrial crops

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» Paddy: MR219, 220, MRQ 50 (Puteri), MRQ 74 (Maswangi), MR232

• New cassava varieties� Sri Kanji 1� Sri Kanji 2� Sri Pontian(for snack)

• New sweet potato varieties� Gendut� Telong� Jalomas� VitAto

VitAtoJalomas

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• Kenaf production technology

THE HERB INDUSTRY

• fresh interest world-wide

• consumers moving towards: → natural and greens

→ away from synthetics

→ chemical free

• search of uncurable diseases− cancer / AIDS

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Herbal Medical Sales by Selected Region

Region Million USD

EU 6,000

Rest of Europe 500

Asia 2,300

Japan 2,100

North America 1,500

Total USD12.4 billion

MARKET

Type Value

Flavour & Fragrance RM1.6 billion

Pharmaceuticals/

NutraceuticalsRM950 million

Herbal Remedies RM2 billion

Total RM4.55 billion

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• Herbs cultivation

� Mengkudu

� Serai wangi

� Nilam

� Tea tree

� Kesum

• Development of herbal products

• Essential oils

• Natural Colorants and Flavors

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• Development of new livestock

breeds and advanced

reproductive technologies for

genetic enhancement

• Feed production technology

from agro-industrial products

• Intensive and semi-intensive

and environmentally friendly

livestock and poultry

production systems

Livestock

• New beef/goat breed� Brakmas cattle

� Charoke cattle

� Boer goat

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� Poultry production under enclosed housing

� Production of Omega-3, Vitamin A and selenium enriched designer eggs

• Product development and processing

• Production efficiency through mechanization and automation

• Food science and food safety

• Post-harvest system and food packaging

Food Technology

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� Fruit yoghurt

(Pro-biotics)

� Bakery & Pastry

� Minimal processing of

fruit and vegetables

� Frozen breaded fruits

�Products from cocoa

�Rice-based products

�Fish-based products

�Meat-based products

�Traditional cakes

Food Processing Technologies

Compost

• Compost production using agriculture waste

• CREST-FERTO (software for fertilizer

application and high yielding paddy)

• Organic vegetable farming

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Molecular biology and genetic engineering

Bio-processing

Bio-diagnostics and bio-safety

Biotechnology

New Biotechnology Products

• Transgenic papaya, pineapple, rice

• Bio-diagnostic and biosensors

• Tissue culture

• Advanced reproductive technology

• Taq polymerase enzyme

New Biotechnology Products

• Transgenic papaya, pineapple, rice

• Bio-diagnostic and biosensors

• Tissue culture

• Advanced reproductive technology

• Taq polymerase enzyme

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• Technology Promotion and Development

• Technical Services

• Business Development

• Planting Materials, Seed and Livestock Breed Production

• Entrepreneur Development

• Incubator

• Test Bed

• Technical Courses and Training

Technology Transfer and Technology Transfer and

CommercialisationCommercialisation

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FUTURE INSIGHTSFUTURE INSIGHTS•• Future depends on development of competitive Future depends on development of competitive

advantage based on strategic discoveries and advantage based on strategic discoveries and

new innovationsnew innovations

•• includes new products from plants, animals and includes new products from plants, animals and

microorganisms thro' powerful, precise, rapid microorganisms thro' powerful, precise, rapid

and efficient biotechnological techniquesand efficient biotechnological techniques

CONCLUSION

• Opportunities in food and agriculture for commercial exploitation existed

• Genuine business acumen and entrepreneurship needed.

• Acknowledge some technologies require further innovation and improvement for commercialization

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CONCLUSION

• Commercialization of technology not a simple process of

from lab → market.

→ involve up scaling and piloting and further testing.

• MARDI invites all interested parties to work with us to

commercialize technologies.