THIRD COUNTRY TRAINING ON AGRICULTURAL FINANCE 1528 February 2004, Hanoi, Vietnam

1
THIRD COUNTRY TRAINING ON AGRICULTURAL
FINANCE15-28 February 2004, Hanoi, Vietnam

• CURRENT SITUATION OF AGRICULTURE IN MALAYSIA
• Prepared by
• Ng Tak Wa
• Bank Pertanian Malaysia
• February 2004

2
Contents

• Importance of the Agricultural Sector
• History of Agricultural Development
• National Agricultural Policies
• Agricultural Commodities
• Agricultural Institutions
• Poverty Eradication

3
PART I

• IMPORTANCE OF
• THE AGRICULTURAL SECTOR

4
Overall Statistics

• Population (2003) 25.32 million
• Land area 330,252 square kilometers
• Employment (000)

5
Importance of Agricultural Sector

• Main contributor to the national economy in
  1960s to 1980s.
  
• This sector laid the foundation was the driving
  force behind the economic growth of the country
  which progressively led to the transformation of
  the economy towards industrialization.
• Strategically important as a provider of food.
• Vital source of raw materials for the agro
  resource-based industrial development.

6
GDP Growth By Sectors ()
7
Share of Agriculture to GDP, 1985 - 2003
8
GDP Contribution By Sectors, 2001 - 2003
9
Employment in Agriculture
10
Share of Agricultural Exports
11
PART II

• HISTORY OF
• AGRICULTURAL DEVELOPMENT
• IN MALAYSIA

12
Agricultural Development in Malaysia

• 1960s 1970s
• Agriculture was the main pillar of the
  Malaysian economy in the 1960s.
  
• Average growth rate of 8.5 per annum.
• Rubber, palm oil, saw logs pepper accounted for
  42.0 of agriculture sector production.
  
• Expansionary policies on paddy and export crops
  (rubber, oil palm cocoa).
  
• Development of new lands and in situ
  development.
  

13
Agricultural Development in Malaysia

• 1980s
• Average growth rate recorded during this period
  was 1.3 per cent per annum.
  
• Growth came mostly from the increase in outputs
  of palm oil, cocoa sawlogs.
  
• Malaysia experienced rapid expansion in the
  manufacturing sector and this altered the
  relative importance of the agricultural sector.
  

14
Agricultural Development in Malaysia

• 1980s (continue)
• During this period, Malaysia continued to focus
  on new land development consolidation of
  uneconomic farm size through in-situ
  development.

15
Agricultural Development in Malaysia

• 1990s
• Average growth rate between 1990-1995 of 1.40
  per cent per annum.
  
• Palm oil sub-sector accounted for over 40.0 of
  overall value-added.
  
• Rubber, cocoa saw logs experienced negative
  growth.
  
• Greater emphasis was given to address
  productivity, efficiency competitiveness issues
  facing the agricultural sector.

16
PART III

• NATIONAL
• AGRICULTURAL
• POLICIES

17
National Agricultural Policy (NAP)

• Agricultural development since independence
  has been guided by the National Agricultural
  Policies (NAP).
  
• NAP 1 (1984 1991)
• NAP 2 (1992 2010)
• NAP 3 (1998 2010)

18
NAP 1 (1984 1991)

• Aimed at maximizing income from agriculture
  through effective and efficient utilization of
  resources and the revitalization of the sectors
  contribution to the national economy.
• Pursued expansionary policies on export crops, in
  particular oil palm and cocoa.
  
• Insitu development to resolve the problems of
  uneconomic farm size, non-remunerative crops and
  low productivity especially among smallholders.

19
NAP 1 (1984 1991)

• In-situ development involves replanting,
  rehabilitating and consolidating activities on
  existing agricultural areas that are faced with
  problems of poverty and low productivity.
• Land consolidation is aimed at consolidating and
  enlarging fragmented and uneconomic holdings.

20
NAP 2 (1992 2010)

• The policy outlines strategies for expanding food
  production, greater role of the private sector,
  marketing reform and accelerated agro-based
  industrial development.

