1. This document outlines the Third National
Agricultural Policy (NAP3) which sets the
strategic directions for agricultural and
forestry development to the year 2010. This
policy has been formulated to ensure that the
capability of the agricultural sector to play
its strategic role in national development is
sustained and enhanced in light of new and
emerging challenges facing agricultural
development. Towards this end, NAP3 will
focus on new approaches to increase
productivity and competitiveness, deepen
linkages with other sectors, venture into new
frontier areas as well as conserve and
utilise natural resources on a sustainable
basis. The policy aims to set in place the
enabling and supportive measures as well as a
conducive environment to promote growth in
the agricultural sector. The policies and
strategies formulated will continue to
emphasise productivity and market driven
growth.
II. BACKGROUND
2. The implementation of the previous two
National Agricultural Policies since 1984 has
enabled the agricultural sector to attain a growth
rate of 3.2 per cent per annum for the 1985-1995
period. In absolute terms, the total value-added
of the sector increased from RM11.9 billion in
1985 to RM16.2 billion in 1995. The relative
contribution of the sector to employment
generation and export earnings, however, declined
from 31.3 per cent and 36.7 per cent in 1985 to 18
per cent and 19.2 per cent in 1995 respectively.
Oil palm, sawlogs and fisheries remained as the
major contributors to the sector's growth. The
share of agricultural industrial commodities to
total agricultural value-added declined from 72.1
per cent in 1985 to 71.0 per cent in 1995 while
that of food commodities increased from 25.3 per
cent to 26.2 per cent for the same period.
3. Structural changes in the economy have
brought forth new issues and challenges in the
agricultural sector in particular acute labour
shortage, limited availability of suitable land
and increasing cost of production arising from
intersectoral competition for resources as well as
intense competition in the global market resulting
from trade liberalisation.
4. The recent financial crisis in the country
and the region resulting from the further
liberalisation of the financial market has
made the currency market highly vulnerable to
speculation. The volatility and resultant
decline in the exchange rate of the Ringgit
vis-...-vis major currencies has negatively
affected the stability and security of the
country's food supply. This instability and
insecurity, if left unchecked, can have
serious economic, social and political
implications.
III. ISSUES AND CHALLENGES
5 The country's food import bill is
continuously increasing. Total food imports has
increased from RM3.5 billion in 1985 to RM7.7
billion in 1995 and RM 10.0 billion in 1997. The
instability and volatility of the exchange rate
has put a strain on Malaysia's foreign exchange
reserves and has led to imported inflation.
6. The high demand for food has led to increases
in food prices. In 1997, increased prices of
food accounted for 51.9 per cent of the
increase in Consumer Price Index (CPI). This
was 28 percentage points higher than 1991,
where increase in food prices only accounted
for 38.4 per cent of the increase in CPI. In
addition, increasing per capita income and
awareness of a balanced diet and health
consciousness of the populace will also bring
about changing tastes and preferences for
food. Thus, there is a need to ensure
adequate supply and accessibility of safe,
nutritious and high quality food at
affordable prices.
7. There is now acute shortage of labour leading
to high employment of immigrant workers in
agriculture and forestry sectors. Due to this
shortage, it is estimated that about 300,000
hectares of rubber holdings are untapped and
30,000 hectares of oil palm are not fully
harvested. Productivity gains in agriculture
have also not matched up to increases in
factor prices. Currently, labour productivity
in agriculture is only about 60 per cent of
the labour productivity in the manufacturing
sector. This necessitates measures to reduce
labour requirement in agriculture and
increase labour productivity.
8. The smallholder sector continues to
experience problems of low productivity and
uneconomic size of holdings. Labour shortages and
low commodity prices have further led to
substantial idle agricultural land and abandoned
holdings. It is estimated that there are about
400,000 hectares of idle agricultural land. In
addition, land for agricultural activities is
becoming more limited owing to conversion for
other uses such as industrial, residential and
urban uses.
9. The implementation of the agreements under
the World Trade Organisation (WTO) and the
Common Effective Preferential Tariff (CEPT)
Scheme of the ASEAN Free Trade Area (AFTA)
has created greater competition for Malaysian
agriculture. Main export commodities such as
rubber and palm oil face increasing
competition from emerging lower cost
producers and continue to face discriminatory
tariff and non-tariff barriers.
