Driving INTRODUCTION

TENTH MALAYSIA PLAN, 2011-2015: PROGRESS

Modernisation Agro-food Value Added

Food Trade Balance
Employment and Productivity Per Worker

in Agro-food Income of Farmers

Agricultural Land Use
Self-Sufficiency Level
Investments and Financing
ISSUES AND CHALLENGES
Low Productivity
High Post-Harvest Loss
Non-optimal Land Use
Unorganised Marketing and Dependence on
Middlemen
Ineffective Institutional Support
Uncompetitive Workforce
Ineffective Knowledge Transfer and Lack of
Priority Research
Unfavourable Terms of Financing
Ineffective Broad-based and Input Driven
Assistance
ELEVENTH MALAYSIA PLAN, 2016-2020:
WAY FORWARD
Macro Strategies
Industry-Specific Strategies
CONCLUSION

Strategy Paper
For further information refer to:

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Economic Planning Unit
Prime Minister’s Department
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62502 Putrajaya
MALAYSIA

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 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-1

I. INTRODUCTION
20.1 Food security, income of farmers and sustainability will continue to be the objectives
of agro-food subsector development, in line with the National Agrofood Policy (NAP), 2011-
2020. The policy aims to meet the growing demand for nutritional and affordable food as
well as to ensure consistent supply of raw materials for resource-based industries. Amidst
this, the farming community faces greater challenges with escalating food production cost
and the need to push for higher productivity gains. Lower private investments as compared
to other economic sectors and dwindling interest among the younger work force in
agriculture has further exacerbated the situation. In addressing these challenges, the sector
needs to shift its focus from the traditional factors of production to the use of modern
technologies, market-driven innovation and knowledge as growth drivers.

20.2 Moving forward, in addition to ensuring food security and safety, the agro-food
subsector will be modernised to provide employment opportunities, generate higher
income and ensure sustainable development. Emphasis will be given to improve
productivity, strengthen the food supply chain, improve the support system and services,
increase knowledgeable and skills of farmers as well as ensure market compliance. The
agro-food industry will gradually progress from being associated with low income and
unskilled jobs to higher income and professions of choice.

II. TENTH MALAYSIA PLAN, 2011-2015: PROGRESS

20.3 During the Tenth Malaysia Plan period, the agriculture sector achieved an overall
improved performance in production, value added and the self-sufficiency level (SSL). Better
agronomic practices, quality inputs, modern farming technologies, improved infrastructure
and skills training programmes were the main contributors to productivity gains. However,
the sector continues to depend on foreign workers for unskilled and semi-skilled jobs.

Agro-food Value Added

20.4 The agriculture sector recorded an average growth of 2.4% in the Plan period as
shown in Exhibit 20-1. The sector remained as an important supplier of raw materials to
resource-based industries, and is estimated to contribute 19.6% of the total manufacturing
value added in 2015. The agro-food subsector is estimated to contribute 38.8% to total
agriculture value added, while the industrial commodities subsector is estimated to
contribute 60.5%. The average annual growth rate of the agro-food subsector is estimated
to reach 3.4%. Among the industries that recorded the strongest average annual growth
rate were vegetables at 9.7%, fruits at 9%, and livestock at 8.1%. These achievements are in
tandem with the NAP target to increase contributions of the agro-food subsector to the
agriculture value added.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-2

Exhibit 20-1
Value Added of Agriculture and Agro-Based Industry, 2010-2020
Average Annual
RM Million Growth Rate (%)
% of Total GDP
Sector (in 2010 prices) Tenth Eleventh
Plan Plan
2010 2015 2020 2010 2015 2020 Achieved Target
Agriculture 82,881 93,184 110,707 100 100 100 2.4 3.5
Industrial Commodities 55,646 56,407 63,096 67.1 60.5 57.0 0.3 2.3
Rubber 8,823 5,658 8,154 10.6 6.1 7.4 -8.5 7.6
Oil Palm 37,467 42,532 48,925 45.2 45.6 44.2 2.6 2.8
Forestry
and Logging 8,493 7,144 4,349 10.2 7.7 3.9 -3.4 -9.5
Cocoa 104 28 63 0.1 0.0 0.1 -23.2 17.7
Pepper 759 1,044 1,605 0.9 1.1 1.4 6.6 9.0
Agro-food 26,595 36,200 46,979 32.1 38.8 42.4 6.4 5.4
Paddy 1,550 1,956 2,495 1.9 2.1 2.3 4.8 5.0
Fruits 2,670 4,117 5,208 3.2 4.4 4.7 9.0 4.8
Vegetables 4,963 7,871 11,505 6.0 8.4 10.4 9.7 7.9
Fisheries 9,036 10,218 12,962 10.9 11.0 11.7 2.5 4.9
Livestock 6,962 10,272 12,773 8.4 11.0 11.5 8.1 4.5
Others 1,414 1,766 2,036 1.7 1.9 1.8 4.5 2.9
Contribution of
Agriculture to GDP (%) … … … 10.1 8.8 7.8
Agro-based Industry 39,042 47,688 57,047 100 100 100 4.1 3.7
Vegetable and Animal Oil
& Fats 7,009 8,915 11,422 18.0 18.7 20.0 3.7 3.7
Other Food Processing,
Beverages & Tobacco 17,171 21,039 25,171 44.0 44.1 44.1 8.9 8.3
Wood Products including
Furniture 7,115 7,867 8,614 18.2 16.5 15.1 3.3 3.0
Paper & Paper Products 2,644 3,140 3,878 6.8 6.6 6.8 1.3 1.3
Rubber Processing &
Products 5,103 6,727 7,961 13.1 14.1 14.0 2.8 2.7
Total Agriculture and
Agro-based Industry 121,923 140,872 167,754
Contribution of Total
Agriculture and
Agro-based Industry to
GDP (%) 14.8 13.3 11.9
Contribution of Total
Agro-based Industry to
Manufacturing Value
Added (%) 20.3 19.6 18.3
Source: Department of Statistics Malaysia and Economic Planning Unit
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-3

Food Trade Balance

20.5 The export of food increased at an average annual growth rate of 9% from RM20.5
billion in 2011 to RM25.6 billion in 2014 as shown in Exhibit 20-2. However, food imports
also grew at an average rate of 9% per annum from RM34.5 billion to RM42.6 billion. The
main contributors to food exports were coffee, cocoa, tea, spices and manufactures at
26.4%, miscellaneous edible products and preparations at 25.8%, fish, crustaceans, molluscs
and preparations at 10.9%, and cereals and cereal preparations at 9.4%. Food trade balance
showed an increasing deficit at an average rate of 8.9% from 2011-2014. The main
contributors to the deficit were animals feed at 34.4%, followed by sugars, sugar
preparation and honey at 17.1%, meat and meat preparation at 14.7% and vegetables at
13.8%.

