Friday, December 2, 2022


in Malaysia remain an importart sector to boost economy and food supply.  A self-sufficient rural economy requires state planning and intervention measures that go beyond the formulation of national strategic blueprints such as the Malaysia Plans. When the National Economic Policy was introduced in 1970, the agriculture sector accounted for about 30 per cent or one-third of the country's gross domestic product, but it declined to 10.5 per cent in 2000. Agriculture contributed 7.4 per cent to GDP in 2020, said the Department of Statistics. The agro-food sub-sectors' contribution was at 48.2 per cent, or RM52 billion in 2020. Of the estimated 5.3 million hectares of agricultural land in 2020, 900,000 hectares (16.75 per cent) are devoted to the agro-food sub-sectors. The rest about 4.2 million hectares (80.7 per cent) of agriculture area is devoted to important primary commodities such as oil palm (Elaeis guineensis) and rubber (Hevea braziliensis). The rise in inflation has highlighted the nation's exposure to price shocks as we depend heavily on food imports. Inflationary pressures have impacted farmers as they are hit by rising factor such as feed costs, prolonged labour shortages, and continuing price ceilings or controls. All these eat into their thin profit margins for the operator.

For example, a padi farmer under the Muda Agricultural Development Authority (Mada) in Kedah in which contributes between 40 and 45 per cent to the nation's padi output, now has to pay RM78 for fertilizer in which used to cost RM50 before. Then the pesticide used to cost RM48 previously but is now selling for RM90. In 2016, the average or mean income of padi planters under MADA reported was RM2,527 per month.  Most padi farmers are also in debt to government and private entities. It was reported that 300,000 padi planters were now drowning in debt in which the problem becomes inter-generational and, by extension as structural. The trend is similar for other food crop and orchaard farmers and it will be for vegetable or poultry sector. In short, the global cost-push and supply-side inflation have worsened structural woes faced by agro-food farmers, the unsung heroes of the nation. Efforts to improve the situation can be made through the expansion of contract farming are directly between farmers and local poultry manufacturers or retailer. of which some Pertubuhan Peladang Kawasan such as PPK Kuala Langat is an eminent example. The contract farming has also been used in the broiler chicken industry since the 1980s. The integrators (multinational companies in food manufacturing) provide basic inputs like day-old chicks and feed to farmers. In turn, the farmers agree to sell back fully grown broilers to the integrator at mutually agreed prices. Contract farming would improve the efficiency of the supply chain and increase farmers' income and profit. It's superior to government subsidies. This form of Supply Chain Management (SCM) allows farmers to be connected to the global value chain via MNCs and other private sector players. A more integrated SCM will ensure competition among supply-chains, whether anchored by the public sector through the Federal Agricultural Marketing Authority, or private sector via cartels, monopolies and oligopolies, where digitalisation will ensure an edge. Empowering farmers with contract farming will ensure a sustainable and self-sufficient rural economy. Thanks. Source of info: NST.
M Anim,
Jun 2022.

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