10. The development of high value-added resource-
based products is still limited and exports mainly
consist of primary and intermediate products.
Seventy per cent of the total raw materials used
in the food processing industries are imported.
Lack of domestic production coupled with
inconsistent supply resulted in many small and
medium scale agro-based firms to operate below
capacity. There is a need to further strengthen
inter and intra-sectoral linkages especially with
support and downstream industries.
11. Concerns for the environment at both domestic
and global levels require more innovative and
efficient agricultural and forestry practices
for the sustainable development of the
sector.
IV. THE THIRD NATIONAL AGRICULTURAL POLICY (NAP3)
12. The further growth of the agricultural sector
requires the nation to address the challenge of
efficient and optimal utilisation of existing
resources in order to further improve
competitiveness. Resource constraints and rapid
changes in the global trading and investment
environment necessitate the development of a
resilient agricultural sector and the enhancement
of its global competitiveness. In addition, the
concern over the availability and stability of
food supply requires the nation to enhance its
competitive capabilities in food production. These
challenges require new strategic approaches and
policy thrusts to enhance the economic
contribution and growth of the agricultural
sector.
OBJECTIVES
13. The overriding objective of NAP3 is the
maximisation of income through the optimal
utilisation of resources in the sector. This
includes maximising agriculture's contribution to
national income and export earnings as well as
maximising income of producers.
14. Specifically, the objectives of the Policy
are :
a) to enhance food security;
b) to increase productivity and competitiveness
of the sector;
c) to deepen linkages with other sectors;
d) to create new sources of growth for the
sector; and
e) to conserve and utilise natural resources on
a sustainable basis.
MACROECONOMIC FRAMEWORK
15. During the NAP3 period, the sector is
expected to achieve a growth rate of 2.4 per
cent per annum. The contribution of the
agricultural sector to Gross Domestic Product
(GDP) is expected to further decline from
13.5 per cent in 1995 to 7.1 per cent in
2010. Contributions to total agricultural
value-added from rubber, cocoa and sawlogs
are expected to decline while contributions
from oil palm and food commodities are
expected to increase. New sources of growth
are expected to emerge in agriculture
resulting from various initiatives to promote
new products and emerging industries such as
agroforestry, biotechnology products,
specialty natural products, bamboo and
rattan, floriculture and aquarium fish.
16. Total workforce in agriculture will decline
from 1,524,000 workers in 1995 to 930,000
workers in 2010. With the current land and
labour shortages and increasing cost of
production, it is envisaged that future
expansion in hectarage would be limited
during the plan period. Therefore, the
increase in output will emanate mainly from
increasing productivity. Labour productivity
is expected to increase from RM10,650 per
worker to RM24,730 per worker within the same
period. This reflects the emphasis given on
labour saving technology, innovations and
more efficient farm management practices.
17. NAP3 will continue to pursue agricultural
growth through moderate expansion of land and
further intensification of land use. There
will be substantial reduction in the rubber
and cocoa areas. Rubber, paddy, coconut and
cocoa holdings are expected to be reduced by
494,000, 303,000, 73,400 and 30,700 hectares
respectively. Most of these areas will be
replaced by agroforestry, oil palm, fruits
and vegetable cultivation. In Sabah and
Sarawak where there is substantial area, new
land development will be undertaken. As such,
land utilisation for agriculture during the
plan period is expected to marginally
increase by about 0.5 per cent per year from
5.7 million hectares to 6.2 million hectares.
STRATEGIC APPROACHES AND POLICY THRUSTS
18. Increasingly scarce resource including land
availability requires a strategy that optimises
resource use for agricultural and forestry
development. Towards this end, an agroforestry
strategy to integrate agriculture and forestry
development outside Permanent Forest Estates
(PFEs) is adopted for NAP3. This agroforestry
approach views agriculture and forestry as
mutually compatible and complementary and
therefore provides a scope for joint development
that can bring about mutual benefits. The approach
will bring about a larger productive base for
agriculture and forestry, allow for a wider range
of agroforestry enterprise mix, optimise resource
utilisation, particularly land outside the PFEs
and enhance the income generating potential of
agroforestry investments. The agroforestry
approach will, thus, enable policy formulation to
address resource constraints such as land and
labour.