Exhibit 20-2
Food Trade Balance, 2010-2013 (RM million)

Source: Ministry of Agriculture & Agro-based Industry

Employment and Productivity Per Worker

20.6 Total employment in agriculture registered an upward trend with an average annual
growth rate of 0.1%. The average annual growth of productivity per worker in the agro-food
was at RM57,539 in 2014, an increase of 2.7% from RM51,672 in 2010. The increase in
productivity was attributed to continuous skills training, better planting materials, adoption
of modern technologies and improved farming techniques. In 2013, the agro-food subsector
employed 35.2% of total agricultural workforce and the productivity per worker was at
RM57,054.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-4

Income of Farmers

20.7 The average monthly gross income received by farmers varied based on the type of
agro-food activities, scale and price as shown in Exhibit 20-3. In the food crop activities,
income ranged from RM1,200 to RM2,700 per month in 2013. Paddy farmers with an
average land holding size of 2 hectares received an average of RM1,550 per month in
granary areas as compared to RM835 in non-granary areas. The differences in income were
mainly attributed to planting intensity and availability of drainage and irrigation
infrastructure which affected level of productivity. Income of vegetable farmers was higher
as compared to fruit farmers due to shorter crop cycles in vegetable farming with year
round production. In the fisheries activities, commercial fishermen obtained higher income
with the use of advanced technologies and bigger vessels as compared to traditional
fishermen who are confined to fishing activities in the coastal areas. In the ruminant
livestock activities, farmers of dairy cattle rearing received the highest income. However,
income received by dairy farmers varied with the level of productivity in milk yield and
number of lactating animals.

Exhibit 20-3
Average Monthly Gross Income of Farmers, 2013
Agro-food Activities RM
Food Crops
Paddy (Granaries & Non-granaries) 835 - 1,550
Vegetables 2,756
Fruits 1,232
Fisheries
Captured Fisheries
Fisheries (Traditional: Zone A) 2,320
Fisheries (Commercial:Zone B,C & C2) 4,420 - 9,500
Aquaculture Fisheries
Freshwater System 1,000 - 3,000
Marine Culture System 1,000 - 8,000
Ornamental Fish 5,000 - 10,000
Ruminant Livestock
Beef Cattle* 800 - 9,000
Dairy Cattle* 2,790 - 32,450
Buffalo* 900 - 10,000
Goats/Sheep** 1,250 - 12,000
Note: * 20-200 heads
** 50-500 heads
Source: Ministry of Agriculture & Agro-based Industry
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-5

Agricultural Land Use

20.8 Total agricultural land is expected to increase by 1.9% in the Tenth Plan period as
shown in Exhibit 20-4. This is largely due to the expansion of oil palm and rubber
plantations. Land use for agro-food activities is at 781,845 hectares in 2014 which comprises
10.7% of the total agricultural land. Paddy areas and fruit farms made up more than 70% of
the total land use for agro-food. Farm land for agro-food is estimated to increase by 1.2%
contributed mainly by an increase in vegetables and fisheries particularly in aquaculture.
However, paddy areas are estimated to decrease by 1.4% in 2020.

Exhibit 20-4
Agricultural Land Use, 2010-2020
'000 Hectare Average Annual Growth Rate (%)
Commodities 10MP
2010 2015 2020 11MP¹
Target¹ Achieved
Industrial Commodities
Rubber 1,020.4 1,087.6 1,197.6 2.2 1.3 1.9
Oil Palm 4,853.8 5,480.0 5,672.0 1.9 2.5 0.7
Cocoa 20.1 18.2 23.4 8.4 1.4 5.2
Pepper 14.2 16.3 18.3 4.0 2.8 2.3
Subtotal Industrial Commodities 5,908.5 6,602.1 6,911.3 2.0 2.2 0.9
Agro-food
Paddy 444.3 394.2 368.2 -2.4 -2.4 -1.4
Vegetables 39.3 38.4 45.7 2.4 -0.4 3.5
Fruits 239.4 203.1 206.9 -0.5 -3.2 0.4
Coconut 105.7 85.8 77.6 -3.4 -4.1 -2.0
2
Fisheries 33.8 46.8 116.6 4.0 6.8 20.0
3
Others 7.1 9.6 10.2 5.2 6.4 1.1
Subtotal Agro-food 869.6 777.9 825.2 -1.4 -2.2 1.2
Total Land Use 6,778.1 7,380.0 7,736.5 1.4 1.9 0.7
1
Note: Targets in National Agrofood Policy and National Commodities Policy, 2011-2020
2
Fisheries include aquaculture, ornamental fish and seaweed
3
Others include herbs and spices and floriculture
Source: Ministry of Agriculture & Agro-based Industry and Ministry of Plantation Industries & Commodities

Self-Sufficiency Level

20.9 The SSL of the majority of agro-food commodities recorded positive increments
supported by programmes to increase food production under the food security initiatives in
the Tenth Plan period as shown in Exhibit 20-5. SSL for all commodities increased during this
period except for pork. The increase in SSL was mainly contributed by increased productivity
with the use of quality seeds, breeds and fries, wider adoption of technologies among
farmers, establishment of new large-scale food production areas, improved extension
services and better agronomic practices. The SSL for pork decreased with the closure of
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-6

unregulated pig farming areas and policies to relocate the farms to designated pig farming
areas.

Exhibit 20-5
Self-Sufficiency Level of Food Commodities, 2010-2020 (%)
2010 2015 2020¹
Crops
Rice 63.1 71.4 100
1
Fruits 103.3 101.6 106.5
Vegetables² 89.8 91.8 95.1
Livestock
Beef 30.1 27.2 50
Mutton 12.2 17.3 24.6
Poultry 105.6 104.6 103.7
Pork 94.7 88.7 83.1
Eggs 114.6 122.1 130
Milk 8.5 13 13.6
3
Fish 93.9 92.6 95.8
1
Note: Excludes temperate fruits
2
Excludes temperate vegetables
3
Includes seaweed
SSL = Production / (Production+Import±Stock-Export) x 100
Source: Ministry of Agriculture & Agro-based Industry

Investments and Financing

20.10 Approved investments in agro-food for the period 2011-2014 recorded a total of 242
projects worth RM1.7 billion. These investments comprised 89% from domestic direct
investment and 11% from foreign direct investment. As at end of December 2014, total
loans from financial institutions to primary agriculture involving upstream activities
recorded RM39.2 billion and to agro-based industries, RM28.5 billion. The overall
agriculture and agro-based financing from Agrobank, established to support the
development of the agriculture sector, accounted for 10.1% as at end December 2014.

III. ISSUES AND CHALLENGES

20.11 The agro-food subsector faces several issues and challenges to meet the rising
demand for affordable, healthy and safe food. The main issues are low productivity, high
post-harvest loss, non-optimal land use, unorganised marketing, ineffective institutional
support as well as inadequate and low skilled workers. Furthermore, ineffective knowledge
transfer and lack of focus on priority research areas, unfavourable terms of financing and
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-7

ineffective broad-based incentive have affected the potential growth of agro-food

subsector. In addition, the industry also faces challenges such as climate change,
competition from low cost producing countries and stricter market requirements from
importing countries.