21
NAP 3 (1998 2010)

• Address the new developments during the 1992 97
  period that posed new issues challenges -
  
• Establishment of WTO and rapid liberation
• of agricultural trade.
• Financial crisis.
• High imports of food.
• Growing concerns for sustainable
• development environmental protection.

22
NAP 3 (1998 2010)

• Objectives -
• To increase food production and stabilize food
  prices.
  
• To maximize income through the optimum use of
  resources.
  
• To increase productivity competitiveness of the
  agricultural sector.
  
• To reduce trade deficit in food.

23
NAP 3 (1998 2010)

• Strategies -
• To enhance competitiveness.
• To add value to the whole value chain.
• To mechanize and commercialize agriculture.
• To promote Malaysia as the Halal Food Center.
• To upgrade business environment.
• To encourage private sector participation.

24
NAP 3 (1998 2010)

• Strategies -
• To encourage innovations and R D.
• To draw foreign investment to help local business
  to upgrade their technology.
  
• To enhance vocational skills and training.
• To upgrade business environment.
• To adopt an integrated approach in agricultural
  development.

25
PART IV

• AGRICULTURAL COMMODITIES
• OF MALAYSIA

26
Main Agricultural Commodities

• Food Products
• Industrial Crops
• Forestry and Timber- based products
• Others Economic Crops (Coconut, Pepper, Tobacco
  Miscellaneous Crops)
  

27
Food Products

• Food Crops
• Paddy
• Fruits and Vegetables
• Livestock
• Fisheries

28
Industrial Crops

• Oil Palm
• Rubber
• Cocoa

29
SUMMARY

• Increase in the production of oil palm.
• Decline in the production of rubber, sawlogs and
  cocoa.
  
• Oil palm is the main contributor to the GDP from
  agriculture (35 in 2003).
  
• Self sufficiency in fruits, poultry and eggs.
• Not self sufficiency in rice, vegetables, beef,
  mutton, pork, milk and food fish.
  
• Target to increase food production and to be net
  exporter of food.
  
• Continued dependence on the import of rice.

30
Agriculture Land Use (000 hectares)
31
Agricultural Value-Added, 1985 - 2000
32
Value Added of Major Commodities,
2001 2003 (RM million)
33
Value Added of Major Commodities,
2001 2003 (RM million)
Including livestock, cocoa,fruits,copra,
vegetables,tobacco,tea, flower, pepper and
pineapple.
34
Self sufficiency Level of Major Food Commodities
()
35
Forecast of Value-Added For The Food Sector
36
Forecast of Production of Major Food
Commodities(000 tonnes)
37
Trade Balance of Foodstuff 2002 (RM million)
Target To be a net food exporter by year 2010
38
Trade Balance of Foodstuff 2010 (RM million)
39
Production and Hectarage of Industrial Crops
40
Exports of Industrial Crops, (RM billion)
41
PART V

• AGRICULTURAL
• INSTITUTIONS

42
Agriculture Institutions

• Agricultural development in Malaysia is entrusted
  under the following 4 ministries -
  
• Ministry of Agriculture
• Ministry of Primary Industries
• Ministry of Rural Development
• Ministry of Land and Cooperative
• Development.

43
Ministry of Agriculture
Roles Functions Responsible for improving the
incomes of farmers, livestock breeders and
fishermen by efficient utilization of the
nations resources, manages food production for
domestic consumption and exports.
44
Ministry of Agriculture

• Departments under the Ministry -
• Department of Agriculture
• Department of Fisheries
• Department of Irrigation Drainage
• Department of Veterinary Services

45
Ministry of Agriculture

• Agencies under the Ministry -
• Agricultural Bank of Malaysia
• Malaysian Agriculture Research
• Development (MARDI)
• Farmers Organization Authority
• Federal Agricultural Marketing
• Authority

46
Ministry of Agriculture

• Fisheries Development Authority of
• Malaysia
• Kemubu Agricultural Development
• Authority (KADA)
• Muda Agricultural Development
• Authority (MADA)
• Pepper Marketing Board