19. Consumers world-wide are increasingly
demanding products that are more specific to their
needs and preferences. They are now accessible to
information technology which support their ability
to seek, identify and procure these products.
Current commodity-based strategies limit the
effectiveness to serve markets that are of higher
value and more segmented. This requires a new
orientation for agricultural development to serve
the needs of these markets and secure higher value-
Di pos oleh Arbain Muhayat pada 20 December 2008
29. THIRD NATIONAL AGRICULTURAL POLICY (1998 - 2010) - EXECUTIVE SUMMARY
I. INTRODUCTION1. This document outlines the Third National
Agricultural Policy (NAP3) which sets the
strategic directions for agricultural and
forestry development to the year 2010. This
policy has been formulated to ensure that the
capability of the agricultural sector to play
its strategic role in national development is
sustained and enhanced in light of new and
emerging challenges facing agricultural
development. Towards this end, NAP3 will
focus on new approaches to increase
productivity and competitiveness, deepen
linkages with other sectors, venture into new
frontier areas as well as conserve and
utilise natural resources on a sustainable
basis. The policy aims to set in place the
enabling and supportive measures as well as a
conducive environment to promote growth in
the agricultural sector. The policies and
strategies formulated will continue to
emphasise productivity and market driven
growth.
II. BACKGROUND
2. The implementation of the previous two
National Agricultural Policies since 1984 has
enabled the agricultural sector to attain a growth
rate of 3.2 per cent per annum for the 1985-1995
period. In absolute terms, the total value-added
of the sector increased from RM11.9 billion in
1985 to RM16.2 billion in 1995. The relative
contribution of the sector to employment
generation and export earnings, however, declined
from 31.3 per cent and 36.7 per cent in 1985 to 18
per cent and 19.2 per cent in 1995 respectively.
Oil palm, sawlogs and fisheries remained as the
major contributors to the sector's growth. The
share of agricultural industrial commodities to
total agricultural value-added declined from 72.1
per cent in 1985 to 71.0 per cent in 1995 while
that of food commodities increased from 25.3 per
cent to 26.2 per cent for the same period.
3. Structural changes in the economy have
brought forth new issues and challenges in the
agricultural sector in particular acute labour
shortage, limited availability of suitable land
and increasing cost of production arising from
intersectoral competition for resources as well as
intense competition in the global market resulting
from trade liberalisation.
4. The recent financial crisis in the country
and the region resulting from the further
liberalisation of the financial market has
made the currency market highly vulnerable to
speculation. The volatility and resultant
decline in the exchange rate of the Ringgit
vis-...-vis major currencies has negatively
affected the stability and security of the
country's food supply. This instability and
insecurity, if left unchecked, can have
serious economic, social and political
implications.
III. ISSUES AND CHALLENGES
5 The country's food import bill is
continuously increasing. Total food imports has
increased from RM3.5 billion in 1985 to RM7.7
billion in 1995 and RM 10.0 billion in 1997. The
instability and volatility of the exchange rate
has put a strain on Malaysia's foreign exchange
reserves and has led to imported inflation.
6. The high demand for food has led to increases
in food prices. In 1997, increased prices of
food accounted for 51.9 per cent of the
increase in Consumer Price Index (CPI). This
was 28 percentage points higher than 1991,
where increase in food prices only accounted
for 38.4 per cent of the increase in CPI. In
addition, increasing per capita income and
awareness of a balanced diet and health
consciousness of the populace will also bring
about changing tastes and preferences for
food. Thus, there is a need to ensure
adequate supply and accessibility of safe,
nutritious and high quality food at
affordable prices.
7. There is now acute shortage of labour leading
to high employment of immigrant workers in
agriculture and forestry sectors. Due to this
shortage, it is estimated that about 300,000
hectares of rubber holdings are untapped and
30,000 hectares of oil palm are not fully
harvested. Productivity gains in agriculture
have also not matched up to increases in
factor prices. Currently, labour productivity
in agriculture is only about 60 per cent of
the labour productivity in the manufacturing
sector. This necessitates measures to reduce
labour requirement in agriculture and
increase labour productivity.