Low Productivity

20.12 Increasing demands for food as well as scarcity of suitable agricultural land and
resources underpin the need for higher productivity. A major concern for productivity is the
inherent gap between actual and potential yields. The issues, among others, are supply of
quality seeds, breeds and fries, compliance to standards, use of technologies, adequacy of
infrastructure as well as biosecurity measures.

20.13 Supply of Quality Seeds, Breeds and Fries. Inadequate local supply, use of
uncertified seeds, high cost and dependency on imported quality seeds, breeds and fries
have hampered the growth of the agro-food subsector. The use of uncertified seeds, except
for paddy, has undermined the level of productivity as currently, the seed industry is not
regulated. The certification of seeds is undertaken on a voluntary basis through special
certification schemes by the Department of Agriculture (DOA). In the ruminant industry,
most breeder animals are imported from Australia and New Zealand. Increasing demand
from other importing countries and limited supply of quality breeder animals have resulted
in higher import costs. In addition, the imported breeder animals are prone to diseases and
do not adapt well to the local environment, contributing to low productivity. Ruminant
production for beef, mutton and milk is a challenge given the availability of limited land and
grazing areas for cattle and goat rearing as well as high feeding costs. In the aquaculture
industry, inconsistent supply and the availability of cheaper fries have led local farmers to
source from other countries. Most of the imported fries are uncertified and inconsistent in
terms of quality.

20.14 Compliance to Standards. The lack of awareness among farmers and buyers and low
premium prices have led to the low rate of compliance to the Malaysian Good Agricultural
Practices (MyGAP), which emphasises good agronomic and sustainable practices. The high
initial capital investment required to attain compliance coupled with low domestic demands
for quality produce remain major deterrents. In 2014, 3,585 farms or 4.6% of the total
77,191 farms complied to MyGAP. The certified farms comprised of livestock at 59%, food
crops, 38% and aquaculture, 3%.

20.15 Use of Technologies. The rate of adoption of new technologies is not prevalent
except in the poultry industry. Among the main contributing factors include accessibility and
adoption of cost effective farming technologies due to farm size, location and geographical
constraints; dependency on foreign labour and lack of dedicated funds for farmers to adapt
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-8

and upscale on developed technologies. In addition, the multi-step process of technology

transfer from research and development (R&D) agencies, such as the Malaysian Agricultural
Research and Development Institute (MARDI), through other agricultural agencies to
farmers has caused delays in technology adoption.

20.16 Agricultural Infrastructure. Inadequate, dilapidated and poorly maintained

agricultural infrastructure have affected production efficiency. In paddy planting areas,
insufficient drainage and irrigation infrastructure have resulted in low canal density, which
affected supply of water to paddy parcels. Currently, only four out of the eight granary areas
achieved 30 metres per hectare of canal density as compared to the optimum density of 50
metres per hectare, which has led to low paddy yield. In fruit and vegetable farming, poor
maintenance and inadequate farm roads also affected accessibility of machineries, timely
delivery of inputs to farms and transportation of farm produce to markets. In the fishery
industry, poor conditions and maintenance of jetties as well as inadequate facilities, such as
cold rooms and ice block production at the jetties, have affected fish landings.

20.17 Biosecurity Measures. Outbreak of diseases due to a lack of biosecurity measures,

including poor pest and disease management as well as absence of early detection and
warning systems, have affected the agro-food subsector. In the fruit industry, the papaya
dieback disease has led to a significant drop in production from 45,990 metric tonnes in
2008 to 35,630 metric tonnes in 2012. In addition, the Early Mortality Syndrome among
white shrimps in the aquaculture industry, caused by uncertified fries brought in illegally by
unregistered farms, has affected shrimp production.

High Post-Harvest Loss

20.18 High post-harvest loss is prevalent especially in the paddy, fruits and vegetables
industries. In 2013, the average post-harvest loss along the supply chain in agro-food was at
30%. The high losses were mainly due to lack of good agricultural practices, inefficient
harvesting machineries and technologies, poor storage facilities and logistics as well as lack
of knowledge on post-harvest handling. Post-harvest loss has affected production, quality of
produce, income of farmers and optimal use of resources.

Non-optimal Land Use

20.19 Limited arable land for food production has been one of the major constraining
factors in achieving targets of food security initiatives. Despite this, it is estimated that a
total of 120,000 hectares of agricultural land, including government-owned land, remains
undeveloped. In addition, challenges faced in utilising idle land include difficulty in
identifying land owners as well as scattered and uneconomic land size holdings.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-9

Unorganised Marketing and Dependence on Middlemen

20.20 Marketing of agro-food has been a persistent issue among small farmers who are
mainly unorganised and lack knowledge on market driven practices as compared to
commercial farmers. As a consequence, small farmers mainly rely on middlemen in the
marketing of their produce.

20.21 Marketing and Distribution System. Production of agro-food are often uncoordinated
with market demand resulting in mismatch and inability to absorb excess from bumper
harvests. The non-conformity of produce to market requirements have also restricted
access to markets. In addition, exporters of agricultural products have to bear additional
cost due to poor air network, long cargo clearance time, insufficient cold room facilities and
high transportation charges. The inefficient supply chain also affects the marketability of
perishable products leading to lower farm gate prices.

20.22 Multiple Tiers of Middlemen. Middlemen play a significant role in the marketing of
agro-food produce as farmers lack financial capability and know-how in marketing. The
existence of multiple tiers of middlemen in the supply chain has also contributed to low
farm gate and high consumer prices. On the average, fruit and vegetable farmers in
Malaysia received between 41% and 45% of the retail price as compared to 65% in South
Korea.

Ineffective Institutional Support

20.23 Lack of comprehensive institutional support by agricultural cooperatives and

extension agencies in providing agricultural related services has affected the productivity
and agility of the industry to respond to current market requirements. The role of the
agricultural cooperatives is largely confined to selected activities within the supply chain,
thus limiting income-generating opportunities. In addition, extension agencies need to
address issues related to quality of extension services.

20.24 Extension Services. Small and dispersed production areas, lack of expertise and
know-how on latest farming technology among extension officers have limited the
effectiveness of their services, particularly the rate of technological transfer to farmers. In
addition, emerging issues in climate change, pests and diseases as well as higher operational
cost have posed more challenges to effective service delivery. A low ratio of extension
officers to farmers as well as low adherence of the agencies to the MS ISO 9001:2008
Quality Management Systems on Agriculture Extension Service and Training have also
affected the quality of advisory services.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-10

20.25 Role of Agricultural Cooperatives and Associations. Agricultural cooperatives and

associations were established to enable farmers to maximise economic benefits by pooling
resources in procurement of inputs, facilitating marketing and distribution as well as
providing technical advice, machinery and financing. However, most cooperatives and
associations are poorly managed, have limited capital and lack business expertise. Hence,
the involvement of such cooperatives and associations is limited to upstream activities such
as distribution of inputs and sale of produce.

