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Agriculture in Malaysia

Agriculture in Malaysia. The era of agricultural development in Malaysia: The early years (1960’s-70’s) The awakening decade (70’s-80’s) The ‘small dragon’ era (80’s and beyond). Traditional Agriculture. Modern Agriculture. The Early Years ( 1960-70s).

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Agriculture in Malaysia

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  1. Agriculture in Malaysia

  2. The era of agricultural development in Malaysia: • The early years (1960’s-70’s) • The awakening decade (70’s-80’s) • The ‘small dragon’ era (80’s and beyond) Traditional Agriculture Modern Agriculture

  3. The Early Years (1960-70s) • Indigenous Bumiputras are traditionally subsistence farmers • working on smallholdings not more than 5 hectares • usually planted with rubber, oil palm, fruits, padi, and other miscellaneous crops • lands are either inherited or customary / indigenous rights

  4. Colonials • owners of large rubber and oil palm plantations • Indians • labourers in estates (rubber) • Chinese • middlemen for agricultural produce, grew cash crops, raised animals such as pigs and poultry, and work on rented and abandoned land owned by the Bumiputras

  5. The Beginning of Colonial Rule: Malay farmers marketing their products in town. The Malays were granted land titles in the hope they would stop moving from place to place. http://www.encyclopedia.com.my/volume7/colonial.html Indians working in estate under supervision of planter

  6. The Awakening Decades (1970-80s) • Bumiputras continued to work on their smallholdings, many migrated into new agricultural land development schemes managed by government agencies • The Indians remained as estate workers although quite a number have started raising cattles and goats • The Chinese, while remaining as middlemen, moved a step further by opening rubber estates followed later by oil palm and cocoa. They also intensified raising pigs and poultry which then has become a big business

  7. The “Small Dragon” Era (1980s and beyond) • Starting mid 80’s • Robust economic growth was catalised by the manufacturing sector • Guthries, Sime Darby, Dunlop (now IOI), Harrison and Crossfield (now Golden Hope). • Malaysia is now the major world producers of rubber and palm oil • IOI has the largest palm oil refinery in the world.

  8. Role of the Chinese in Malaysian Agriculture • Came from China to escape poverty and hunger there • Many came to seek wealth here but many failed (hard life) • Came to work as unskilled labourers (coolies) • Migration to Peninsular Malaysia, Sabah, and Sarawak followed different paths http://www.my-island-penang.com/Chinese-Coolies.html

  9. Peninsular Malaysia • encouraged by the British to work in agriculture, mining, and business sectors • influx of the Chinese into Peninsular Malaysia grew so much that in 1941, the Chinese population actually exceeded that of the Malay population • Chinese farmers chose crops that brought quick returns • pepper, sugar, tapioca, and gambier in Penang, Melaka, Johor, Negeri Sembilan, and Johor • eventually, the Chinese became actively involved in a much more lucrative crop: rubber

  10. Sarawak • Chinese initially came not to become farmers but to work in gold mines opened in Larak • then White Rajah’s concessions and land leases for the Chinese to grow pepper, gambier, and vegetables • 1898 to 1911 when Charles Brooke sponsored four Chinese colonies to settle permanently in Sarawak for agriculture purposes • such as the Foochow in Rejang Basin and the Hakka in Kuching

  11. Sabah • the Chinese were brought in by the British North Borneo Chartered Company in 1881 • involved as coolies, working in tobacco estates owned by the Europeans • The Chinese Hakka, however, were involved in growing maize, rice, vegetables, fruits, and coffee in Kudat • The economic boom in Sabah in 1920 saw huge numbers of Chinese influx into Sabah

  12. Early crops • The Chinese farmers preferred quick return crops such as tapioca, sugar, pepper, and gambier • Tan Chay Yan (first person to grow rubber commercially), Yap Ah Loy, Lim Lean Teng, Kee Lai Huat, Yeap Chor Ee, and Tan Hiok Nee • “Sugar King”, Tan Sri Robert Kuok, who, in the 1970s, controlled 10 per cent of the world’s sugar market Tan Chay Yan Tan Sri Robert Kuok

  13. Rubber “white gold” • Chinese farmers practised shifting cultivation, deemed by the British colonial rulers then to be wasteful • British wanted a more permanent crop like rubber • Sir Hugh Low, the then British Resident of Perak, started the first rubber planting in Malaysia, and the first trees were planted in Kuala Kangsar. • Henry Ridley, a botany enthusiast, invented the “herringbone” tapping method on which today’s rubber tapping method is based. Ridley’s close friend, Tan Chay Yan, who was the first to grow rubber for commercial purposes

  14. Herringbone rubber tapping by H.N. Ridley http://en.wikipedia.org/wiki/Henry_Nicholas_Ridley

  15. First commercial rubber estate: Bukit Lintang Estate (which was converted from a tapioca plantation) • Tan Chay Yan is also the inventor of commercial sheet rubber • Encouraged by Tan Chay Yan’s success in rubber, Tan Kah Kee decided to be involved in the rubber enterprise • “Rubber King” • Tan Kah Kee is also the first to export rubber overseas, and he is one of the first few millionaires in Singapore and Malaysia

