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PRT 2008 Lecture 14 Approaches to agricultural development Malaysian agricultural policy • Producer (1960s) • Producer and downstream activities (1980s) Agricultural development • Lifestyle • Source of income • time Lifestyle • For subsistence • Work in the morning • Relax in the afternoon Source of income Emphasis on commercial value Time • 1960-1970. Bumiputra grew crops on < 5 ha of • land (rubber, oil palm, orchard). Land inherited from their parents. Indian worked as labor in rubber and oil palm plantations. Chinese worked as middlemen. The English owned estates 1070-1980. More Bumiputra became smallholders, in settlement schemes (FELDA). Indians stilt worked as labor and in livestock. Chinese started to open estates, rear chicken and pig. 1980 to now Introduction of Malaysia incorporated, buying over estates (Golden Hope, Guthrie, Sime Darby) from British owners. Agriculture expanded. Industrial commodity became important. Food still insufficient in the country. Aquaculture and eco-tourism expand. Cont. Agriculture became one of the engines of economic growth. GDP growth was high (> 8 %). Manufacturing was the catalyst. Malaysia is going towards industrialization. National Agricultural Policy • NAP 1 (1984-1991) • NAP 2 (1992-2010) • NAP 3 (1998-2010) NAP 1 • Opening of new schemes for rubber, oil palm and cocoa continued to increase export and job market, reduction of poverty, support manufacturing. • Improvement of smallholders (subsidy). Use of modern technologies. Gave training. Cont. • Increase incentive for manufacturing sector. Late 1980s, manufacturing expanded. Investment in agriculture became less attractive. Contribution of agriculture to GDP contracted from 23 % (1980) to 8.7 % (2001) and 7.5 % (2005). But absolute amount increased from RM 10.2 b (1980) to RM 17.9 b (2001). So agriculture is still important. NAP 2 • Towards sustainable agriculture • Expansion of agro-based industries • Less export of raw materials • Increase the role of private sector in the production (import then re-exported) • Agro-forestry policy revised to maintain biodiversity. Conservation genetic resources Cont. • 1997 – Southeast Asia economic crisis began. Structural changes in the economy. • Trade liberalization and globalization lead to establishment of WTO and AFTA Cont. • New issues and challenges • Changing matrixes in the environmental agricultural trade Cont. • Liberalization increases competition • Trade without border • Consumers emphasized on quality • Biotechnology improved production • ICT changed trade paradigm Cont. Malaysia was under threat due to competition on production sources, consumer attitude, slow rate of adopting new technologies, competition from cheap import the problem of sustainability Cont. In agriculture, industrial commodity subsector (oil palm) expanded, but food commodity sub-sector not developed (a lot of import). George Soros took the opportunity to speculate currency. Cont. Loss of foreign exchange. Import bill increased. Agriculture labor reduced. Took in foreign labor (problem). Labor productivity was down compared to manufacturing. Rubber not tapped. Oil palm not harvested. Cont. Limited land area for agriculture. Low productivity for smallholders. Abandoned land increased (now > 400,000 ha). Peripheral land changed status to residential and industrial. Cont. WTO and AFTA were on. High competition for Malaysian agriculture. Cheap products from Thailand and Indonesia. Investment risk was high. Cont. Increase in production cost. Food processing industries imported 70 % of their required raw materials. Downstream factories were not operated with full capacity. Pressure from GAP (hygienic) Cont. Gave negative pressure to buying power, food security, input cost and import cost of food. Cont. By 1997, it was realized that NAP 2 was not capable of realizing the plan. Not competitive. Without strategy. Could not improve agriculture. Need to revise. NAP 3 Agriculture as a big business entity in response to market demand, preference and potential Strategic approaches • Agro-forestry • Product-based Agro-forestry approach • Increase agro-forestry activity • Same land can produce agricultural and forest products • Encourage private sector to get involve on commercial agro-forestry Product-based approach • Strengthen food security – reduce import. Encourage private sector and state government to produce food commodities. Give incentive, support, infrastructure. • Improve marketing efficiency – pasar tani, direct sale • Contract farming Cont. • Increase productivity • Focus on biotechnology • Use all biomass • Reduce labor • Automation • Increase value-added of products • Maximize land resource Cont. • Encourage private sector • Establish agro-technology park • Establish incubation center • Establish land bank • Encourage foreign investment Cont. • Strengthen agricultural export • Halal food hub • Bilateral agreement (palm oil credit) • Barter trading • Regional distribution center • Promotion of Malaysian products Cont. • Human development • Trained labor • K-workers (biotechnology, mechanization, automation, ISO) Development institutions • Education • Research • Extension Education • IPTA • Colleges (RISDA) • Training centers (FELDA) • Agricultural Institute (DOA) • Incorporated Society of Planters (Cadet Planters) • Scientific and professional societies (MSSS, AIM, MAPPS) Research • Public – MARDI, MRB, MPOB, MCB, FRIM, FELDA (Sg TEKAM), VRI • Private sectors – Golden Hope (OPRS), UP (Teluk Intan), Nestle (coffee, Kedah), Applied Agricultural Research (Sg. Buloh), Guthrie Research Chemara Extension (TOT) • • • • • • • • DOA MARDI RISDA MRB MPOB KESEDAR KETENGAH FAMA Laws and Standard • DOA – GAP (crop and livestock), integrated pest management, zero burning, certification integrated pollution control, organic farming certification scheme • Ministry of Health – Food Act 1983, GMO policy, Labor Health and Safe Act, guideline for medical crops