Uncompetitive Workforce

20.26 Agricultural workforce comprised 1.6 million workers or 11.6% of the total workforce
in 2014. However, the sector is in need of skilled workers to boost productivity and
modernise the sector. Currently, 98.3% of the workforce comprises semi-skilled and
unskilled workers due to lack of demand for qualified and trained workers as a result of the
low level of mechanisation and adoption of technology, small scale ventures and easy access
to cheap foreign labour. In addition, lack of awareness and negative perception on the
opportunities in agriculture, unconducive working environment, limited career
advancement opportunities as well as low wages have caused locals, particularly the youth,
to shun away from the sector. This further aggravates the issue of aging farmers in the
sector. In 2013, 29.3% of the agricultural workforce was above 50 years old as compared to
27.3% in 2005.

Ineffective Knowledge Transfer and Lack of Priority Research

20.27 The lengthy transfer process of research findings, by research agencies such as
MARDI via agricultural departments, coupled with extension officers who lack knowledge on
new technology and farm techniques, have contributed to the ineffectiveness of knowledge
transfer to farmers. R&D in agriculture, which is largely undertaken by public agencies and
universities, have low take up rates due to lack of market demand and insufficient
promotion. Focus on priority research areas, particularly on pests and diseases, quality
seeds, breeds and fries as well as animal feed, are needed to address disease outbreaks and
high dependency on imported seeds and feeds.

Unfavourable Terms of Financing

20.28 Financial support for agricultural ventures is crucial, as they require high initial
investments. Financial institutions offer limited products and unfavourable terms for
agribusinesses. Conventional financing, consisting of term financing and collaterals, is
unsuitable, particularly in cases where income from farming is dependent on seasonal
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-11

harvesting. In addition, operators in the agro-food subsector face difficulties in acquiring

loans due to uncertainty in income and higher risks as compared to industrial commodities.

Ineffective Broad-based and Input Driven Assistance

20.29 Currently, most agricultural assistance provided is broad-based and input driven.
Subsidies for paddy cultivation including certified paddy seeds, fertilisers, herbicides and
pesticides are provided annually based on hectarage, which amounted to RM2.2 billion in
2014. This form of assistance is ineffective as the same amount of inputs is provided
irrespective of soil conditions, pests and diseases. In the fisheries sector, for instance, RM1.1
billion was allocated for fuel subsidy as compared to RM91.2 million as incentives for fish
landing in 2014. Despite the huge allocation for fuel subsidy, fish landing only increased
marginally at an average of 2.9% per annum from 2011 to 2014.

IV. ELEVENTH MALAYSIA PLAN, 2016-2020: WAY FORWARD

20.30 In the Eleventh Malaysia Plan, the agriculture sector is expected to grow at 3.5% per
annum, contributing 8.2% to total GDP. The agro-food subsector is expected to grow at 5.4%
per annum with livestock, aquaculture and vegetable as the main contributors, while
demand for food is expected to reach 14.8 million metric tonnes in 2020. The share of agro-
food to agriculture value-added is projected to reach 42.2% and industrial commodity at
57%. The agro-based industry is expected to contribute 18.3% of total manufacturing value
added by 2020.

20.31 During the Plan period, the agro-food subsector will be transformed into a high
income and sustainable industry through innovative R&D and modernisation initiatives.
Emphasis will be given in ensuring food security and safety, increasing income of farmers
and boosting productivity, particularly food commodities with low SSL. The targeted
industries in the Plan period are paddy and rice, fruits and vegetables, ruminant and
fisheries. Eleven factors have been identified as the focus areas in driving modernisation in
the agro-food subsector as shown in Exhibit 20-6. Common issues faced by the agro-food
subsector are addressed under macro strategies, while specific issues, under industry-
specific strategies.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-12

Exhibit 20-6
Strategy Canvas for Agro-food Subsector

Macro Strategies

20.32 The macro strategies identified across the agro-food subsector will address common
issues that hinder development and improvement in the productivity of the industry. In
addition, these strategies will focus on improving the income of farmers, fishermen and
livestock rearers, particularly the bottom 40% of the income group and drive modernisation
in the agro-food subsector. These strategies are as follows:
 Improving productivity and income of farmers, fishermen and rearers;
 Building capacity of agricultural cooperatives and associations along the supply
chain;
 Promoting training and youth agropreneur development;
 Strengthening institutional support and extension services;
 Improving market access and logistics support; and
 Scaling up access to agricultural financing.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-13

Improving Productivity and Income of Farmers, Fishermen and Rearers

Accelerating Adoption of Modern Farming Technology and Information and

Communication Technology

20.33 The use of modern technology and information and communication technology (ICT)
in farm management will be intensified to improve efficiency and reduce labour
dependency. ICT-based applications such as wireless sensor networks, smartphone
applications for mobile farm management solutions and precision farming will be further
deployed. Various media such as mobile phones and websites will be used to disseminate
market information on prices, demand and supply of produce between agencies, extension
officers and farmers. In addition, the Agriculture Flagship (AgF), which is an integrated
platform for effective delivery of information among stakeholders along the agro-food
supply chain will be operationalised during the Plan period. This system will facilitate
effective planning and decision-making.

Preserving and Optimising Agricultural Land

20.34 State governments will be encouraged to gazette granary areas and permanent food
production parks to ensure that designated agricultural land alienated by state governments
are used for agriculture. In addition, incentives in the form of adequate infrastructure
including farm roads and grants will be provided to retain existing agricultural land and
encourage state governments to allocate more land for food production. Undeveloped land
belonging to the Federal Government will be leased for short cycle food crops or high value
farming activities, pending plans for development.

Intensifying Research & Development and Commercialisation in Priority Areas

20.35 Research & Development and Commercialisation (R&D&C) in the development of

quality seeds, breeds, fries and animal feed, integrated pest and disease management as
well as product improvement and presentation will be given focus as priority research areas.
A research management agency will collaborate with MARDI to spearhead collaborative
efforts among public research institutes, universities and private research centres to ensure
research is participatory and market driven as well as to promote the uptake of solutions
among industry and farmers. In addition, MARDI will be involved directly with extension
officers in the dissemination of knowledge and training of farmers to ensure effective
transfer of technology.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-14

Increasing Farm Compliance to MyGAP

20.36 Farms will be incentivised to increase compliance to MyGAP certification to ensure

sustainable production and safe fresh produce. Farms with MyGAP certification will be given
priority for grants or soft loans. The MyGAP certification will be a prerequisite for all farms
in the permanent food production parks (TKPM). The MyGAP will be aligned to the Global
GAP requirements criteria to increase market access, particularly to the European Union.
The benefits of MyGAP certified products will be promoted to consumers through
campaigns and awareness programmes.

