CHAPTER 7 ECONOMICS OF AGRICULTURE DEVELOPMENT
Contribution of Agriculture to Malaysian Economy • Contributes to the gross domestic product (GDP), decreased since 1970. • Plantation or estate agriculture is normally single crop cultivation in a land area of more than 40 ha. • Crops such as rubber, oil palm, coconuts, cocoa, pineapples and tea are planted
Contribution of Agriculture to Malaysian Economy • The smallholder consists of those farmers who cultivate small areas, between 0.4 - 4 ha • Two types of smallholders: (1) The subsistence farmers - Own consumption and sell the produce in the marketplace or to the middleman. - practice mixed cropping systems, vegetables and fruit as main crops or mixed cropping and livestock
Contribution of Agriculture to Malaysian Economy • Two types of smallholders: (2) Monocropping type of subsistence farming - commodity crops such as rubber, cocoa, or oil palm.
Contribution of Agriculture to Malaysian Economy • Malaysia’s agricultural development is guided by the National Agricultural Policy (NAP) - aimed at expanding food production to improve the food trade balance - increasing export of primary commodities - ensuring supply of raw materials for local downstream industries.
Agricultural Growth • The 7th Malaysia Plan (1995-2000), the agricultural 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 • 1995 to 2005, the value of rubber and forestry products has decreased while that of palm oil, livestock and fisheries has increased.
Agricultural Growth Agricultural value added (USD million in 1987 prices), 2000-2010
Land Utilisation For Agriculture • Agricultural land use increased, due mainly to the opening-up of new land for oil palm cultivation in Sabah and Sarawak. • Oil palm, pepper, pineapple, vegetable and fruits has increased while that of rubber, cocoa and coconut has decreased. • 430,800 ha of rubber and cocoa land were converted to oil palm.
Land Utilisation For Agriculture (000’ hectares), Source: Eight Malaysia Plan and Ninth Malaysia Plan
Food commodities • 3rd National Agricultural Policy (NAP3) -meet the national food requirements as well as broaden the export capacity of the agriculture sector • the self-sufficiency level (SSL) for food commodities except rice have improved • poultry farming system introduced by fast-food chains • fruit and vegetable production growth is due to consolidation of small orchards into larger organized farms and instituting group farming projects.
Food Commodities Self-sufficiency levels of food commodities (%), 1995-2010
Food Commodities • Growth in livestock production is mainly attributed to the improvement in animal husbandry and the shifting from traditional to commercial farming practices especially in the non-ruminant subsector. • Rubber and oil palm plantations have contributed to the increase in beef production- • (feedlot and integrated beef cattle farming).
Food Commodities • Poultry production increase is due to the integrated poultry farming system introduced by fast-food chains such as Kentucky Fried Chicken
International Trade in Agriculture • Agricultural trade has consistently generated trade surpluses. • In 2002, against a backdrop of USD7,375 millionexports and USD4,300 imports, a surplus of USD3,075 million. • Palm oilexports contributed almost 52% of export share in agriculture.
International Trade in Agriculture • Malaysia is still a food-deficit country. • Major import items include maize, sugar, wheat, rice, soybean and various food preparations. • Raw rubber, palm oil and cocoa beans are imported, processed, and then reexported as final products
International Trade in Agriculture • Exportspalm oil, rubber, fatty acid complexes, palm kernel oil, various food preparations, sugar and cocoa butter. These items accounted for at least 78% of the total agricultural exports in 2002
Market Trade Performance in 2002-2004 • In 2004, the top five important import sources: • Japan • the US • Singapore • China • Taiwan • major source of imports(ASEAN): • Singapore • Thailand • the Philippines • Indonesia
Market Trade Performance in 2002-2004 • the top export markets : • US • Singapore • Japan • China • Hong Kong • Thailand • Taiwan • Netherlands • Korea • Australia
International Trade in Agriculture Value of total agricultural imports (USD million), 2004-2009