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| Malaysia’s total agricultural imports were around US$6.6 billion in 2006. The major agricultural imports are vegetables (valued at US$451 million in 2006), dairy products (US$444 million), maize (US$398 million) and sugar (US$391 million) (figure d). Other main agricultural imports are rice, wheat, oilseeds and cotton, each valued at around US$280 million. Imports of many agricultural commodities, such as vegetables, maize, sugar and dairy products, fell significantly in 1998 during the Asian financial crisis (figure e). Over the past few years, however, imports of these commodities have grown strongly, reflecting strong income growth. |
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| Australia is a major source of food imports | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Australia is the leading agricultural exporter to Malaysia (figure f). Other major agricultural exporters are China, Thailand, the European Union and the United States. While Malaysia’s imports from Australia, the European Union and the United States were lower in recent years compared with the mid-1990s, imports from Thailand and China have increased. China and Thailand are major suppliers of a number of agricultural commodities to Malaysia. Major imports from China include vegetables, maize, oilseeds and cotton, while major imports from Thailand include rice, vegetables and sugar. Malaysia’s trade with these two countries has been increasing significantly, particularly imports of vegetables from China and rice from Thailand |
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| Key agricultural imports from Australia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The key agricultural imports from Australia are wheat (valued at US$198 million in 2006), sugar (US$178 million) and dairy products (US$112 million) (figure g). Other agricultural imports that are important for Australia include wool and live cattle, each valued at more than US$30 million. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wheat | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Malaysia does not produce wheat and therefore is totally dependent on imports to meet domestic consumption. In 2006, wheat imports in Malaysia were worth around US$280 million, with more than 70 per cent sourced from Australia. The remaining wheat imports came mainly from Canada and the United States. Growing domestic consumption of wheat-based products and increased exports of processed food, such as noodles, biscuits and bakery products, have led to higher demand for wheat imports in Malaysia. However, the actual amount of wheat that will be imported will be affected by the state-imposed price controls on flour. For example, if the price ceiling set by the government for flour is low relative to the prices of imported wheat, flour millers are unlikely to increase their purchases of wheat (Whitley 2007). |
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| Sugar | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In Malaysia, the cultivation of sugarcane is small. The area harvested ranges from 20 000 to 24 000 hectares and yields are low. The small production of sugarcane reflects partly the reallocation of resources to other crops, such as palm oil because of their higher returns. In addition, Malaysia’s climatic conditions limit cultivation of sugarcane. Malaysia’s sugar imports account for two-thirds of its sugar requirements (Spire Research Consulting 2005). Sugar production in Malaysia is monopolised by four producers. Any shortfalls are met by imports through licences issued to refiners. An equal amount of raw sugar imports is allocated to each mill (Hoh 2006a). Domestic sugar prices in Malaysia are administered by the Ministry of Domestic Trade and Consumer Affairs, which is responsible for setting domestic prices of many agricultural products. A significant increase in world sugar prices since 2005 has resulted in considerable difficulty in preventing domestic sugar prices from rising above the administered levels. The price of raw sugar in the international market increased to a peak of around US$417 per tonne in February 2006 from around US$250 per tonne in 2005 (Ariff 2006). In the first half of 2008, the sugar price averaged around US$300. Because domestic prices have been lower than world prices, there has been an incentive to smuggle sugar for exports from Malaysia to neighbouring countries, which results in sugar shortages in the domestic market. Producing sugar at the price set by the government is no longer economical. When the Malaysian government requested sugar producers to increase their output, they were reluctant to comply (Ariff 2006). In 2006, Australia and Brazil were the two leading raw sugar exporters to Malaysia, each accounting for around 45 per cent of sugar imports. Sugar imports from Australia and Brazil have increased in recent years, while the importance of Thailand as a source of sugar imports has declined (figure h). Australia will continue to be the major supplier of cane sugar to Malaysia at least in the short term. The Malaysian government signed a three-year agreement, effective from January 2006 to December 2008, to import sugar from Australia (Hoh 2006a). Thailand relies on the availability of cheap labour and abundant land to produce sugar. In recent years, these resources have not been readily available to the Thai sugar industry as a result of competition from other sectors of the economy (NaRanong 2000). With rising domestic demand and weak growth in sugar production in Thailand, it is unlikely that sugar imports from Thailand will increase markedly in the short term. Thai sugar exports to Malaysia are also expected to slowdown because of strong competition from relatively cheaper Indian sugar (Prasertsri 2008). |