Reducing Post-Harvest Loss

20.37 Post-harvest handling mechanisms will be strengthened to reduce agricultural

produce loss along the supply chain and to ensure farmers receive higher income. These
include upgrading and building more collection and distribution centres, improving logistics
particularly cold trucks and storage facilities, turnaround time at airports and ports as well
as intensifying R&D in food handling. In addition, farmers will be updated in new post-
harvest management and harvesting techniques by relevant agricultural agencies.

Building Capacity of Agricultural Cooperatives and Associations along the

Supply Chain

20.38 Programmes will be implemented to empower and strengthen the capacity of

cooperatives and associations in the area of management, finance, investment and
marketing as well as to create new business opportunities along the supply chain. To realise
this, a cluster-based approach integrating production, quality control, processing and
marketing will be further promoted. This will ensure sustainable income for farmers through
secured demand contracts, better farm gate prices and profit sharing from processing
activities. For example, Area Farmers Organisations (PPK) will be assisted to venture into
leasing of farm machineries, providing credit services, supplying of certified seeds and
processing activities. The involvement of Area Fishermen Associations in fish cage farming,
production of fish fries and fish meal as well as processing of fish-based products will be
further promoted. In addition, dairy cooperatives will be linked up with milk collection
centres under the Department of Veterinary Services (DVS) to undertake collection,
processing and marketing activities of dairy products. To enhance professionalism,
MyAgrosis participants, trained in agribusiness, will be engaged to assist cooperatives and
associations in the area of management and business development.

20.39 Cooperatives and associations will be assisted to participate in various local and
international events to showcase and market their products. In addition, dedicated outlets
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-15

in airports and tourist destinations will be established to promote local agricultural

products. Assistance in the form of matching grants and soft loans will be provided for
product testing, packaging, rental space, promotion and advertising to secure better
business opportunities.

Promoting Training and Youth Agropreneur Development

20.40 Skills and entrepreneurship development among farmers will be strengthened in

tandem with the objective to modernise the sector. During the Plan period, a total of 69,000
skilled workers and 10,000 agropreneurs are expected to be trained in the agro-food
subsector by 2020 to meet the requirements of the industry. The National Agriculture
Training Council (NATC) in collaboration with institutions of higher learning and the industry
will review the training curriculum regularly to produce skilled and knowledgeable workers.
The National Occupational Skills Standard (NOSS) for agriculture will be strengthened to
develop skilled human capital to address pertinent issues such as climate change, supply
chain and standard compliance. Familiarisation and attachment programmes for potential
farmers will be encouraged through collaboration with international bodies such as the
Food and Agriculture Organisation (FAO) and ASEAN counterparts.

20.41 Programmes will be implemented to promote farm mechanisation and automation

to increase productivity and to further reduce labour requirement particularly of foreign
workers. To support this initiative, skills training on the use and maintenance of farm
machinery and equipment will be provided to accelerate farm mechanisation.

20.42 The success of the pilot collaboration programme between Kolej Pertanian Malaysia
and the industry at Bukit Tangga, Kedah, will be rolled out to other agricultural training
institutes. This programme involves the leasing out of unutilised land at the training centres
to agribusinesses which in return, provides on the job training to the students. Special focus
will be given to strengthen the capacity of young agropreneurs in modern farming
techniques and market opportunities through hand-holding, incubator and mentor-mentee
programmes. The MyAgrosis programme, a joint collaborative effort between the Ministry
of Agriculture and Agro-Based Industry (MOA) and the Ministry of Education will be further
promoted to encourage participation of students from education and training institutes
under both ministries in agribusinesses. Participants of this programme will be given priority
in obtaining start-up grants and soft loans in agribusiness ventures.

20.43 The role of the NATC, as a central planning body for agro-food and agro-based
related training, will be strengthened to identify future skills and manpower requirements
to meet industry demand. In this regard, NATC will be tasked to formulate training content,
accredit training institutions and coordinate training programmes among various agencies
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-16

under the MOA. The Ministry will centrally coordinate the development of training facilities
under agencies to optimise the use of resources.

Strengthening Institutional Support and Extension Services

20.44 Compliance to the MS ISO 9001:2008 Quality Management Systems on Agriculture

Extension Service and Training will be extensively promoted to enhance the quality of
extension services. Extension services provided by various agencies will be reviewed based
on location, agricultural activities and relevance of services provided. Extension officers will
be trained in multiple fields, such as in livestock, aquaculture, oil palm and rubber as well as
the use of modern technologies, sustainable practices and in managing impacts of climate
change. Through this approach, the establishment of different extension agencies in one
area will be avoided and existing officers will be redeployed to optimise their services. The
use of remote sensing and drones by extension officers will be promoted for planning,
surveillance and monitoring agricultural activities mainly in paddy areas. The private sector,
universities and farmer associations will be encouraged to provide advisory and technical
services as well as knowledge sharing. In addition, the private sector will be facilitated to
undertake the upgrading of skills among farmers and apprenticeship programmes in the
field of farm management and new technology applications.

Improving Market Access and Logistics Support

20.45 Marketing of agricultural products will be improved through the establishment of

more market outlets, market compliance products, online marketing, promotion and
branding. In addition, the Malaysia External Trade Development Corporation (MATRADE)
will intensify the promotion of agricultural products in the global market through trade and
food exhibitions with the collaboration of the agriculture attaché under MOA. Direct
involvement of the Federal Agricultural Marketing Authority (FAMA) in the marketing of
agricultural produce through contract farming will be reviewed to focus on facilitating
arrangements between farmers and consumers, industries as well as exporters. The revision
is to ensure secure market, timely delivery of products to the market and to meet buyer
specifications in terms of quality and safety. In addition, to widen market access of
agricultural products, AgroBazaar.com.my, an existing online trading portal will be upgraded
to facilitate sales, payment and delivery transactions.

20.46 The logistics support for collection, distribution and marketing of agricultural
produce will be improved to ensure quality of produce, minimise post-harvest loss and
reduce marketing cost. In addition, collection and distribution centres will be provided in
new production areas and upgraded in existing areas while cold storage and handling
facilities will be provided or upgraded in fishery complexes, ports and airports to facilitate
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-17

exports of perishable products. The use of halal and green logistics will be promoted to
increase marketability of agricultural exports.

Scaling Up Access to Agricultural Financing

20.47 Government funding through Agrobank will be restructured from fixed-term to

flexible repayment based on harvest cycles of agro-food commodities. The current practice
of loan repayments by paddy farmers based on harvesting cycles will be extended to other
agro-food commodities such as aquaculture and vegetables. In addition, these loans will
have more flexibility by allowing credit insurance in place of collateral requirements.

Industry-Specific Strategies

20.48 Industry-specific strategies will be implemented in the paddy and rice, fruits and
vegetables, ruminant and fishery industries to further boost growth and sustainability. The
strategies will focus on specific initiatives and programmes to address issues faced by the
related industries.

