The Malaysian agricultural sector has come a long way since Malaysia achieved its independence fifty years ago. The sector which kicked off as the major earner for the country’s coffer in the 1950’s has been reduced to one of many sectors in the country’s economic statistics. At the turn of the 21st century, agriculture accounted for less than one-tenth of the country’s Gross Domestic Product and export earnings. The industrial sectors such as services, electrical and electronics and construction, have become the country’s engines of growth. This trend is applauded by development economist as a testament to the role of the agriculture sectors as the catalyst to industrialization in the early stage of development. Before the financial crisis in 1997, Malaysia was destined to be one of the newly industrialized economies in the Asian region with potentials to be a developed economy. The pace of rapid growth suffered a temporary setback after the crisis, but the country was able to recover and continue with developmental programmes towards a fully developed nation by the second decade of the century.
The history of Malaysian agriculture was charted by the colonial masters since the nineteenth century which was responsible in shaping the Industry in the years that followed. The development path for the Malaysian agriculture sector has been painted with various mixes of strategies driven by goals which shifted according to the demands of time. Its history is unique and rich with experiences, both failures and success. A chronological review of the sector’s development indicates an evolution of policies and strategies that were bold and creative which brought the Malaysian agriculture to what it is today.
The purposive outright neglect of the rural and agricultural sector has resulted in a lopsided development favouring the urban population, industrial sectors, non-indigenous population and the plantation sub-sector of the agricultural sector. The poor sectors of the economy are mainly rural, agricultural and effecting most of the indigenous locals i.e., The Malays, KDM and etc. The inequitable growth and distribution in particular the high incidence of poverty in the rural areas have been the major force in shaping the economic and agricultural policies thereafter. The premise of “growth with equity” began and continued to remain as the axis of Malaysian economic and agricultural policies in the years to come.
The agricultural sector has since transformed itself from largely a mere subsistence activity to highly commercialized and market oriented venture . The palm oil industry is a clear case of success for Malaysia as the country holds the largest share of oil export in the world. The prospect of biodiesel production from this crop holds many promises of higher value added to the industry. The rapid growth of some selected food sectors such as aquaculture, high value vegetables and flowers and fruits have contributed significantly to the country’s export earnings. The agriculture sector is industrializing to ensure competitiveness in the export market where efficiency rules. The success of these selected subsectors is a function of the right mix of policies and strategies under the right environment and time.
There are, however, spots or sub-sectors where Malaysia fails miserably. For Instance, Malaysia’ paddy and rice sector is not yet ready to compete in an open market and Malaysia depends heavily on imports for its supply of beefs, milk and dairy products. The serious setbacks of the Malaysian agriculture currently are; its heavy dependence on imported feedstuff for its livestock (including poultry) industry and imported seedling for its horticulture produce. In other words, Malaysia depends on imported inputs to produce its output which, under the current economic environment (particularly trade liberalization), may prove unsustainable. Simply, Malaysia does not have comparative advantage in these sectors. The rapid industrialization stiffens the competition for resources and factors of production with the industrial sectors. It is obvious that agriculture loses out as the return to other sectors are much more lucrative. The tecnhnological advances in production, mechanization, have not been much despite the heavy investment in R&D. As a result, productivity levels for some selected agricultural produce are much below those achieved in neighbouring countries of equal standing. These are some of the challenges facing the country in steering its agriculture sector towards industrialization.
The agriculture sector in Malaysia, like in most developing nations, plays an important role in the country’s economic development, functioning as a food supplier, employment provider, export earner and provider of raw material for the agro-based industries. The development path for this sector has been painted with various mixes of strategies driven by goals which shifted according to demands of time. It was after independence that the agriculture sector began to function in full force as a result of the comprehensive policy to develop the full potential of the sector.
Despite the injection of investment into the infrastructure, agrarian reform, institutional support, numerous incentives and subsidies, varying degrees and forms of market interventions, the share of agriculture in the country’s economy in 2005 had declined relatively to 8.2% and its share of employment and export earnings reduced to 12.9% and 2.4% respectively (Government of Malaysia, 2006). However, poverty incidence has been reduced significantly from 49.3% in 1970 to 5.7% in 2004 (Government of Malaysia, 1971 and 2006).
Source:
Arshad, F.M., et.al (ed). (2007). 50 Years of Malaysian Agriculture. UPM. Kuala Lumpur
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