  16. Tun Tan Cheng Lock was also actively involved in rubber planting • he established the United Malacca Rubber Estates Limited in 1910 at the age of only 27 • Also active in the rubber milling, marketing, and manufacturing • Lee Rubber, established by Lee Kong Chian • Lee Rubber is still in operation today, running 12 rubber mills in Malaysia and is responsible for 30% of the total rubber export in this country

  17. Loke Yew Fai runs International Footwear, a company his late father-in-law, Datuk Seri Tan Hoay Eam, indirectly helped to establish. • International Footwear was once the official equipment manufacturer (OEM) for Dunlop footwear. International Footwear also established, in 1979, the footwear Pallas, a household brand name • Tan Sri Dr. Lim Wee Chai helped to establish Top Glove, the world’s largest rubber glove manufacturer • Top Glove is considered a “one-stop centre” for all rubber glove types and uses in the world

  18. Oil palm “golden crop” • Unlike rubber planting, the Chinese played little role in pioneering the oil palm planting • Early oil palm estates were foreign-owned, which was later bought out by the Malaysian government and local private holders • The Chinese only became actively involved in oil palm starting from the 1970s when it was clear to many that rubber’s importance in Malaysia’s economy was diminishing due to rubber’s persistent problem of low and fluctuating prices

  19. Two largest Chinese-owned oil palm plantation groups in Malaysia are IOI and KLK • IOI • CEO is Tan Sri Lee Shin Cheng who was born poor • has the largest oleochemical plant in the world • Besides palm oil production, IOI is also actively involved in palm oil downstream activities, as well as in real estate and township development (such as in Puchong and south Johor) Tan Sri Lee Shin Cheng

  20. KLK • first made its fortune in rubber before switching over to oil palm • KLK owns 18 palm oil mills, two refineries and two crushing plants • also owns an oleochemical plant in Rawang which is one of the largest in Malaysia • Datuk Seri Lee Oi Hian is now the CEO of KLK, and he has diversified KLK’s palm oil activities to include international retailing (such as Crabtree & Evelyn), health, cosmetics, and food products

  21. Three Chinese firms were among the pioneers in Malaysia to be involved in kernel crushing, refining, and oleochemical production • Lam Soon (M) Berhad • Lee Oilmills • Palmco Holdings Berhad (now a subsidiary of IOI Group)

  22. Vegetables, fruits, flowers, and rice • Vegetable and flower farming in Malaysia are dominated by the Chinese • Cameron Highlands, in particular, is an important farming area for vegetables and flowers, where 83 per cent of the farmers there are Chinese, followed by the Indians (15 per cent), and the Malays (2 per cent) • The Chinese vegetable farmers in Cameron Highlands are the pioneer uses of rain shelters in the 1970s. • Organic vegetables in Cameron Highlands • Two Chinese companies: Grace Cup Sdn. Bhd. and Cameron Organic Produce Sdn. Bhd

  23. The bulk of flower farmers in Cameron Highlands today are also the Chinese • They were the first to commercially grow flowers, beginning in in 1952, at Yuland Farm in Ringlet, a farm which is still in operation today • Chinese are also actively involved in fruit farming, growing in particular pineapple and dragon fruit • introduced only ten years ago to Malaysia, dragon fruit is attracting a lot of interest from farmers because, like pineapple, there are a lot of opportunities for downstream activities for the dragon fruit

  24. Most rice farmers are the Malays • However, Sekinchan is an unusual rice bowl in Malaysia for two reasons • In Sekinchan, not only are the rice farmers mostly the Chinese, Sekinchan is also a highly productive rice production area, producing rice yields of 10 or more tonnes per hectare which is higher than the average national rice yield • Sekinchan farmers first developed a direct seeding method for planting rice as one method to overcome labour shortages in rice fields

  25. Matahir, H. and Tuyon, J. 2013. The dynamic synergies between agriculture output and economic growth in Malaysia. International Journal of Economics and Finance, 5: 61-70.

  26. Employment Estimates of Agriculture by Activity (‘000) Category 2000 2001 2002 2003 2004 2005 Rice farmers 306 300 297 287 252 239 Other Farmers 277 254 238 244 222 191 Livestock farmers 39 35 37 36 36 33 Fishermen 116 121 104 103 125 114 Aquaculture Farmers 8 7 3 4 6 5 Smallholders 358 286 305 378 400 414

  27. Matahir, H. and Tuyon, J. 2013. The dynamic synergies between agriculture output and economic growth in Malaysia. International Journal of Economics and Finance, 5: 61-70.

  28. Dept. of Irrigation and Drainage Malaysia. 2011. Review of the national water resources study (2000-2050) and formulation of national water resources policy. Final report. Vol. 14. Selangor, Federal Territory of Kuala Lumpur and Putrajaya. August 2011. Kuala Lumpur.