Paddy and Rice Industry

20.49 The demand for rice is expected to increase from 2.4 million metric tonnes in 2013
to 2.6 million metric tonnes in 2020. Production of rice is expected to reach 2 million metric
tonnes by 2020 with total parcel areas of 416,000 hectares. Initiatives towards achieving full
self-sufficiency will focus on consolidating small farms, providing adequate irrigation and
drainage infrastructure, introducing new high yielding varieties, gazetting permanent rice
production areas, improving delivery services and providing performance-driven subsidies.
In addition, four new granaries in Rompin and Pekan, Pahang; Batang Lupar, Sarawak; and
Kota Belud, Sabah will be developed.

Consolidating Small Farms

20.50 More estates or group farming initiatives will be created to reap economies of scale
and reduce cost of production. Efforts will be continued to consolidate paddy fields
averaging 2.2 hectares into estates of more than 100 hectares to be managed by PPKs or
private companies. Under the Agriculture NKEA, special incentives of RM2,000 per hectare
per season for up to five seasons will continue to be provided for farmers who join the
group farming initiative in addition to profit sharing and employment opportunity. This
consolidation initiative is expected to raise the paddy yield from 5 metric tonnes per hectare
to 8 metric tonnes per hectare and increase the income of farmers by 5% by 2020.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-18

Providing Adequate and Efficient Irrigation and Drainage Infrastructure

20.51 The construction and upgrading of irrigation and drainage infrastructure in granaries
and non-granaries will be undertaken in phases to increase canal density to a minimum of
30 metres per hectare. This effort is expected to increase crop intensity from an average of
188% (1.8 times per year) in 2014 to 200% (two times per year) in 2020. High density
polyethylene pipes will be used as an alternative to reduce construction and maintenance
costs of infrastructure in new granaries. The role of water management groups or Kumpulan
Pengguna Air set up among the farmers will be revived to manage water resources and
encourage voluntary maintenance of infrastructure in their respective areas. The use of
radio telemetry and Supervisory Control and Data Acquisition as practised in the Muda
Agricultural Development Authority (MADA) area will be expanded to other granaries for
effective management and monitoring of water distribution.

Promoting Use of Certified High Yield and Aerobic Rice Varieties

20.52 New certified paddy varieties such as MR253, MR263 and MR269 which offer better
yield and resistance to disease will be widely promoted, particularly in disease prone areas.
In addition, planting of aerobic rice, a paddy variant that is heat resistant and requires less
water will be promoted in areas where single season planting is carried out due to poor
water supply. The short maturity period of aerobic rice enables three planting cycles a year
and is expected to increase the income of farmers.

Improving Post-Harvest Handling Chain

20.53 Strategies in reducing post-harvest loss will focus on improving the post-harvest
handling chain including harvesting, drying, storage, transportation and milling activities.
Reducing post-harvest loss from an average rate of 30% to 15% will increase the overall
production of rice thus raising the income of farmers. Research will focus on improving the
efficiency of harvesting machines, drying and storage facilities as well as milling technology.
In addition, more drying and storage facilities will be built to help farmers store their paddy
before transporting to rice mills.

Gazetting granaries and non-granaries as permanent rice production areas

20.54 Maintaining fertile permanent land for cultivation of paddy is pertinent to ensure
sufficient production of rice. As the cost of developing new areas requires huge investment,
existing granaries and non-granaries must be gazetted as permanent food production zones
and conversion for other uses should be strongly discouraged by state governments. A
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-19

special incentive will be provided for farmers to retain land for paddy cultivation on a
permanent basis.

Enhancing Knowledge and Skills of Farmers

20.55 Training programmes aimed at equipping farmers with knowledge on sustainable

agricultural practices will be disseminated via farmers’ field training. In this approach, lead
farmers will be trained by agencies such as MADA and NATC who will in turn train other
farmers in the designated area. Training programmes on the use of fertilisers on a scheduled
basis, water management, pest and disease management and managing impact of climate
change will be continued to enhance knowledge of farmers.

Targeting on Performance-Driven Assistance

20.56 During the Plan period, the provision of assistance for paddy will be based on
performance driven and targeted assistance focusing on increasing production. Various
input assistance such as fertilisers and pesticides for paddy cultivation will be given to
farmers according to soil conditions, types of pests and weeds as compared to the standard
assistance provided irrespective of the needs of farmers. MARDI will assist MADA, Kemubu
Agricultural Development Authority (KADA) and Integrated Agricultural Development Areas
(IADAs) to determine the suitability and requirement of inputs for maximum productivity
gains. Input assistance will be extended to farmers in Sabah and Sarawak to promote
sustainable hill rice production in permanent areas and discourage shifting cultivation
practices.

Fruits and Vegetables Industry

20.57 Production of fruits and vegetables will be increased to meet domestic and export
market demand. Focus will be on non-seasonal fruits and highland vegetables. The SSL of
fruits (excluding temperate fruits) is expected to reach 106.5% in 2020 as compared to
100.2% in 2014 whereas the SSL for vegetables (excluding temperate vegetables) is
expected to reach 95.1% as compared to 90.9%. The implementation strategies under the
Plan period will be guided by the NAP. These strategies will focus on increasing productivity
through developing fruit and vegetable clusters, replanting and rehabilitation of fruit farms,
strengthening contract farming arrangements and widening adoption of modern
technologies.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-20

Developing Fruit and Vegetable Clusters

20.58 Fruit and vegetable clusters, which consist of production areas, collection and
distribution facilities as well as processing centres, will be developed and coordinated by the
DOA with the involvement of various agencies such as FAMA, MARDI and Farmers
Organisation Authority (LPP) based on an integrated approach. The cluster-based
development would leverage on economies of scale, integrated support activities and
marketing. In this regard, seven fruit clusters with a total area of 4,000 hectares and ten
vegetable clusters totalling 3,350 hectares will be developed by DOA. The clusters will be
integrated to optimise the use of existing facilities such as collection centres and distribution
centres as well as packaging and storage facilities. Existing facilities including the 176
collection centres, 36 distribution centres, 515 Fresh Fruit Stalls (Gerai Buah-buahan Segar -
GBBS) and 558 Farmers Markets (Pasar Tani) within the cluster areas will be upgraded to
support these clusters. In addition, collection centres and distribution centres will be
developed in new cluster areas. Programmes to ensure sufficient supply of certified fruit
seedlings including durian, banana, jackfruit and mango for the clusters will be undertaken
by MARDI and DOA. With these strategies, production of fruits is expected to increase from
1.6 million metric tonnes in 2014 to 2.1 million metric tonnes in 2020 while vegetables from
1.7 to 2.9 million metric tonnes.

Replanting and Rehabilitation of Fruit Farms

20.59 The DOA will provide replanting assistance in the form of land preparation costs and
certified seedlings to PPK as well as to farmers with farm holdings of less than five hectares.
Under this effort, fruit farms with non-commercial varieties and non-productive trees will be
replanted in phases with high commercial value varieties such as durian, jackfruits and
mangosteen. In addition, the farms will be rehabilitated to comply with MyGAP certification.

