MALAYSIAN AGRICULTURE SUCCESS - MUCH TO BE DESIRED

THE MALAYSIAN AGRICULTURE SUCCESS  much to be desired and according to a new World Bank report titled the 'Agricultural Transformation and Inclusive Growth' as the Malaysian Experience are deems the story of Malaysian agriculture a success in which it implying little room for lot of improvement. However in this narrative is not likely to be taken too seriously by better-informed observers who view various aspects of Malaysian agriculture as leaving much to be desired. Lack of attention to the sector for decades is hardly seen as benign neglect. The sector’s contribution to national output has been growing rather modestly for many years, especially in the 1990s, reflecting slow productivity growth.  For farmers especially those growing rice that are still among the poorest Malaysians and while regional inequalities as well as the urban-rural gap remain troubling. With the current government’s professed interest in turning agriculture around, a more balanced, even critical, report could have provided useful guidance for reform. The report highlights agriculture’s role as a major source of Malaysia’s foreign exchange earnings, long promoted all over the world by the World Bank through its policy advice and conditionalities. In recent decades, agricultural export earnings have largely been from oil palm, accounting for three quarters of cultivated land, making crop diversification to mitigate the risks of monoculture a major challenge. Blog 'Anim Agriculture Technology' rewrite the article from tredemarkets.com as part of the references.

The Malaysian government’s institutional set-up for agriculture and food development falls under two ministries, the Ministry of Agriculture and Food Industry (MAFI - renamed in 2020 from Agro-based Industry) and the Ministry of Primary Industries (MPI) in which are responsible for agriculture. Both has not helped close the gap between tree cash crops and food crops or between large plantations and smallholdings.  Such arrangements have also not been effectively supportive of efforts to improve farmer incomes and for example, farmers need to deal with multiple agencies under different ministries to integrate farming such as by breeding livestock on tree crop farm land. Beyond administrative hassle and such ministerial arrangements imply different and potentially conflicting policies, priorities and objectives. Additionally the Ministry of Rural Development and the Ministry of Economic Affairs (which oversees land settlement, rehabilitation and smallholders under Federal Land Development Authority (FELDA), Felcra Bhd and Rubber Industry Smallholders Development Authority) have their own priorities and agendas, while most states, especially Sabah and Sarawak, have their own agricultural ministers or executive committee members.  With growing concerns over sustainability, food security, nutrition, rural development and native customary rights, the agricultural sector would benefit from more comprehensive and coherent policies, implementation and enforcement.

In the issue of agricultural labour, although progressive agricultural transformation implies adoption of labour-saving technologies, the report avoids discussing the all-too-obvious elephants in the room in which agricultural wage labour and the impact of heavy reliance on undocumented foreign workers. The former human resources minister estimated the number of undocumented foreign labour in Malaysia at around 4.5 million, about double the number of documented workers. Although agriculture’s share of employment has been declining over the years, the sector is said to have employed the biggest share (27% in 2017) of documented foreign labour in Malaysia. Meanwhile, many more undocumented foreign workers are employed in agriculture.  The easy availability of cheap foreign workers who are willing to take 3D (demeaning, dirty and dangerous) jobs not only depresses agricultural wages, it also disincentivises investment in agricultural mechanisation, discourages youthful participation in agriculture and depresses working conditions for the entire labour force in Malaysia.  Nevertheless, ostensibly as a short-term measure to tackle the shortage of agricultural workers, in 2019, the government reduced the extension levy for foreign workers, which is likely to further slow labour productivity growth in the long run.

In the case of agricultural subsidies and their implementation need more careful review and critical examination to support progressive agricultural transformation. Instead, they have often been abused for clientelist political advantage and have inadvertently blocked agrarian progress. While the specific objectives of various agricultural subsidies vary, they should enable farmers to become more productive, earn much more and become progressively less reliant on government subsidies. The very considerable subsidies received by paddy farmers now is due to colonial era policies. On the one hand, the British sought rice self-sufficiency to maximise net foreign exchange earnings from Malaya. On the other hand, to create a yeoman peasantry, Malay reservation land often had cultivation conditions attached, typically to grow only rice. While almost half of the MOA’s total budget over the years an approximately RM1.8 billion in 2019  has gone to various rice subsidies, the industry has not seen major improvements. The subsidies received have disincentivised crop diversification while doing little to raise productivity. It has even encouraged farmers to misrepresent themselves to continue receiving subsidies. A recent Auditor-General’s report reveals that thousands of deceased paddy farmers, including many who had died more than a decade ago, received subsidies of RM57.92 million between 2016 and 2018. The report also pointed to problems of subsidy targeting, provision of poor-quality paddy seedlings and delays in fertiliser distribution.

Malaysia’s food security policy ought to be more broadly reconsidered  to go beyond rice self-sufficiency  to better address the nation’s very avoidable malnutrition problems, including micronutrient deficiencies and diet-related non-communicable diseases. For example, under-nutrition remains high in Malaysia, with stunting among children below five years rising from 17.2% in 2006 to 20.7% in 2016. A comprehensive national nutrition strategy is required while programme initiatives such as universal school feeding should not only address food security and nutrition but also improve children’s socialisation and physical and mental development. Similarly, food procurement policies can promote healthy food agriculture and raise farmers’ incomes.  While the World Bank report lauds the public sector’s involvement in agriculture, little is said about needed reforms, the need for greater or more transparency and accountability. Scandals involving FELDA, National Farmers Association and NFC (National Feedlot Corporation) to name a few, have not only cost billions of public funds but also undermined public confidence in government, politics and public policy. The writer Ashraf Shaharudin is a research associate at Khazanah Research Institute. As a comment from Dr Jomo Kwame Sundaram known as  a former economics professor and United Nations assistant secretary-general for economic development, is the recipient of the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought and a member of the Economic Action Council. Thanks....

HAPPY NEW YEAR 2021...

By,

M Anim, 

Putrajaya,

Malaysia.

(August 2020).