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Provided for non-commercial research and educational use. Not for reproduction, distribution or commercial use. This article was originally published in the online Reference Module in Food Sciences, published by Elsevier, and the attached copy is provided by Elsevier for the author's benefit and for the benefit of the author's institution, for non-commercial research and educational use including without limitation use in instruction at your institution, sending it to specific colleagues who you know, and providing a copy to your institution's administrator. All other uses, reproduction and distribution, including without limitation commercial reprints, selling or licensing copies or access, or posting on open internet sites, your personal or institution’s website or repository, are prohibited. For exceptions, permission may be sought for such use through Elsevier’s permissions site at: http://www.elsevier.com/locate/permissionusematerial From Arshad, F.M., 2016. Food Policy in Malaysia. Reference Module in Food Sciences. Elsevier, pp. 1–12. doi: http://dx.doi.org/10.1016/B978-0-08-100596-5.21173-6 ISBN: 9780081005965 © 2016 Elsevier Inc. All rights reserved. Academic Press Author's personal copy
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Provided for non-commercial research and educational use.Not for reproduction, distribution or commercial use.
This article was originally published in the online Reference Module in Food Sciences,published by Elsevier, and the attached copy is provided by Elsevier for the author's
benefit and for the benefit of the author's institution, for non-commercial research andeducational use including without limitation use in instruction at your institution,sending it to specific colleagues who you know, and providing a copy to your
institution's administrator.
All other uses, reproduction and distribution, includingwithout limitation commercial reprints, selling orlicensing copies or access, or posting on open
internet sites, your personal or institution’s website orrepository, are prohibited. For exceptions, permission
may be sought for such use through Elsevier’spermissions site at:
http://www.elsevier.com/locate/permissionusematerial
From Arshad, F.M., 2016. Food Policy in Malaysia. Reference Module in Food Sciences.Elsevier, pp. 1–12. doi: http://dx.doi.org/10.1016/B978-0-08-100596-5.21173-6
ISBN: 9780081005965© 2016 Elsevier Inc. All rights reserved.
Academic Press
Author's personal copy
Food Policy in MalaysiaFatimah Mohamed Arshad, Universiti Putra Malaysia, Serdang, Malaysia
© 2017 Elsevier Inc. All rights reserved.
Introduction 1Food Sector Performance 1Land Use 1Value Added 2Food Trade 2Food Production 3Food Sufficiency 6Evolution of Food Policy 8Agriculture-Led Development 8Export-Driven Economy 9Industrialized Economy 9Sustainable and High-Income Economy 10Conclusion and Policy Recommendations 11References 11
Introduction
Malaysia has achieved a relatively impressive growth since its independence in 1957. Its achievement is shown in the following indices:ranked 36th/217 in GDP (World Bank, GDP Ranking, 2015), 18th/190 in ease of doing business (World Bank, Doing BusinessReport, 2016), and 59th/188 in Human Development Index (HDI) (United Nations, HDI, 2016). Despite these achievements, itsfood sector remains underdeveloped as reflected by its food trade deficits amounting to RM18 billion in 2015 for almost all itemswith the exception of fisheries products and poultry and pork meat (www.epu.my). It relies on imported inputs such as feedstuff,fertilizers, agricultural machineries, and labor and general productivity level remains low.
The food sector performance can be depicted graphically to indicate trends, magnitude, and changes. However, its journey andhow and why it has arrived to the current state are driven largely by its policy stance, then and now. This note examines briefly theevolution of the Malaysia food policy since 1960s until to date and how it has shaped the country’s food sector development. Thefollowing sections discuss the performance of the food sector in the context of the Malaysian agriculture, a brief evolution of thefood policy, and lastly the conclusion.
