Chapter 8: Agriculture and Malaysia Economic

INTRODUCTION

• The agricultural sector has contributed to the growth and major contributors to national income & export earning.
• It's become basis of economic growth and main contributor in national economy prior to the 1970 s.
• The agricultural sector  initially derived from the increase in the production of livestock, fisheries and other miscellaneous crops.
• The agricultural industry more valuable cash crops owing to the increase in earnings from major commodities such as palm oil, rubber & food commodities.
• It has enable the sector to retain its workforce & shore up the economic downturn of the 1997 financial crisis.

THE IMPORTANCE OF AGRICULTURE SECTOR

Backbone of the economy

1. At independence , it contributed 39.3% to GDP, generated 58.3% of a total employment and about 50.0% to export earnings.
2. After independence, economy underwent a diversification, so the contribution declined.
3. In 1980, still contributed 22.9% of total GDP, 39.7% to employment & less than 22.9% to export earning.

Agricultural Growth

• In 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.
• However, the agriculture sector grew only at 1.5% per annum.
• Among commodities, from 1995 to 2005, the value of rubber and forestry products has decreased while that of palm oil, livestock and fisheries has increased.
• In 2005, industrial crop production accounted for 60% of the total value in agriculture with the remaining 40% taken by the food sector, with livestock and fisheries accounted for significant increases.

CHALLENGES

• To make Agricultural sector as the 3rd engine of national economic growth (new source)
• New scope includes agro-based industry.
• Development of the sector covers the total aspect of production & supply chain management.

INTERNATIONAL TRADE IN AGRICULTURE

- The agricultural sector contributes significantly to the country in earning foreign exchange through export.

- Malaysian is still a food-deficit country. Food import have continuously far exceeded export.

- Among the major import items included maize, sugar, wheat, rice, soybean, and various food preparation.

- The major food items that have a large balance of trade deficit are livestock feed, cereals (mainly rice), vegetable and dairy products.

- Raw rubber, palm oil and cocoa beans are imported, processed, and then re-exported as final products.

- Balance of trade of agricultural products and commodities 2005 (RM million):

-   The total agricultural sector in export 62,596, in import 36,250, and the balance is 26,346

-   The total of food items in export 10,669, in import 17,733 and in become negative in balance which is -7,065. 

AGRICULTURAL EMPLOYMENT

Ø  Currently the agriculture sector accounts for about 12% of total employment in the country from a high of 42% in the 1980, reflecting the transformation from an agricultural to an industrialized economy.

Ø  The number of people employed in the agriculture sector in 2010 is 1.51 million out of a total force of 11.3 million.

Ø  About 80% of the labour in agriculture is employed in crop production while only 9% are in livestock production and 6% are in fisheries.

Ø  The biggest number of farmers in Malaysia is rice growers (239,000 in 2005).

Ø  The total number of smallholders in 2005 was 414,000.