Strengthening Contract Farming Arrangements

20.60 Contract farming arrangements for fruits and vegetables will be strengthened
through long term contract arrangements by linking farmers to direct buyers to increase
marketability and reduce dependency on middlemen. In addition, FAMA will be tasked to
facilitate contract farming arrangements between all players from producers to buyers and
to secure markets for agricultural produce as well as to ensure quality and safety
specifications are met. Participants of the contract farming arrangements will be provided
with technical advice, systematic farm management and input assistance. More contract
farming arrangements will be established through existing marketing linkages under the
corridor authorities such as the Northern Corridor Implementation Authority and the
Eastern Corridor Economic Council to widen market access of agricultural produce. Program
Pengukuhan Bekalan Ladang Kontrak Ke Pasaran (KUKUH) will also be expanded to
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-21

encourage the direct involvement of farmers in marketing through local outlets such as
Pasar Tani and GBBS. The Food Agro Council for Export (FACE) under the MOA will serve as
a platform to coordinate and promote agro-food exports as well as facilitate contract
farming arrangements between local producers and exporters.

Widening Adoption of Modern Technologies and Farm Automation

20.61 MARDI, DOA and the Malaysia Pineapple Industry Board will extensively promote the
adoption of modern farm technology such as rain house shelters, fertigation system as well
as farm automation through the use of ICT and mechanisation. The use of rain house
shelters and fertigation will increase the number of production cycles, ensure efficient use
of inputs as well as improve quality and quantity of produce. Soft loans and matching grants
will be made available to encourage the adoption of these technologies, particularly in the
identified clusters and TKPM areas. The use of vertical farming technologies, developed by
MARDI for the growing of vegetables, will also be promoted in urban areas and areas with
limited and less fertile agricultural land. Rain water harvesting will be implemented to
mitigate the occurrence of flash floods due to extensive use of rain shelters.

Ruminant Industry

20.62 Specific strategies will be implemented to increase local production and reduce
imports of beef, mutton and milk. Focus will be given on intensifying research in genetic
enhancement, improving breeding techniques, ensuring sufficient supply of quality animal
feed, strengthening dairy facilities, establishing traceability through Radio Frequency
Identification Tagging (RFID) as well as transforming small-scale farms. These initiatives are
expected to improve the SSL of beef from 27.7% in 2014 to 50% in 2020, mutton from 16.1%
to 24.6% and milk from 12.8% to 13.6%.

Intensifying Research in Genetic Enhancement

20.63 Research on genetic enhancement will be undertaken by MARDI in developing

resilient genetic quality of indigenous breeds of cattle and goats focusing on the Kedah-
Kelantan cattle and the Katjang goat for improved productivity. Genetic improvement of the
Kedah-Kelantan cattle breed is expected to increase lean meat growth rate, enhance meat
quality, improve fertility and increase cost efficiency. MARDI will intensify research on the
breedlot, an intensive cattle breeding system, to increase the supply of locally produced
good quality breeds. This system will address the lack of land for breeding and production to
gradually reduce dependence on imported breeds. In addition, efforts will be undertaken to
develop a national database on genetic characterisation of cattle and goat breeds for
genetic and breeding improvement programmes.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-22

Improving Breeding Techniques of Cattle and Goats

20.64 More breeding programmes based on a two-tier structure consisting of a nucleus

farm and multiplier tiers will be encouraged among local breeders to increase animal stock.
In this program, the nucleus farm will be operated by private breeders with the
collaboration of MARDI and DVS to focus on genetic improvement of the breeder cattle and
goats through latest breeding techniques such as artificial insemination and embryo
transplant. The breeds from the nucleus farms will be distributed to multiplier farms for
commercial breeding. This will ensure increased supply of quality breeds with higher calving
rate, weight gain and milk production. Nucleus farms for the breeding of the Kedah-
Kelantan cattle and their crosses will be established at cattle breeding centres in Tersat and
Kemaman, Terengganu; Tanah Merah, Kelantan; and Jelai Gemas, Negeri Sembilan while the
Brahman cattle in Ulu Lepar, Pahang. The Temudok livestock station in Sri Aman, Sarawak
will be upgraded with the two-tier structure for the purpose of breeding and conditioning of
local and existing imported breeds. These centres will supply quality breeder cattle to
multiplier tier farms throughout the country.

20.65 DVS will focus on the Mafriwal breed, which has high milk production and is
adaptable to tropical climate, under its dairy cattle breeding programmes. MARDI will
develop cattle breeds for milk and meat at its Muadzam Shah Cattle Research and
Innovation Centre and is expected to contribute 1%-2% of beef SSL. MARDI will upscale its
National Animal Embryo Centre in Kluang, Johor to improve breeding techniques for high
productivity of dairy cattle. Breeding of goats will focus on Boer, Katjang and their crosses,
while for sheep, Dorper, Damara and their crosses, through two-tier breeding programmes
by engaging local breeders as multiplier breeding farms.

Ensuring Sufficient Supply of Quality Animal Feed

20.66 The following measures will be undertaken to ensure a sustainable supply of quality
animal feed, which forms 60% of ruminant production cost.
 DVS will collaborate with government linked companies (GLCs) to supply local
resources such as palm kernel expeller and palm kernel cake to the ruminant
industry;
 DVS will gazette 22,000 hectares as grazing and fodder areas to reduce cost of
imported animal feed. In addition, MARDI will focus on feed formulation and the
development of pellets or cubes based on local fodder such as Napier, Brachiaria
decumbens, kenaf and corns as a complete and balanced diet;
 DVS will conduct training in feed efficiency management to educate rearers to defray
rising feeding cost;
 MARDI will develop a precision ruminant feeding system to enhance feed utilisation
and reduce production cost; and
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-23

 A web-based system containing information on feed ingredients at current cost as

well as advisories will be developed by MARDI to assist rearers to improve the
efficiency of feeding ruminants.

Upgrading Dairy Facilities at Milk Collection Centres

20.67 Efforts to upgrade the facilities at milk collection centres will be continued towards
enhancing milk collection, processing and distribution. In addition, these centres will also
operate as incubators to build the capacity of cooperative members in the processing of
dairy-based products. The operation in marketing and distribution of milk at these centres
will be leased gradually to local dairy cooperatives.

Establishing Ruminant Traceability Through Radio Frequency Identification

Tagging

20.68 A ruminant traceability system and a national ruminant database will be established
for effective planning and monitoring of animal movement and for disease control. The
traceability system developed by MARDI using sub-dermal radio frequency identification,
will capture information such as animal profile, history and health conditions, entry point
and farm locations, unique to an individual animal. A coordinated data sharing system will
be developed and monitored by DVS as a disease control mechanism in cases of disease
outbreaks as well as support zoning of disease-free areas.