Food Sector Performance
The country’s economic development was spearheaded by the agriculture sector since the 1950s but since then its role has declinedto make way for industrialization. The contribution of agriculture to GDP has reduced from about one-third of GDP beforeindependence to 8.3% in 2015, employment (2/3%–12.1%), and exports (2/3%–14.1%) (Ministry of Agriculture and AgrobasedIndustry, 2015). The food sector accounted for 24.8% and 3.5% of agricultural and total exports in 2015, respectively. However, itaccounted for about more than half, i.e., 51.6% and 5.7% of the agricultural and total imports in 2015, respectively. The foodexport/import ratio decreased from 0.75 in 1990 to 0.65 in 2015 indicating the country is a net importer of food. Despite the declinein the percentage contribution of the agricultural and food sector, its absolute value has increased but at a lower rate relative to othersectors. When the country opted for industrialization in the late 1980s, it induced the outflow of resources (land, labor, and capital)to the manufacturing, construction, and service sectors leaving the agriculture sector beset with labor problem and erodingcompetitiveness, particularly the food sector. The following paragraphs examine the performance of the sector in terms of landusage, value added, trade, production, and sufficiency.
Land Use
Fig. 1 indicates the land usage in Malaysia, 1960–2015. The area under agriculture has increased by 176% from 2.6 mn ha to7.3 mn ha between 1960 and 2015 suggesting an annual rate of change of 10%. In the 1960s, the share of food crops stood at31.5% but reduced to 10.5% in 2015, while the share of oil palm in industrial crop category increased from 3% in 1960 to 37.4%in 1990 to 83% in 2015. Note that the decline in the food crop area is not compensated by a large increase in the productivity.
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Value Added
Despite the predominance of industrial crops in terms of area (89.5%), their contribution to the value added is lower. For instance,in 2015, industrial crops contributed to about 60.5% to value added in 2015 compared to 38.8% by food crops, which accountedfor only 10.5% of the area. These figures suggest that the returns per hectare of food crop area are higher than industrial crop (Fig. 2).
Food TradeWhile the exports of industrial crop-based products (for instance crude palm oil, natural rubber, and cocoa products) provide tradesurplus, it is not the case for food, feed or livestock, and almost all of the agricultural inputs (such as seeds, breeds, agriculturalmachines, and labor). As shown in Fig. 3, the food trade deficit increased from about RM1.1 billion in 1990 to RM18 billion in2015 and reduced to RM15 billion in 2017. Figures 3 and 4 summarize a few pertinent observations. First, both the export andimport of food show an increasing trend between 1990 and 2016 with import growing at average 9.6% compared with 9% peryear for export. Food export increased from RM3.4 billion to RM30 billion, while import grew from RM4.5 billion toRM46.7 billion in the said period. These data explain the ever-growing food trade deficit from RM1.1 billion in 1990 toRM18 billion in 2015, which reduced somewhat at RM16.5 billion in 2016. Second, with the exception of live animals (mainlypoultry), food manufactures, and edible products and preparations, all food items showed a growing deficit in volume and value.
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These include cereals and preparations (including rice, wheat, and corn), feedstuffs for livestock, fruits and vegetables, sugar, andpreparations and lately fish, crustaceans, and mollusks. As for fishery products, after years of surpluses, Malaysia began to experiencedeficit since 2011 reaching RM1 billion in 2015. This is partly due to the overexploitation of fisheries resources in the Straits ofMalacca in the face of growing consumption. Third, the major food export items were coffee, tea, cocoa, spices, and manufacturesaccounted for 27.4% in 2016 valued at RM8.2 billion, followed by miscellaneous edible products and preparations (24.2%)valued at RM7.2 billion. Both items registered trade surplus but not enough to offset the overall deficits. Fourth, the largest foodimports were vegetables and fruits accounting for 18.6% of food import valued at RM8.7 billion. This is followed by cerealsand preparations (15.8%) valued at RM19.5 billion. The other important import items include coffee, tea, cocoa, spices, andmanufactures (14.6%) and miscellaneous edible products and preparations (11.9%). Fifth, the largest deficit is recorded by fruitsand vegetables, which accounted for about one-third of food deficits valued at RM6 billion followed by cereals and preparations(19.5%) at RM3.9 billion. However, the value of food deficit is larger than stated if one takes into account of the agricultural inputs,which are mostly imported such as fertilizer, pesticides, agricultural machineries, and foreign labors.
