ECONOMICS OF AGRICULTURAL DEVELOPMENT

1. ECONOMICS OF AGRICULTURAL DEVELOPMENT LECTURE 7

2. 2 systemsi) plantation sector single crop cultivation land area of more than 40 ha. rubber, oil palm, coconuts, cocoa, pineapples and tea plantation management is more systematic using modern technology and hired labour.

3. ii) Smallholder cultivate small areas between 0.4 - 4 ha. production capacity is low limited technology disorganised farm management practices

4. SMALLHOLDERS 1) Subsistence farmers: cultivate their land for their own consumption sell the produce in the marketplace or to the middleman. practice mixed cropping systems ( vegetables and fruit trees) others mixed cropping and livestock farming systems 2) those that practice monocropping type of subsistence farming. farmers cultivate their land with commodity crops such as rubber, cocoa, or oil palm

5. National Agricultural Policy (NAP). Latest Third NAP (NAP3) 1998-2010 http://www.epu.jpm.my/rm9/html/english.htm development programs aim: i) to improve the food trade balance (export balance the import) Eg: the ninth placing in the world for the export of its star fruit. also the number two exporter in the world for exotic papayas. ii) increasing export of primary commodities iii) ensuring supply of raw materials for local downstream industries.

6. Agricultural Growth 7th Malaysia Plan (1995-2000): grew at 1.2% per annum, lower than the targeted 1.9% 8th Malaysia Plan (2001-2005): midterm review, grew only at 1.5% per annum, targeted 3.0% annually. 1995 to 2005, the value of rubber and forestry products has decreased palm oil, livestock and fisheries has increased 9th Malaysia Plan (2006-2010): Increase SSL.

7. Agriculture Contribution to GDP

8. Table 1. Agricultural value of major crops (USD million). _______________________________________________ 1995 2000 2005 ____________________________________ Industrial Crop (60%) Rubber 560 310 270 Palm Oil 1114 1631 1938 Forestry & logging 1089 893 799 Cocoa 322 305 314 Food Crop (40%) Padi 136 140 177 Livestock 51 292 383 Fisheries 517 625 789 Others 506 581 862 TOTAL 4496 4777 5531

9. Land Utilisation For Agriculture land use increased from about 5.7 million ha in 1995 to almost 6.0 million ha in 2000 due to the opening-up of new land for oil palm cultivation in Sabah and Sarawak. The acreage in oil palm, pepper, pineapple, vegetable and fruits has increased rubber, cocoa and coconut has decreased. About 400,000 ha of rubber and cocoa land were converted to oil palm.

10. Agriculture Land Use

11. Food Commodities

12. Aquaculture

13. Income from others aquaculture

14. Factors to growth livestock production: shifting from traditional to commercial farming practices Increase integrated beef cattle farming in rubber and oil palm plantations. However, Malaysia is still not self-sufficient in the production of beef and mutton, with local production catering 24.1% and 7.3%, respectively. 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. fruits and vegetables: government efforts in consolidating small orchards into larger organized farms and instituting group farming projects.

15. Livestock SSL

16. Livestock production value

17. INTERNATIONAL TRADE IN AGRICULTURE Table 4. Total agricultural imports and exports (USD million). Item 1999 2000 2001 2002 Import Maize 259 255 218 262 Sugar 255 253 286 257 Wheat 215 187 206 201 Rice, milled 181 175 134 124 Nat. rubber 119 214 180 185 Soybean 145 132 150 167 Food prep. 141 148 157 150 Tobacco 89 96 133 199 Cocoa bean 63 77 93 141 Oil palm 92 15 46 137 TOTAL 3733 3792 4028 4300

18. Table 4. Total agricultural imports and exports (USD million). Item Year = 1999 2000 2001 2002 Export Palm oil 3738 558 2534 3824 Rubber 521 589 427 580 Fatty acid 422 389 322 430 P.kernel oil 433 285 212 277 Food prep. 96 106 119 142 Shortening 99 110 111 119 Cigarette 142 141 139 117 Sugar 50 64 76 99 Pastry 87 103 96 96 Cocoa butter 108 83 84 93 TOTAL 7117 5821 5521 7375

19. CROP DIVERSIFICATION IN MALAYSIA 1) horizontal diversification Planting various types of plants as raw materials or sell it as fresh form. Ex: Fruits, flowers, herbs, commodity plants etc.

20. 2) vertical diversification • refers to the upstream to downstream activities of a particular crop/crops • 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.

21. CHALLENGES of CROP DIVERSIFICATION need to reduce labour requirements in agriculture coz of shortage need to maximize land utilization strengthen the competitiveness of Malaysian agriculture need to enhance private sector investment in food production smallholders need to be transformed into a more commercial sector more innovative and efficient agricultural practices for economic development of the sector as well as to maintain the ecological and environmental

22. Opportunities opportunities for downstream activities changing consumer tastes for environmentally friendly goods (organic farming & soilless culture) Others agriculture produces: Cut flowers Ornamental fishes seaweed

23. Income from agriculture diversification

24. Flowers production value

25. Income from flowers industries

26. Prospect demand for rice in both international and domestic markets is expected to increase. (1.8 mill to 2.3 mill in 2010) growth of the fruit industry are bright due to the expected increase in domestic consumption of both fresh and processed fruits and expanding world demand for tropical fresh and processed fruits to concentrate on production of high quality fresh vegetables for both domestic and export markets and also on a few selected vegetables for processing.