47
Ministry of Primary Industries
Roles Functions Oversees the development of th
e primary commodities covering R D, production,
processing and marketing in respect of timber,
palm oil, rubber, cocoa, pepper, tin, copper and
other minerals.
48
Ministry of Primary Industries

• Departments and agencies under the Ministry -
• Forestry Department
• Malaysian Rubber Board (MRB)
• Rubber Industry Small Holders
• Development Authority (RISDA)
• Malaysian Palm Oil Board (MPOB)
• Forest Research Institute of
• Malaysia (FRIM)
• Malaysian Timber Industry Board

49
Ministry of Primary Industries

• National Tobacco Board
• Malaysian Cocoa Board
• Tin Industry Board
• (Research Development)

50
Ministry of Land Cooperative Development

• Agencies involved in agricultural development -
• Federal Land development Authority
• (Felda)

51
Land Development Under FELDA (As at 31-12-2002)
52
Ministry of Rural Development

• Agencies involved in agricultural development
  -
  
• Federal Land Consolidation and
• Rehabilitation Authority (FELCRA)

53
FUNCTIONS OF FELCRA

• The rehabilitation of unsuccessful state managed
  schemes.
  
• The consolidation of unused government land
  fringing villages for the purpose of providing
  additional land to small farmers so as to enable
  them to possess economic size land holdings.
• Youth land development program to develop unused
  marginal government land to provide land to
  unemployed rural youths.
  
• In situ development project.

54
PART VI

• POVERTY ERADICATION
• IN THE AGRICULTURAL/RURAL SECTOR

55
Incidence of Poverty

• The incidence of poverty in Malaysia is based on
  the poverty line income (PLI).
  
• The PLI is defined as an income sufficient to
  purchase a minimum basket of food to maintain
  household members in good nutritional health
  other basic needs such as clothing and footwear,
  rent, fuel and power, transport and
  communications, health care, education and
  recreation.

56
Poverty in Malaysia
57
Strategies For Poverty Reduction In
Agricultural/Rural Sector

• Providing employment opportunities in
  higher-paying jobs, while welfare handouts were
  reserved for the aged and disabled who could not
  find employment.
• Since the poor were largely engaged in
  agriculture, there were encouraged to be involved
  in modern farming and non-farm or off-farm
  activities.

58
Programs For Poverty Reduction
In Agricultural/Rural Sector (1)

• Resettle the landless and those with uneconomic
  holdings in new land development schemes
  
• Undertaking in-situ development of existing
  agricultural land through rehabilitation and
  consolidation of the land, replanting of old
  commercial crops with new higher-yielding clones
  and better planting techniques

59
Programs For Poverty Reduction
In Agricultural/Rural Sector (2)

• Integrating agricultural and rural development
  with downstream processing of farm products and
  encouraging village industries and rural
  entrepreneurship to generate additional sources
  of income
• Introducing double-cropping or off-season
  cropping for paddy, inter-cropping and mixed
  farming on the same plots of land to supplement
  the income derived from main crops

60
Programs For Poverty Reduction
In Agricultural/Rural Sector (3)

• Establishing farmers markets in urban centers so
  that farm produce can be sold directly and fetch
  better prices
  
• Providing training and education on topics
  pertaining to farming as well as work attitudes
  and values to motivate participants to become
  more productive farmers

61
Programs For Poverty Reduction
In Agricultural/Rural Sector (4)

• Providing industrial and vocational training for
  the rural manpower, coupled with credit
  facilities and related support, to enable them to
  be employed in non-farm occupations or start
  their own businesses in rural areas and urban
  centers
• Improving educational access as well as providing
  text books and financial assistance to children
  of poor households
  

62
Programs For Poverty Reduction
In Agricultural/Rural Sector (5)

• Providing infrastructure and social amenities as
  part of a broader program to improve the quality
  of life of all Malaysians. For the rural
  population, they include the provision of
  portable and piped water, electricity, roads,
  medical and health services and schools,
  including rural hostels.
• Providing micro credit for the financing of
  income generating projects.
  

63
Thank you