Food ProductionBesides importing rice, beef, mutton, and dairy products, Malaysia is a net importer of fruits and vegetables despite being one of theworld’s richest countries in biodiversity. As shown in Fig. 5, areas planted with fruits have increased from 188,334 ha in 1992 toa peak of 306,911 ha in 2000, but since then it has declined to reach 199,709 ha in 2015. The composition of fruits planted has notchanged very much with the share of durian hovered around 32%–35% between 1992 and 2015, bananas (10%–15%), andpineapple (5%–8%). Most of the fruits experienced decline in area planted as shown in Fig. 6. These include starfruit, sapodilla,sweet lime, pulasan, limau besar, papaya, mango, rambutan, jackfruit, salak, duku/duku langsat, banana, and guava. Fruits thatsaw an increase in areas include nangka, dokong, pineapple, langsat, mangosteen, durian, and watermelon. The factors that leadto the slow growth of this industry include cheaper imports, lack of institutional supports particularly R&D, and high cost ofproduction.
The vegetables industry exhibits an opposite trend but is still inadequate to turn Malaysia as an exporter. As shown in Fig. 7, theareas planted with vegetables have increased by 138% between 1992 and 2015 from 28,980 ha to 68,927 ha. The major vegetablesinclude mustards (accounted for 23.1% in 2015), cabbage (15%), long beans (8.2%), and cucumber (8%). Unlike the fruits sector,vegetables that experienced area decline were minimal (Fig. 8). This sector enjoys growth due to increase in consumption and healthawareness and relatively better return compared with the fruits sector. The productivity level remains low compared with those inthe ASEAN countries largely due to inadequate institutional supports particularly R&D, extension, and high input cost particularlylabor.
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Figure 3 Malaysia food balance of trade (RM mn), 1990–2015. Source: Economic Planning Unit. 2017. Socio-Economic Statisticshttp://www.epu.gov.my/en/socio-economic/overview.
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Figure 4 Balance of selected food trade (RM mn), 1990–2016. (A) Cereals and preparations; (B) feedstuff for livestock; (C) fruits and vegetables;(D) sugar and preparations.
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Note: BoT (Balance of Trade)
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Figure 4 (cont’d) d (E) fish, Crustaceans, and mollusks; (F) food manufactures. BoT, balance of trade. Source: Economic Planning Unit, 2017.Socio-Economic Statistics http://www.epu.gov.my/en/socio-economic/overview.
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Figure 5 Total area planted with fruits (ha) and share of each fruit (%) for selected years. Source: Data before 2010 were sourced from Ministry ofAgriculture and Agro-Based Industry (various publications). Data 2011–15 were sourced from Department of Agriculture, 2016. Booklet StatistikTanaman (Sub-Sektor Tanaman Makanan) 2015. Putrajaya: Department of Agriculture, Ministry of Agriculture and Agro-Based Industry.
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As for rice, Malaysia is a perpetual net importer since the 1940s despite the large investment and subsidies that poured in. Asshown in Fig. 9, the amount of subsidies was on the rising trend between 1979 and 2006 but it began to shoot up after the worldfood crisis in 2008. By 2016, the total subsidies allocated reached RM2.2 billion. Malaysia is unable to achieve high degree of self-sufficiency as local production failed to meet the consumption due to increase in population and income (Fig. 10). Unlike othercommodities, this sector is highly protected from the world market vagaries through market instruments such as floor and ceilingprices for paddy and rice, respectively; import monopoly by BERNAS, a government-linked company; and provision of numerousinput and output subsidies. A number of studies have shown that the distortion effort comes with high prices such as inefficientallocation of resources, slow production and processing growth, market sluggishness, and numerous market irregularities andinconsistencies (Amin et al., 2010; MIER, 2010; Fatimah, 1994; Jenkins and Lai, 1991). Despite the observed downsides, theprotectionist stance continues.
Food SufficiencyFood security is an important agenda for Malaysia. The self-sufficiency level (SSL) is a gross proxy to indicate the level of“availability” of a particular food in the country. The level of food sufficiency of major food items between 1990 and 2015
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Figure 7 Total area planted with fruits (ha) and share of each vegetable (%) for selected years. Source: Data before 2010 were sourced fromMinistry of Agriculture and Agro-Based Industry (various publications). Data 2011–15 was sourced from Department of Agriculture, 2016. BookletStatistik Tanaman (Sub-Sektor Tanaman Makanan) 2015. Putrajaya: Department of Agriculture, Ministry of Agriculture and Agro-based Industry.