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| Dairy products | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In 2006, dairy products were Malaysia’s third largest agricultural import from Australia. New Zealand is the largest supplier of dairy products to Malaysia, followed by Australia and the European Union. The main dairy products that Australia exports to Malaysia are milk powder and cream products. In 2006, Malaysia imported around US$80 million worth of milk powder and cream from Australia. Australian exports of other dairy products to Malaysia include smaller amounts of cheese, whey and butter. Given sustained income growth in Malaysia, demand for Australian dairy products is likely to continue to grow. Australia is well positioned to supply this market. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wool | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Despite being a small importer, wool was the fourth largest agricultural import from Australia in 2006 (figure g). Malaysia’s wool imports were worth around US$34 million in 2006, a decline of more than 50 per cent from 1995. The Malaysian textile industry has faced increased competition from some other Asian countries such as China and India, mainly because of cheaper labour costs in those countries. More than 90 per cent of Malaysia’s wool imports come from Australia. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Live cattle and beef | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Australia is Malaysia’s largest supplier of live cattle. In 2006, Malaysia imported live cattle from Australia valued at US$31 million. Australia’s position as the dominant supplier of live cattle reflects its proximity to Malaysia, Australian cattle being able to acclimatise to tropical conditions, and Australia’s disease-free status. Australian live cattle have mainly been used for improving breeding stock in Malaysia. Overall, Malaysia imports a relatively larger amount of beef (US$186 million in 2006) compared with live animal imports (US$34 million in the same year). India was the largest exporter of beef to Malaysia in 2006. Beef imported from India is cheaper because of its lower quality. India also has a history of foot and mouth disease occurrences. Hence, the sustainability of India as the leading beef exporter to Malaysia depends largely on its ability to maintain its foot and mouth disease-free status. Beef imports from Australia, New Zealand and the United States are generally of higher quality and are used in high-end food outlets and restaurants (Chang 2006). Australia is the second largest supplier of beef to Malaysia. Australian beef exports were adversely affected in late 2005 and early 2006 because of the suspension of the halal accreditation for all but one Australian abattoir (MLA 2005). Australian beef exports to Malaysia resumed but were down by 10 per cent year on year in 2006 (MLA 2007). As of December 2007, 22 Australian abattoirs and plants had been approved by the Malaysian Department of Veterinary Services. Among these, six are cattle abattoirs and plants (Malaysian Department of Veterinary Services 2007). |
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| Other agricultural imports | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Malaysia’s main agricultural imports also include vegetables, maize, rice, oilseeds and cotton. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vegetables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| China is the leading vegetable exporter to Malaysia. Other major suppliers include India, Thailand and Australia. Malaysia’s imports of vegetables from China have grown strongly, from around US$80 million in 1995 to around US$200 million in 2006, while imports from Australia fell from around US$60 million to around US$25 million. Exports of some vegetables from Australia to Malaysia, such as cabbage, cauliflower, carrots and potatoes, have been facing strong competition from other exporters, particularly China (table 4). China has also significantly increased exports of other vegetables to Malaysia, including onions, shallots, garlic, leeks and potatoes. China’s vegetable export advantage lies in its low wages and land costs (Huang and Gale 2006). The competitive pressures for Australian exports of vegetables are not expected to ease in the short term. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Maize | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Maize is an important feed ingredient for the poultry industry. Maize imports have grown rapidly, to US$398 million in 2006, in response to stronger demand from the poultry industry (figure d). Most of the imports are from Argentina, the second largest maize exporter in the world and, to a lesser extent China. Malaysia is China’s second largest maize market. In contrast, Malaysia’s maize imports from the United States are negligible. US maize imports increased only in 1995 and 1996, as a result of the absence of imports from China because of Chinese domestic production shortfalls. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rice | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Although rice consumption in Malaysia has declined, rice remains an important part of the Malaysian diet. Malaysia produces around 70 per cent of its rice consumption (Ariff 2008a). BERNAS, the state trading agency, has been given the sole right to import rice to Malaysia for a period of 15 years from 1996. This is to regulate rice imports and reduce competition with the locally produced rice (Ariff 2008b). The major rice exporters to Malaysia are Thailand and Vietnam. Malaysia’s rice imports were worth around US$285 million in 2006, an increase of around 50 per cent from 1995. Although rice yield in Malaysia (3.3 tonnes/ha) is higher than in Thailand (2.9 tonnes/ha), Malaysia’s costs of production are higher than Thailand’s and Vietnam’s (Ariff 2008a). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oilseeds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Malaysia imported oilseeds valued at around US$275 million in 2006. There is no commercial cultivation of soybeans in Malaysia. The United States was the largest exporter of soybeans to Malaysia, capturing more than 50 per cent of Malaysia’s soybean imports in 2006. Other major exporters are Canada and Argentina. Soybean is used in animal feed and manufactured food such as tofu, soy milk and soy sauce. Malaysia is one of the largest producers of soy drinks in South East Asia (Hoh 2008). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cotton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cotton is a major intermediate input to the textile industry in Malaysia. China is the largest exporter to Malaysia, with cotton exports valued at US$56 million in 2006. Aggregate cotton imports in Malaysia have declined from US$667 million in 1995 to US$274 million in 2006. There are a number of challenges facing the Malaysian textile industry. In particular, there has been increased competition for the Malaysian textile industry from China and other south Asian countries, including Bangladesh and India, because of their cheaper labour (The Economist 2007). It is unlikely the textile industry in Malaysia will expand markedly so cotton imports could continue to decline in the foreseeable future. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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