Sunday, January 02, 2011

National Key Economic Areas (AGRICULTURE-Including Herbs)

Where we are today

The agriculture sector plays an important role in Malaysia’s economic development—providing rural employment, uplifting rural incomes and ensuring national food security. Excluding industrial crops such as palm oil and rubber, the agriculture sector contributed RM20 billion or 4 percent of Malaysia’s GNI in 2009. Traditionally labelled as the poor man’s sector, the face of agriculture is slowly changing as entrepreneurs in diverse businesses like swiftlet nest ranching and large-scale paddy (rice) farmers are able to move up to Malaysia’s high-income group.

Vision for the future

By 2020 agriculture will be transformed into agribusiness, moving towards a model that is inclusive but simultaneously anchored on market needs, economies of scale and value chain integration. Malaysia will focus on large global markets with high growth potential such as aquaculture and premium processed foods, while maintaining a strong presence in strategic sub-sectors such as paddy and livestock to ensure national food security. To do so, we will need to capitalise on natural resources while enhancing productivity and adopting a truly demand driven approach.

Targets and aspirations

The Agriculture NKEA is targeted to raise total GNI contribution by RM20 billion to reach RM49 billion by 2020. The NKEA will create an additional 75,000 jobs, mostly in rural areas, where we target to increase the incomes of farmers participating in our initiatives by two to four times.

The NKEA plans to bridge this gap through 16 EPPs that catalyse the establishment of market-driven, industrial scale and integrated agriculture-related businesses along four themes.

1Capitalising on Malaysia’s competitive advantage: We aim to unlock value from Malaysia’s biodiversity, including developing our diverse natural herbs into premium herbal products, commercialising our unique native seaweed varieties, expanding swiftlet nest production, farming through integrated cage aquaculture systems and rearing cattle in oil palm estates.

2Tapping premium markets: We will focus efforts on expanding production of premium grade fruit and vegetables and certified shrimps for export as well as developing premium processed foods and introducing a fragrant rice variety for non-irrigated areas.

3Ensuring food security objectives are consistent with increasing GNI: The Government will ensure that food security objectives are met. As the population continues to grow, these EPPs will scale up and strengthen productivity of paddy farming and cattle ranching as well as establish local dairy clusters with the help of foreign players to help meet increasing demand.

4Expanding participation in the regional value chain: We aim to expand our participation in the region by acquiring foreign firms, undertaking contract farming activities overseas and providing regional services in niche areas such as molecular marker discovery and validation for breeding.

Enabling growth

Achieving our aspirations will require cumulative funding of RM22 billion over the next 10 years with 62 percent coming from the private sector. Of the total public funding for capital, half will go towards upgrading irrigation in granary areas and the rest to develop critical infrastructure such as water intakes, roads and jetties.

In addition, five key enablers are required to support the implementation of the EPPs and business opportunities ranging from providing incentives for anchor companies (to transform from small-scale production-centric activities to a large-scale, market-centric approach) to strengthening adoption of good agricultural practices, making regulatory changes, strengthening logistics and ensuring a sufficient pipeline of human capital

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