| 3 |
Agricultural policies in Malaysia |
|
| Agricultural policies in Malaysia have emphasised supporting a higher level of food self-sufficiency. In recent years, there has also been a renewed focus on developing the food processing industries. |
| Rice production policy |
While rice accounts for only around 3 per cent of agricultural output, it is the most important crop in setting agricultural policy in Malaysia. Rice farming is associated with traditional living styles of the Malays, and incomes of rice farmers are relatively low.
The Malaysian government provides various programs to support rice farmers, including fertiliser and investment subsidies and a guaranteed minimum domestic price. Among the different support measures, the guaranteed minimum price for rice has incurred a significant budgetary cost to the Malaysian government, estimated at 186.7 million Malaysian ringgits (or around US$57 million) in 2004. The guaranteed minimum price has been implemented through a trading company, BERNAS, which buys paddy rice from farmers at the current level of 65 ringgits (or US$18) per 100 kilograms. In addition, all rice farmers receive a subsidy of 25 ringgits (or US$7) per 100 kilograms of padi delivered to a licensed mill or drying facility (Hoh 2006a). |
| Self-sufficiency targets |
| Malaysia’s food self-sufficiency rates are very low for milk, mutton and beef (table 1). In contrast, self-sufficiency rates for fruit, poultry, eggs and pig meat are high. Under the Ninth Malaysia Plan 2006–2010, the Malaysian government intends to increase production of some key agricultural commodities to raise the level of self-sufficiency. These commodities include rice, beef, sheep meat, milk, fruit and vegetables (see box 1). Despite this policy aim, it is unlikely a significant increase in self-sufficiency will be achieved in the short to medium term, given the limited resources in agriculture and strong competition for resources in other sectors of the economy. Malaysia is expected to remain highly dependent on imports of many agricultural products, including beef, dairy products, sheep meat and, to a lesser extent, rice. |
| The food processing industry |
The Ninth Malaysia Plan 2006–2010 emphasises the promotion of value adding in agricultural production. This partly reflects the growing importance of the food processing industry in the manufacturing sector. The food processing industry accounts for nearly 10 per cent of Malaysia’s manufacturing output. Food manufacturing sales increased by around 10 per cent to US$3.9 billion in 2005 (Chang 2006).
Malaysia’s food processing industry has been successful in competing with imports in the domestic market, as foreign competitors have found it difficult to match domestic prices and the local flavours of domestic brands. For example, chicken frankfurters, cocktail sausages and burgers that were imported are now produced locally (Chang 2005). Despite the increased competitiveness of the food processing industry, most of the intermediate inputs in food processing are imported (Spire Research Consulting 2005). This provides an opportunity for major food exporting countries, such as Australia, to work closely with the local food processing industry and help drive its expansion. The Malaysian government aims to develop the food processing industry with a particular emphasis on halal food products, which have the potential to expand into international markets. |
 |
| 1 |
Food self-sufficiency in Malaysia (per cent) |
|
| |
|
1995 |
2000 |
2005 |
2010 a |
|
| Rice |
76 |
70 |
72 |
90 |
| Fruits |
89 |
94 |
117 |
138 |
| Vegetables |
72 |
95 |
74 |
108 |
| Fisheries |
92 |
86 |
91 |
104 |
| Beef |
19 |
15 |
23 |
28 |
| Mutton |
6 |
6 |
8 |
10 |
| Poultry |
111 |
113 |
121 |
122 |
| Eggs |
110 |
116 |
113 |
115 |
| Pork |
104 |
100 |
107 |
132 |
| Milk |
3 |
3 |
5 |
5 |
| |
a Targets set by the Ninth Malaysia Plan 2006–2010.
Source: Economic Planning Unit (2006). |
|
|
box 1
The Ninth Malaysia Plan 2006-2010
In 2006, the Malaysian government launched the Ninth Malaysia Plan 2006–2010, which focuses on developing the so-called ‘new agriculture’. The plan aims to spur large-scale commercial farming, higher value adding processing activities and the adoption of biotechnology in agricultural production.
In livestock production, the plan encourages the adoption of modern production systems and improved animal breeds to enhance the industry’s competitiveness. The plan also aims to encourage large-scale fruit production for particular varieties that have export potential through the establishment of fruit production zones.
For rice, the plan focuses on raising productivity to achieve a yield target of 10 tonnes per hectare. Farmers will be encouraged to cultivate higher yield rice varieties, or to covert their land to alternative uses.
Other key production targets of the plan are to increase milk, beef, sheep meat and fruit production by more than 50 per cent between 2005 and 2010.
Source: Economic Planning Unit 2006. |
|
|
|
|