Transforming Small-Scale Ruminant Farms

20.69 Currently, small-scale ruminant farms constitute about 57% of the total 80,577
ruminant farms. During the Plan period, small-scale ruminant farms will be transformed into
viable commercial-scale farms through the provision of suitable incentives such as soft loans
with appropriate repayment grace periods, technical assistance, long term forward
contracts and buy-back schemes. In addition, small-scale ruminant farmers will be grouped
together into clusters and managed by cooperatives with the objective of integrating
production, processing and marketing of beef, mutton and dairy products.

Fisheries Industry

20.70 The fisheries industry, which consists of capture fisheries and aquaculture, is
expected to achieve an average annual growth of 3.7% during the Plan period. Demand for
fish is expected to increase from 1.3 million metric tonnes in 2010 to 1.9 million metric
tonnes by 2020 with a growth of 3.8% per annum. Fish consumption per capita is expected
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-24

to increase from 46 to 55 kilograms per year at a rate of 1.9% per annum in the same period
due to increased demand for healthier source of protein.

20.71 In line with the Aquaculture Blueprint by MOA, the contribution of aquaculture is
expected to increase to 50% or 1.76 million metric tonnes of the total fish production by
2020. The export value of aquaculture, including fish products is expected to increase from
RM1.4 billion in 2010 to RM3.2 billion in 2020. During the Plan period, the development
strategies in the fisheries industry will focus on the following:
 Increasing supply of quality high value fries;
 Transforming small-scale aquaculture farmers;
 Increasing production of high value aquaculture;
 Ensuring supply of affordable and quality fish feed;
 Enhancing sustainable fish resource management; and
 Strengthening capacity of coastal fishermen and deep sea fishing.

Increasing Supply of Quality High Value Fries

20.72 The warm climate throughout the year provides an excellent breeding ground for the
production of high value fish such as the hybrid grouper and tiger grouper. The supply of
quality fish and shrimp fries, and spats for oyster and mussels will be encouraged through
joint collaboration between the Fisheries Research Institute and hatchery operators.
Incentives will be given to hatchery operators to increase the production of fish and shrimp
fries from 16 billion in 2013 to a target of 30.6 billion in 2020. Breeding centres to produce
tilapia, sea bass and grouper fries and molluscs will be developed in collaboration with the
private sector in Kuching, Lake Kenyir, Rompin and Semporna. In addition, research on new
fish varieties that are resistant to climate change and disease will be intensified with the
cooperation between universities and hatchery operators.

Transforming Small-Scale Aquaculture Farms

20.73 Clustering of small farmers into enterprises will be implemented by the DOF to
improve their productivity and income. This clustering system will take into account among
others, geographical distance, farm size and aquaculture production technology, which will
enable the sharing of facilities such as hatcheries, storage and processing centres as well as
the provision of technical advisories and marketing services. In addition, the Synergy
Aquaculture Farming Model, where an anchor company supports a group of small farmers,
will be widely promoted through the provision of matching grants to the anchor companies
and assistance to small farmers. This model will consolidate the value chain vertically to
provide fish fry, fish feed, growth techniques, processing and marketing under established
product brands with a buy-back scheme by participating anchor companies.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-25

Increasing Production of High Value Aquaculture

20.74 A total area of 82,900 hectares of land and water bodies suitable for aquaculture
development has been identified to achieve the target set in the Aquaculture Blueprint.
During the Plan period, strategies will focus on improvement of production technologies,
expansion of fish cage farming and development of new aquaculture zones particularly in
Sabah and Sarawak. Production technologies such as multilevel aquaculture, recirculating
aquaculture system and flexi-float high density polyethylene cage farming will be promoted
to increase the production of high value aquaculture. These products, which include tilapia,
grouper, sea bass, oyster and marine shrimp, will be exported to the European Union and
People’s Republic of China.

Increasing Supply of Affordable and Quality Fish Feed

20.75 The rapid expansion of aquaculture, including cultured marine fish requires sufficient
supply of fish feed. During the Plan period, research on fish feed will be intensified to
improve feed formulation using alternative and safe raw materials, such as poultry-based,
palm kernel and soy meals as well as algae as a source of protein, to ensure affordable and
quality supply of feed. Fishermen associations will be incentivised to produce fish feed, thus
reducing dependency on imported fish feed.

Enhancing Sustainable Fish Resource Management

20.76 Sustainable management of marine fishery resources and conservation efforts will
be intensified through ecosystem-based resource management, which comprises usage of
environmental-friendly hauling gears, artificial reefs, introduction of fish aggregating device
and refugia development. In ensuring sustainable aquaculture farming practices, proper
discharge of waste and organic matter as well as the responsible use of chemicals and feed
will be regulated. In addition, effective from 2016, the use of trawler nets will be prohibited
in Zone B fishing area, an important fish breeding ground. Fishing zones for the north-west
coast of Peninsular Malaysia are as shown in Exhibit 20-6. The Automatic Identification
System developed by the DOF will be enforced to ensure the safety of fishermen at sea and
monitor activities of vessels in Zone B and Zone C.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-26

Exhibit 20-6
Fishing Zones for North-West Coast of Peninsular Malaysia

Source: Department of Fisheries

Strengthening Capacity of Coastal Fishermen and Deep Sea Fishing

20.77 Coastal fishermen will be given basic input assistance and training programmes to
enable them to participate in aquaculture activities to provide them with an alternative
source of income, especially during the monsoon season. These programmes include
training in aquaculture technologies, farm management and disease control to enhance the
capacity of fishermen. The participation in aquaculture activities is expected to provide an
additional income of at least RM500 monthly to the fishermen.

20.78 A transformation programme for coastal fishermen will be undertaken to enable

them to be involved in deep-sea fishing. Fishermen associations will be incentivised to assist
members to purchase deep-sea vessels equipped with modern technologies through special
schemes. The Fisheries School under the NATC will provide training courses for school
leavers who aspire to be boat captains and deckhands in deep-sea fishing. The training
programmes will include, among others, fish capture technologies, navigation, repairing of
gear and fishing equipment, marine engineering and weather forecasting. A total of 250
fishing skippers and 1,250 skilled deckhands will be trained by 2020 to support the deep-sea
fishing industry.
 Eleventh Malaysia Plan
Strategy Paper 20: Driving Modernisation in Agro-food 20-27

V. CONCLUSION

20.79 During the Eleventh Plan period, the agro-food subsector will be transformed and
modernised towards achieving food security, providing employment opportunities and
generating higher income for farmers, fishermen and rearers. Initiatives will be undertaken
to improve productivity, strengthen the food supply chain, improve support and delivery
services, enhance knowledge and skills of farmers, fishermen and rearers as well as ensure
compliance to standards and good agricultural practices. In achieving these objectives, it is
imperative that effective planning, coordination and implementation of agricultural
programmes are carried out by all stakeholders.