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Malaysia Urgently Needs Agricultural Revolution – Analysis

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Out-of-the-box solutions necessary, not “Ag 4.0”

Malaysia faces acute shortages of staples like chicken, eggs, beef, mutton, and milk, with prices rising for vegetables including tomatoes, cucumbers, chillies, cabbages, beans, peppers, and various salad leaves due to labor shortages and dramatic increases in fertilizer and transport costs, almost all of it due to government venality and incompetence. 

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The prices of imported processed foods are rising as well, along with many items being subject to shortages. Prices of commodities like wheat and corn are rapidly rising making locally produced foods much more expensive.

A falling ringgit, increasing oil and raw material costs and a massive jump in freight rates are putting further pressure on prices. Inflation is increasing much faster than forecast, with no signs of abatement in the near future. This is beginning to put the cost of food out of the reach of many B40 and even M40 families and pushing up household debt even more, with many lacking the ability to cope.

Adding to this crisis is that 60 percent of Malaysia’s food is imported. In 2020, the country imported RM55.4 billion (US$12.67 billion) of foodstuffs. The country is dependent on imports for 88.8 percent of mutton and 76.4 percent of its beef. Once self-sufficient in poultry, it is now importing chicken to fill the void in the market due to the closure of many poultry farms. 

Yet many institutional issues prevent any increase in production. Most of the primary sector, led by CLCs and other politically connected companies have traditionally focused on the production of commodity crops rather than food. Malaysia has long been a victim of success in palm oil, crowding out food production. 

In addition, some import monopolies like Padiberas Nasional Berhad (Bernas) are selling imported rice at prices local producers can’t complete with, leading to local mill closures and leaving farmers in debt. Providing farmers with subsidies to maintain production is hindering the creation of higher productivity from introducing innovation. Farmers need finance, not subsidies, to take control of their own business destiny.

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The whole system of Approved Permits (AP) for import permission is skewed towards politically-connected companies, keeping prices unnecessarily high and stifling competition. The import of cheap Chinese vegetables is making it impossible for local producers to compete. The traditional land inheritance system leads to uneconomic plots of farming land, which are usually sold off for housing and industry, for quick financial windfalls.

Crisis in rural Malaysia 

The majority of the nation’s farmers are elderly. Rural youth unemployment is much higher than urban, where crime and drug dependency are chronic. Even though the Ministry of Agriculture and Food Industries has launched a number of capacity development programs like the Young AgroPreneur Program and My Future Agro, the image of farming as a vocation for locals is very low. Particularly among Malays, farming is seen as being a failure. Most have been conditioned to aspire to work in the banking or government service. This is in great contrast to neighboring Thailand, where many smallholders are degree holders in agriculture and business, operating their farms as businesses. 

Individual state governments are doing very little to allocate land to those in need for food production. Currently 103,563 hectares of farmland are abandoned, making up 46,382 lots in 2019 that couldn’t be utilized due to ownership issues. This doesn’t include idle or unused land in the hands of government. 

Land tenure and rising rents in farming areas like the Cameron Highlands in the mountains above Kuala Lumpur are major issues. Farmers across the country are being evicted by state land offices to make way for corporations, while vegetable cartels run protection rackets. Politically connected companies are taking over the poultry industry, turning it into a cartel. The use of foreign labor, with millions of undocumented aliens, is a major scandal that appears to be controlled by a highly politically connected government grouping. Labor shortages are now directly threatening food security. 

This desperate situation requires immediate attention to prevent a major catastrophe. However, at the same time this offers Malaysia an opportunity to solve the rural crisis that is also prevalent across the nation. It is time to mobilize rural youth. Both of these domains are in crisis. 

However, no agricultural revolution is going to occur via high-cost smart farming technologies visualized by so-called “Industry 4.0” proponents in government. The skills, know-how and capital of rural youths cannot afford such dreams. The agricultural base is relatively undiversified, with production based on high chemical inputs, which in the current inflation environment is a recipe for  further dramatic food prices. Malaysia is using chemicals that have been banned in other countries for years. 