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is depicted in Fig. 11. With the exception of poultry and pork meat, fishery product, and eggs, the rest of the food items are belowthe country’s requirement such as rice (71.6% in 2014), fruits (81.3%), vegetables (56%), beef (28.6%), mutton (18.3%), anddairy (4.9%). Note that little progress is achieved in the SSL of basic food items such as rice, fruits, vegetables, beef, muttonand, dairy products.
Evolution of Food Policy
The above graphs and paragraphs are largely the composite end results of the food policy adopted inMalaysia in the last five decadesor so. The evolution of the food policy is best understood by examining the policy documents that provide the statement andstrategies intended. The country has undergone a structural transformation from a primary producing economy to an industrializednation focusing on services and manufactures. Along the way, the food sector emphasis changed in accordance to the domesticsociopolitical and economic landscapes and international market scenes. Based on these considerations, the history of the foodpolicy can be demarcated into a number of eras or phases such as agriculture-led development, export-driven economy, industrializedeconomy, and sustainable and high-income economy. The following paragraphs briefly review the food policy in the saiddevelopmental phases.
Agriculture-Led Development
This era refers to the colonial times (1950s) until late 1970s when agriculture was the mainstay of the economy. Prior to independence(1957), Malaya’s agricultural policy was designed primarily to serve the needs of British colonial rule with a purposive neglect of therural sector, which was predominantly agricultural. While British companies ventured into plantation agriculture, largely rubber andother commercial crops cultivation, the rural sector that produced food such as rice, fruits, vegetables, livestock, and fisheries productsremained largely in subsistence and smallholder agriculture. This policy was responsible for the bimodal development of Malaysianagriculture to date, i.e., the plantation and food/smallholders sectors grew side by side unevenly in growth, efficiency, and productivity.
Early development focuses and strategies were encapsulated in two development plans: First Malaya Plan (1 MP) (1957–60) andSecond Malaya Plan (2 MP) (1961–65) (Malaya, 1957, 1961). The thrusts of the plans continued the industrial crops developmentestablished by the colonials earlier except the participation of the smallholders was further increased through land developmentprogram by reallocating farmers from overcrowded uneconomical farms to new land schemes to plant rubber and oil palm. In1956, the Federal Land Development Authority (FELDA) was established to fulfill this function. There was no specific mentionon food sector development in the two policy documents.
Overall development of the country is the major theme of the First Malaysia Plan (1966–1970). The overall objective is “socialand economic development, capacity building of human resources, population control, infrastructures, transport, communica-tion, social welfare, health, housing.” Land development continued to be instrumental in poverty addressal. By the end of 1970,
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a total of 593,800 ha of new land was cleared up for rubber and oil palm plantation. The word and concept of food were notmentioned, but they were efforts to increase human capital capacity and R&D in agriculture at large including fisheries and live-stock products. During this the expenditure in drainage and irrigation for paddy accounted about 33% of agricultural develop-ment expenditure indicating the beginning of the concern of the major staple of the country, which is rice. During this period,rubber accounted for about 61% of agricultural GDP.
