Page 16 - Malaysia Food Business Directory 2020/2021
P. 16

  For decades, agriculture was the main contributor to the Malaysian economy. Rubber ruled the agriculture landscape for a very long time. From the 1930s to the 1980s, it put the country on the map as the largest producer of natural rubber in the world. Today, Malaysia is the third largest producer of natural rubber after Thailand and Indonesia.
After Malaysia’s independence in 1957, the cultivation of palm oil was encouraged to complement rubber. As palm oil increased in value and turned in a bigger profit, it presented itself as a viable alternative to natural rubber. A concerted effort was made by the government of the day to embrace it as the preferred cash crop.
In 1991, Vision 2020 was launched. This was a government initiative to help the country become fully industrialised by 2020. It became necessary for the country to move away from its agrarian foundation and prioritise manufacturing. Given its strength, the agriculture sector was streamlined to put the focus on palm oil.
Over the following decades, palm oil became Malaysia’s liquid gold, the country’s most valuable agricultural crop. A common ingredient in countless products, it is the most consumed vegetable oil in the world. It is also efficient in that it needs a lot less land area, and fewer fertilizers and pesticides compared to other vegetable oils. It is cheap to produce, stable during processing, and has a long economic life.
Today, Malaysia is the second largest producer and exporter of palm oil after Indonesia. In 2018, it was the largest agriculture contributor to the country’s GDP at 4.5% and brought in 52.8% of export earnings or RM67.5 billion.
However, putting all our agriculture eggs in one palm oil basket may not have been a good long-term strategy. Palm oil accounts for 75% of cultivated land today and takes up a large portion of the agriculture sector’s resources. This means less land and resources for other crops. In fact, the agriculture sector’s contribution to GDP fell from about 50% in the early 1950s to just 7.3% in 2018.
This has translated into higher food imports. In 2019, our food import bill was a whopping RM50 billion. We are now spending top dollar on foods that can be easily cultivated here, such as onions, garlic, chilli, ginger, cabbage, carrots, cauliflower and broccoli. Even the local farming of rice – Malaysia’s staple food – is inadequate and has to be imported.
Palm oil demand was already falling prior to the COVID-19 lockdown. One reason is that it has gained a bad reputation in western countries for allegedly causing deforestation. In addition, there were fears that India – the world’s largest buyer of palm oil – might purchase less palm oil from us following disagreements about the Indian government’s new Kashmir policy and citizenship law. Demand from China was also expected to be lower as it had agreed to buy more agriculture products from the US, including soybean oil, palm oil’s competitor.

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