ECONOMICS OF AGRICULTURAL DEVELOPMENT
TOPIC 1 CONRIBUTION OF AGRICULTURE TO MALAYSIAN ECONOMY
• Contribution of Agriculture to GDP has declined since 1970 but making comeback. • Characterized by a dualistic system: plantation sector and smallholder sector.
• Plantation a a o ag agriculture cu u e is s normally o a ys single ge crop with land area of more than 40 ha. Crops such as rubber, rubber oil palm, palm coconuts, coconuts cocoa, pineapples and tea are planted. • It is more systematic, systematic uses modern technology and hired labour.
• Smallholdings are small areas between 0.4-4 ha. • Production capacity is low due to limited technology and poor management practices. practices
• Two types yp of smallholders: 1. Subsistence farmers who cultivate their land for their own consumption or sell produce in the marketplace or to middleman. Practice mixed cropping systems of vegetables and fruit trees or mixed cropping combined with livestock farming (chicken, (chicken goats or cows) 2. Farmers that p practice monocropping pp g type yp of subsistence farming similar to plantations, cultivating rubber, cocoa, or oil palm
• In the past, emphasis given to production of primary commodities for export earnings. • However, agriculture now expanded into secondary d d downstream t processing i f for value-added products.
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Malaysia’s a ays a s ag agricultural cu u a de development e op e is s guided by the National Agricultural Policy ( (NAP). )
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Development programmes are aimed at: 1. expanding food production to improve food trade balance 2. increasing export of primary commodities, and 3. ensuring supply of raw materials for local downstream industries
1.1 Agricultural Growth • In the 7th Malaysia y Plan ((1995-2000), ) the agricultural g sector grew at 1.2% per annum, lower than the targeted 1.9%. • The 8th Malaysia Plan (2001-2005) targets the sector to grow at 3.0% annually. However, during the midterm review the agriculture sector grew only at 1.5% review, 1 5% per annum. • From 1995 to 2005, the value of rubber and forestry products has decreased while that of palm oil, livestock and fisheries has increased.
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In 2005, of the total value in agriculture: – Industrial crop pp production: 60% – Food sector (with significant increase in livestock and fisheries): 40% Agricultural value of major crops (USD million). 1995 2000 2005 ____________________________________ Industrial Crop Rubber Oil palml Forestry & logging Cocoa
560 1114 1089 322
310 1631 893 305
270 1938 799 314
136 251 517 506
140 292 625 581
177 383 789 862
4496
4777
5531
Food Commodity Padi Livestock Fisheries Others TOTAL
1.2 Land Utilisation For Agriculture • Agricultural g land use increased from 5.7 million ha in 1995 to 6.3 million ha in 2005 due mainly to new land cultivation for oil palm in Sabah and Sarawak. • The hectarage in oil palm, pepper, pineapple, vegetable t bl and d fruits f it has h i increased d while hil that th t off rubber, cocoa and coconut has decreased. • About 400,000 ha of rubber and cocoa land were converted to oil palm.
Agricultural land use (hectares) 1995 2000 2005 _____________________________________
Industrial Crop Rubber Palm Oil Cocoa Pepper Pineapple Tobacco
1727000 2507611 234538 8600 9081 10539
1430700 3460000 105000 11480 10233 15000
1301500 3100000 105000 12500 16000 12500
592410 298740 42000 244471 268146
572196 220000 51420 297436 67534
611000 201000 77290 379613 67737
5743137
5949934
6314977
Food Crop Padi Coconut Vegetables Fruits Others TOTAL
1.3 Food Commodities • Implementation of NAP3 to meet national food requirements and broaden exports have increased food production. production • S Self-sufficiency lf ffi i l levels l (SSL) for f f d food commodities (except rice) have generally i improved d or decreased d d only l slightly. li htl
Self-sufficient level (%) of food commodities
Rice Fishery produce Beef M tt Mutton Pork Poultry Eggs gg
1995 76.3 92.0 19.2 60 6.0 104.0 110.7 110.3
2000 72.0 89.0 16.0 60 6.0 99.0 113.0 116.0
2005 71.0 90.0 23.2 90 9.0 100.0 123.0 109.0
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Impressive growth in livestock production is due to improvement in animal husbandry and shift from traditional to commercial agriculture especially in poultry subsector. subsector
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Poultry increase is due largely to fast-food chains such as KFC. It is most popular meat due to pricing and religious acceptability
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Increase in feedlot and integrated beef cattle farming in rubber and oil palm estates have led to increase in beef production.
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However, Malaysia is still not self-sufficient in production of beef and mutton, with local production catering 24.1% and 7.3%, respectively.
The Star 11 May 2008
Self-sufficient level (%) of food commodities
Fruits Vegetables
1995
2000
2005
88.9 71.6
105.0 78.0
109.0 80.0
• Production increase is due to government efforts in consolidating small orchards into larger organized farms and instituting group farming projects. • Per capita consumption of fruits and vegetables has increased from 40 kg g in 1985 to 65 kg g and from 42 kg to 64 kg in 2005, respectively.
TOPIC 2 INTERNATIONAL TRADE IN AGRICULTURE
• O Over the th years, agricultural i lt l ttrade d has h consistently generated trade surpluses • In 2002: Exports: USD 7,375 million (palm oil, 52%) Imports: p USD 4,300 , million Surplus: USD 3 3,075 075 million
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Malaysia is still a food-deficit country (food imports exceed d exports) t )
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Food imports p in 1985: USD 0.92 billion 2000: USD 3.0 billion
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Major import items include maize, maize sugar sugar, wheat wheat, rice rice, soybean and various food preparations.
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Raw rubber rubber, palm oil and cocoa beans are imported imported, processed, and then re-exported as final products.
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Malaysia itself exports palm oil oil, rubber rubber, fatty acid complexes, food preparations, sugar and cocoa butter (78% of total agricultural exports in 2002)
Total agricultural imports (USD million). Item Import
Year =
1999
2000
2001
2002
Maize
259
255
218
262
Sugar
255
253
286
257
Wheat
215
187
206
201
Rice, milled
181
175
134
124
Natural rubber
119
214
180
185
Soybean
145
132
150
167
Food prep.
141
148
157
150
Cocoa bean
63
77
93
141
Oil palm
92
15
46
137
TOTAL
3733
3792
4028
4300
Total agricultural exports (USD million) Item
Year = 1999
2000
2001
2002
Oil palm
3738
2558
2534
3824
Rubber
521
589
427
580
Fatty acid
422
389
322
430
Food prep.
96
106
119
142
Cigarette
142
141
139
117
Sugar
50
64
76
99
Cocoa butter
108
83
84
93
TOTAL
7117
5821
5521
7375
Export