Export-Driven Economy
Malaysia saw the opportunity of exploiting the growing demand for agricultural and industrial raw materials particularly naturalrubber and tin, respectively. The growing automobile industry in the West provided the strong impetus to produce thesecommodities. Hence, a policy that directed toward export-led growth was adopted during the early 1970s till the late 1980s. Exportopportunities ruled the policy design and emphasis. This means crops such as natural rubber and oil palm were perceived as thehighest potential export earners and hence were given bigger supports. A crop diversification program was implemented tominimize the risk of heavy dependence on a few commodities. Under the Second Malaysia Plan (1971–1975), Third MalaysiaPlan (1976–1980), and Fourth Malaysia Plan (1981–1985), oil palm was given a bigger boost through more land developmentand institutional supports. By 1980, rubber area had reduced to 45% of the agricultural land while oil palm had increased to23% and cocoa area 2.8%. By 1980, land development reached its peak of 866,058 ha under the FELDA, FELCRA,1 and RISDA2
schemes.As for the food sector, paddy also received extensive support with the completion of the MADA, KEMUBU, and Besut irrigation
programs. The National Padi and Rice Authority (NPRA) was established to formulate policies and coordinate activities relating tothe production, processing, and marketing of paddy and rice. Coconut rehabilitation schemes and replantation of pineapples wereintroduced. New high-yielding paddy varieties were introduced in MADA area. In 1970, MADA harvested its first off-season paddyover 83,000 ha. A number of programs were introduced to develop the livestock sector, pepper, tapioca, sugar cane, cocoa, andmaize. In 1970, West Malaysia was self-sufficient in poultry and pork meat. Supports were provided for coconut and pineapplereplanting and rehabilitating, and cocoa was added as an intercropping crop.
By 1980, Malaysia achieved 92% rice self-sufficiency largely due to the irrigation facilities, introduction of HYVs as well as theGuaranteed Minimum Price Scheme. Rubber and oil palm accounted for 42.1% of total agricultural production, paddy (20.8%),forestry (14.4%), and livestock and fishing (18.9%).
Muda Irrigation Scheme was completed in 1974, and Kemubu Irrigation Scheme was completed in 1975. Other schemes includeKrian and Trans-Perak. Institutional supports were intensified. This era saw the setting up of MAJUIKAN, MAJUTERNAK, RISDA,NTB, FOA, FAMA, IADPs, and BPM3 to help the development of the related agricultural industries. Universiti Putra Malaysiacommenced degree courses in forestry, veterinary science, and agriculture in 1972 as well as agribusiness and fisheries.
Industrialized EconomyThe industrialization of the Malaysian economy started in the 1980s with import-substitution programs launched by the country, inparticular heavy industry development as marked by the production of the first national cardProtondin 1982. The share ofmanufactured products from exports reached almost 60% in 1990 (Sixth Malaysia Plan, 1991–1995) from a humble 20% inthe 1980s. However, the world saw a serious commodity crisis in 1987 as prices dipped to an all-time low. The rubber industrywas losing its shine as prices were barely enough to support costs of production and hence income for the smallholders. The starkcontrast in growth rates of the two sectorsdagriculture and industrydprompted the government to review the agricultural policyafter it was overshadowed by the industrialization takeoff in the 1980s.
In 1984, the National Agricultural Policy I (NAP I) was launched to provide a muchmore “all encompassing” policy approach toagricultural development (Malaysia, 1984). The NAP I was designed to ensure a balanced and sustained rate of growth in theagricultural sector vis-à-vis other sectors in the economy. The policy objectives of the NAP were aimed specifically at “maximisingincome from agriculture through effective and efficient utilisation of the country’s resources and the revitalisation of the sector’scontribution to the national economy” (Malaysia, 1984). An important rationale behind the formulation of the NAP was concernedwith the slower rate of growth of the agricultural sector relative to other sectors in the economy and the prevailing poor state ofwelfare of agriculture. The agricultural policy set in the NAP I has been the guideline for the sector for the Fifth Malaysia Plan(1986–2000). Food sector was embedded indirectly under the broad category of agriculture.
The agrarian reform of new land and in situ development was continued, indeed on a larger scale. Rice self-sufficiency was set ata reasonable target of 65%. The new element introduced in the NAP I was the enhancement of the agro-based sector to increasevalue added for export purposes.
However, it has been shown that NAP I failed in addressing the big divide between agriculture and industrial sector; Malaysiawas unable to sustain its leading position in rubber while simultaneously facing major supply constraints in developing other cropsand commodities. The food sector failed to show progress particularly in meat production, fisheries, fruits, and vegetables(Abdul Aziz, 1994).