  29. AGRICULTURE SYSTEM IN MALAYSIA PLANTATION SECTOR SMALLHOLDERS Oil palm plantation in Sabah, Malaysia http://travel.mongabay.com/jeremy_hance/malaysia/sabah_119.html Oil palm smallholders http://www.eastasiaforum.org/2010/11/13/oil-palm-and-agricultural-policy-boom-or-ruin-for-indonesian-farmers/

  30. Plantation sector • single crop cultivation (economic value crop) • large-scale (more than 40 ha) • rubber, oil palm, coconuts, cocoa, pineapples, sugar and tea • management is more systematic • using modern technology and hired labour • more intensive and productive

  31. Smallholders • cultivate small areas • production capacity is lower and less intensive • limited use of technology • disorganised farm management practices

  32. Subsistence farming • 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 • those who practice monocropping type of subsistence farming. • farmers cultivate their land with commodity crops such as rubber, cocoa, or oil palm

  33. Federal Land Development Authority (FELDA) - an agency that oversees smallholder farms and is the world's largest plantation producer. (thejakartaglobe.com – 29/4/2012) Smallholders: government had allocated RM297 million under NKEA for 2011-2013 to assist  smallholders to replant oil palm in the country (theborneopost.com – ‘RM297 mln to help oil palm smallholders ‘ - 18/3/2012) Photo: http://www.thejakartaglobe.com/business/malaysia-plantation-giants-listing-faces-headwind/514774 http://www.ifc.org/ifcext/agriconsultation.nsf/AttachmentsByTitle/FSG+Report/$FILE/FSG+report_formatted.pdf http://www.theborneopost.com/2011/10/04/chamber-to-help-smallholders-solve-long-queue-issue/

  34. Shift from traditional to commercial farming practices • Increase integrated beef cattle farming in rubber and oil palm plantations • 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

  35. Integrated Beef Cattle Farming in Oil Palm Plantations: Integrated Brahman cattle in Lundu, Sarawak. http://cattlegrow.blogspot.com/

  36. Integrated Poultry Farming System : the operation consists of breeder farms and hatchery, feedmills, poultry farms, contract broiler farming and processing and further processing plants. http://www.kfcholdings.com.my/English/Flashsite/BusinessUnits/BizU_Poultry_Integration.asp

  37. Malaysia’s main crops • Industrial crops (> 6 million hectares) • Oil palm (5 mil. ha) • Rubber (1.1 million hectares) • Cocoa (77,000 hectares) • Rice (535,000 hectares) • Others (tobacco, coffee, sugarcane, coconut, tea) (200,376 hectares)

  38. Fruits (315,000 hectares) • star fruit, papaya, jackfruit, ciku, dokong, durian, guava, langsat • rambutan, watermelon, pineapple, lime, manggis • Vegetables (40,000 hectares) • Cash crops (19,000 hectares) • maize, groundnut, tapioca, taro (ubi keladi), sweet potato, potato, beet root • Spices (18,000 hectares) • chili, pepper, turmeric, lemon grass, nutmeg. mint, clove, tamarind

  39. % Malaysia agriculture land usage, 1960-2005

  40. Malaysia imports food • in 2011 = RM34.5 billion • cereals and cereal preparations (RM7.2 billion) • vegetables and fruits (RM4.2 billion) • cocoa (RM3.6 billion) • sugar and sugar confectionery (RM3.4 billion) • animal feed (RM2.8 billion).

  41. Malaysia’s food export • In 2011 = RM20.6 billion to more than 200 countries, of which • processed food contributed (RM13.5 billion) • cocoa and cocoa preparations (RM3.8 billion) • cereals and flour preparations (RM1.6 billion) • margarine and shortening (RM1.3 billion) • So, Malaysia is a net food importer • for many years

  42. Challenges to Malaysian agriculture • Land scarcity • only 20 per cent of total land is arable, and no more fertile land left for agriculture • 72 per cent of Malaysia’s soils is acidic and highly weathered—problem with fertility in particular phosphorus • Peninsular Malaysia = 8.1 million hectares arable • Sabah = 2.15 million hectares arable • Sarawak = 5.31 million hectares arable • competition from non-agricultural land use

  43. Land quality classes in Asia

  44. Problem soils in Malaysia

  45. Some problem soils in Malaysia peat steepland saline/sodic soil sandy soil

  46. Acid sulphate soils • When acid sulphate soils are exposed to air (that is, no longer in a waterlogged), the iron sulfides (pyrite) react with oxygen and water to produce a variety of iron compounds and sulfuric acid • Soils often have shadings of yellow (jarosite), blue, grey and brown

  47. Shortage of labour • high migration from rural to urban • lack of interest in agriculture • 300,000 foreign workers • sustainable agriculture requires high labour • Increasing cost of production • fuel, fertilizers, labour, technology • still dependent on manual, not mechanization

  48. CROP DIVERSIFICATION IN MALAYSIA • 1) horizontal diversification • grow more than just one crop • 2) vertical diversification • refers to the upstream and 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.

  49. CHALLENGES of CROP DIVERSIFICATION • need to reduce labour requirements in agriculture 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

  50. Food subsidies • Malaysia subsidizes on • petrol, diesel, and liquid petroleum gas • flour • cooking oil • sugar • broken rice • Malaysia’s debt (2010) = RM 245.7 billion • will be bankrupt by 2019 with if these subsidies continue

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