New agro start-ups need to be promoted, based upon the proper preparation of land, appropriate technologies, the use of alternative techniques to conventional farming, and new business models supplemented with old fashioned agriculture extension as existed during the 1960-70s, making land available to beginning farmers and opening vocational training, that is available to all. Finally, the copycat culture in terms of what is planted must be replaced with diversity and staggered plantings so produce can be supplied to markets all year round. New chemical-free farming practices must be developed to improve the quality and safety of produce. 

This would assist rural youth to create market gardens, mixed boutique farms, small-scale livestock ventures and poultry farms that are viable from both production and financial perspectives. 

This objective needs to be approached through implementing a number of initiatives. Practical agricultural training needs to be made available to rural youth, provided area by area by  teams of practitioners and educators. These travelling schools would be temporarily housed within existing government infrastructure, and even the grounds of some of the larger mosques as community centers. Model farms would be established, with extension services available to all.  

Those in need of drug rehabilitation should be seen as potential start-up farmers and housed on model farms. At these farms the youths would learn farming and necessary business skills, with  produce produced sold to assist in paying back some of the operational costs.

It is important to teach land and soil preparation techniques to avoid flooding, maximize positive water flows, and prevent the growth of soil bacteria and viruses. With petrochemical fertilizers becoming more expensive, traditional  community cooperation is vital for locally based groups to produce their own organic fertilizers. Local cooperatives could also convert used cooking oil into biodiesel for farm use. 

State governments must make available suitable land for these start-ups, with RM12 development available for building irrigation and other publicly shared infrastructure. The other big gap is the absence of funding directly to smallholders. Malaysia must develop some sort of micro-finance network.  

Semi-sustainable agricultural practices must be employed within market garden, fruit, mixed food, livestock and poultry production. Organic and halal farming protocols must be developed to add value to farm produce. 

New business models are necessary. For example, farm produce can be advertised and ordered through social media and other specific apps for direct home deliveries by couriers, cutting middlemen wholesalers. The pasar malam or night market can be tapped into and become de facto farmers’ markets. 

Small scale processing equipment should be developed to further add value to produce, with manual bottling, canning and vacuum packing to produce an array of processed products. Local agricultural concerns such as dairies and butcheries would produce cheese making, specialized meats and canned soups. This is the exact opposite to what the Malaysian Ministry of Agriculture is advocating on the ground with their investment in the Industry 4.0 concepts that cash strapped smallholders won’t benefit in the least from. 

Farmer risk needs to be underwritten by a national produce insurance scheme to assist in protecting smallholders against droughts, natural disasters, and other unforeseen events. 

Traditional sources of raw materials used for the production of local foods may become unavailable or exorbitant in price in the near future, so contingencies with local foods need to be made. National food security must become a high economic priority. Decreasing dependence on imported food needs many changes to the way agriculture is undertaken.  But with a failing government headed by a political class seemingly mostly interested in looting the country,  as seen with the collapse of the poultry industry, as Asia Sentinel reported on January 30. The hope for reform appears remote.

Originally published in the Asia Sentinel 10th May 2022

You can access Murray Hunter’s blog here

Murray Hunter

Murray Hunter has been involved in Asia-Pacific business for the last 30 years as an entrepreneur, consultant, academic, and researcher. As an entrepreneur he was involved in numerous start-ups, developing a lot of patented technology, where one of his enterprises was listed in 1992 as the 5th fastest going company on the BRW/Price Waterhouse Fast100 list in Australia. Murray is now an associate professor at the University Malaysia Perlis, spending a lot of time consulting to Asian governments on community development and village biotechnology, both at the strategic level and “on the ground”. He is also a visiting professor at a number of universities and regular speaker at conferences and workshops in the region. Murray is the author of a number of books, numerous research and conceptual papers in referred journals, and commentator on the issues of entrepreneurship, development, and politics in a number of magazines and online news sites around the world. Murray takes a trans-disciplinary view of issues and events, trying to relate this to the enrichment and empowerment of people in the region.

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