The new National Agricultural Policy II (1992–2010) (NAP II) was introduced in 1992 to address the significant shortcomings ofthe previous NAP I (Malaysia, 1992). The overriding objective of the new NAP II was “the maximisation of income through optimalutilisation of resources.” Its specific objectives include the achievement of balanced development between the agriculture and
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manufacturing sectors, enhancement of the integration of the sector with the rest of the economy and in particular themanufacturing sector, and the achievement of a higher level and greater depth of food industry development. Agriculturaldevelopment efforts were to be implemented on the basis of sustainability (Malaysia, 1992). The strategies identified by theNAP II include (1) optimizing resource use, (2) accelerated agro-based industries, (3) enhancement of R&D and technologicaldiffusion, (4) greater role of private sector, (5) reformed marketing strategy, (6) expanded food production, (7) human resourcedevelopment, (8) development of viable, and (9) self-reliant farmers/fishermen’s institutions. The NAP II ran in parallel to the SixthMalaysia Plan (1991–1995).
Clearly, unlike the previous policy plans, NAP II provided a comprehensive food policy plan. NAP II has specifically emphasizedthe need for security where issues such as food availability, accessibility, and utility were taken into account. To ensure availabilityand accessibility, NAP II has identified selected food commodities to focus its developmental support. NAP II has set SSL targets forthese selected food commodities by 2010, which include rice (65%), vegetables (125%), eggs (125%), fish (170%), beef (14%),mutton (21%), poultry (139%), pork (2%), fruits (120%), and milk (10%). However, actual data indicated that except for rice,all the targets were overly estimated. In the case of pork meat, the target was overly underestimated. To improve the nutritionsecurity, efforts and resources were directed toward the expansion of a more protein and high-fiber food. The NAP II has outlinedcomprehensive and specific policies and programs for each of the food commodity. Despite the two NAPs, the food sector showeda slow growth as reflected by the growing deficits of food trade (Figs. 3 and 4) and the prominence of industrial crops grew strongeras shown in Fig. 12.
Sustainable and High-Income Economy
The late 1990s marked a new beginning in the country’s outlook and strategies. This was prompted by the serious financial crisis in1997, which was triggered by a combination of factors such as weak fundamentals, the free flow of capitalization across borders, andthe highly integrated economies of the ASEAN countries. The immediate impact of the financial crisis on the Malaysian economywas currency depreciation, reversals of net capital flows, and strains on the financial sector. These contracted the economytemporarily where economic growth became negative in 1998. The rate of growth of agriculture, forestry, and fishing was �4.0in 1998, which was lower compared with the manufacturing sector that contracted �10.2 during the same year. The depreciationof the ringgit put pressure on prices; food prices registered the largest price increase as well as food imports (Malaysia, 2001). Thevalue of the import bill increased from RM7.8 billion in 1995 to RM12 billion in 1998 (Fig. 3).
The third National Agricultural Policy (1998–2010) or NAP III was formulated again to revive agriculture under a new economicorder of the world where globalization rules and trade liberalization intensifies (Malaysia, 1999). The NAP III focuses on newapproaches to increase productivity and competitiveness, deepen linkages with other sectors, venture into new frontier areas, aswell as conserve and utilize natural resources on a sustainable basis. The policy aims to set in place the enabling and supportivemeasures as well as a conducive environment to promote productivity and growth in the agricultural sector. Themajor policy thrustsof the policy include meeting national food requirement, enhancing competitiveness and profitability in agriculture and forestry,strengthening requisite economic foundation, and adopting sustainable development. The NAP III has been the referentialdocument for agricultural and food development strategies for Seventh, Eighth, and Ninth Malaysia Plans.
The NAP III provides a comprehensive review and policy directions for selected commodities and clusters. The clusters weredivided into nine product groups as follows: food product group, which consists of paddy, livestock, fisheries, fruits and vegetables;
Paddy
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Paddy Oil palm Rubber Cocoa Pepper
Figure 12 Crop mix in the Malaysian agriculture in terms of area (%) (1961–2014). Source: Department of Statistics, 2017a. Time Series Data:Paddy https://www.dosm.gov.my/v1/index.php?r¼column/ctimeseries&menu_id¼NHJlaGc2Rlg4ZXlGTjh1SU1kaWY5UT09; World Bank, 2017b. DoingBusiness Report 2016, Ranked 18th Out of 190 Countries http://www.doingbusiness.org/rankings.
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forestry and wood-based products; new products and future industry; floriculture products and aquarium fish; sago; roselle; equineand exotic animals; agro-tourism; and other economic crop products. The prerequisites of development of those subsectors includea strong economic foundation, technology, financing and incentives to further increase efficiency, productivity, and competitiveness.Productivity enhancement was to be achieved through lesser use of labor input, mechanization, and automated production systemand processes. Despite the NAP III, the food sector structure remained largely unchanged and the growth is still slow as shown inFig. 11.
In 2010,Malaysia has embarked on another path of progress through Economic Transformation Program to achieve a high-incomeeconomy by 2020. The plan defines the Agriculture National Key Economic Areas (NKEAs) encompassing two major sectors: palm oiland high growth sector (PEMANDU, 2010a,b). To enhance the growth of the palm oil sector, the plan laid out a number of strategiessuch as enhancing upstream productivity and downstream expansion and sustainability. Some of the entry point projects includeimproving fresh fruit bunch yield and worker productivity, increasing the oil extraction rate, developing biogas at palm oil mills,developing oleo chemicals, commercializing second generation biofuels, and expediting growth in food- and health-based down-stream segments. With regards to other agriculture subsectors, NKEA has identified high growth potential industries comprising ofaquaculture, seaweed farming, swiftlet nests, herbal products, fruits and vegetables, premium processed food, paddy, and livestock.To complement the agriculture agenda in NKEA, the Ministry of Agriculture and agro-based industries have announced in 2011the Agro-Food Policy (2011–20) to replace the NAP III, which expired in 2010 (MoA, 2011). The Tenth and Eleventh Malaysia Plans(2011–2015 and 2016–2020, respectively) have embraced the new Agro-Food Policy in their development plans.
The food crisis in 2008 provided the impetus for the government to relook at the food sector of the country. Among the keythrusts of the policy are high-value agriculture development, sustainable agriculture development, private sector investment tomodernize the sector, and knowledgeable and informed human capital. The policy aims at ensuring sufficient food supply, makingthe agro-food as a viable and sustainable industry, and increasing the income of agriculture entrepreneurs. The ministry has lined upspecific strategies to achieve the policy’s objectives, covering agro-food industry development, which focuses on the paddy and riceindustry, fisheries, livestock, vegetables and fruits, agro-based industry, and agro-tourism.
Conclusion and Policy Recommendations
Malaysia has chosen to strengthen its “comparative advantage” in industrial crops (rubber, oil palm, cocoa, pepper), which hassomewhat marginalized the food sector and related industries particularly the agribusiness industry. The industrial crop-centricpolicy has left the food sector behind in all dimensions, growth, productivity, and return as resources are diverted to those crops.The realization of the strategic roles of agriculture began with NAP II and beyond. By then it was a little too late as the divide hadgone bigger and wider. Clearly the unintended consequence of such a policy is the creation of a “duality in the agriculture sector,which is unsustainable in the long term as resource outflow continues. Underdeveloped food sector signifies a big opportunity lossto the society in terms of food and nutrition security and other social and environmental benefits. The food sector requires majorstructural changes to improve its return to factors of production to encourage growth. This could be achieved through productivityenhancement by increasing R&D and innovation and effective extension for transfer of technology. To improve efficiency, the cost ofinput has to be reduced through the development of local input sector (fertilizer, seeds, breeds, machines, feedstuff for livestock).Most of all, a complete set of institutional supports is imperative to empower farmers through organization (associations andcooperatives), advanced technical know-how, market incentives schemes, and infrastructural and logistical facilities without which,the sector would continue to worse off.
Footnotes
1 FELCRA, Federal Land Consolidation and Rehabilitation Authority.2 RISDA, Rubber Industry Smallholder Development Authority.3MAJUIKAN, Fisheries Marketing Development Board; MAJUTERNAK, National Livestock Development Authority; NTB, National Tobacco Board;FOA, Farmers Organization Authority; FAMA, Federal Agricultural Marketing Authority; IADP, Integrated Agricultural Development Project, andBPM, Agricultural Bank of Malaysia.
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