8. The smallholder sector continues to
experience problems of low productivity and
uneconomic size of holdings. Labour shortages and
low commodity prices have further led to
substantial idle agricultural land and abandoned
holdings. It is estimated that there are about
400,000 hectares of idle agricultural land. In
addition, land for agricultural activities is
becoming more limited owing to conversion for
other uses such as industrial, residential and
urban uses.
9. The implementation of the agreements under
the World Trade Organisation (WTO) and the
Common Effective Preferential Tariff (CEPT)
Scheme of the ASEAN Free Trade Area (AFTA)
has created greater competition for Malaysian
agriculture. Main export commodities such as
rubber and palm oil face increasing
competition from emerging lower cost
producers and continue to face discriminatory
tariff and non-tariff barriers.
10. The development of high value-added resource-
based products is still limited and exports mainly
consist of primary and intermediate products.
Seventy per cent of the total raw materials used
in the food processing industries are imported.
Lack of domestic production coupled with
inconsistent supply resulted in many small and
medium scale agro-based firms to operate below
capacity. There is a need to further strengthen
inter and intra-sectoral linkages especially with
support and downstream industries.
11. Concerns for the environment at both domestic
and global levels require more innovative and
efficient agricultural and forestry practices
for the sustainable development of the
sector.
IV. THE THIRD NATIONAL AGRICULTURAL POLICY (NAP3)
12. The further growth of the agricultural sector
requires the nation to address the challenge of
efficient and optimal utilisation of existing
resources in order to further improve
competitiveness. Resource constraints and rapid
changes in the global trading and investment
environment necessitate the development of a
resilient agricultural sector and the enhancement
of its global competitiveness. In addition, the
concern over the availability and stability of
food supply requires the nation to enhance its
competitive capabilities in food production. These
challenges require new strategic approaches and
policy thrusts to enhance the economic
contribution and growth of the agricultural
sector.
OBJECTIVES
13. The overriding objective of NAP3 is the
maximisation of income through the optimal
utilisation of resources in the sector. This
includes maximising agriculture's contribution to
national income and export earnings as well as
maximising income of producers.
14. Specifically, the objectives of the Policy
are :
a) to enhance food security;
b) to increase productivity and competitiveness
of the sector;
c) to deepen linkages with other sectors;
d) to create new sources of growth for the
sector; and
e) to conserve and utilise natural resources on
a sustainable basis.
MACROECONOMIC FRAMEWORK
15. During the NAP3 period, the sector is
expected to achieve a growth rate of 2.4 per
cent per annum. The contribution of the
agricultural sector to Gross Domestic Product
(GDP) is expected to further decline from
13.5 per cent in 1995 to 7.1 per cent in
2010. Contributions to total agricultural
value-added from rubber, cocoa and sawlogs
are expected to decline while contributions
from oil palm and food commodities are
expected to increase. New sources of growth
are expected to emerge in agriculture
resulting from various initiatives to promote
new products and emerging industries such as
agroforestry, biotechnology products,
specialty natural products, bamboo and
rattan, floriculture and aquarium fish.
16. Total workforce in agriculture will decline
from 1,524,000 workers in 1995 to 930,000
workers in 2010. With the current land and
labour shortages and increasing cost of
production, it is envisaged that future
expansion in hectarage would be limited
during the plan period. Therefore, the
increase in output will emanate mainly from
increasing productivity. Labour productivity
is expected to increase from RM10,650 per
worker to RM24,730 per worker within the same
period. This reflects the emphasis given on
labour saving technology, innovations and
more efficient farm management practices.
17. NAP3 will continue to pursue agricultural
growth through moderate expansion of land and
further intensification of land use. There
will be substantial reduction in the rubber
and cocoa areas. Rubber, paddy, coconut and
cocoa holdings are expected to be reduced by
494,000, 303,000, 73,400 and 30,700 hectares
respectively. Most of these areas will be
replaced by agroforestry, oil palm, fruits
and vegetable cultivation. In Sabah and
Sarawak where there is substantial area, new
land development will be undertaken. As such,
land utilisation for agriculture during the
plan period is expected to marginally
increase by about 0.5 per cent per year from
5.7 million hectares to 6.2 million hectares.
STRATEGIC APPROACHES AND POLICY THRUSTS
18. Increasingly scarce resource including land
availability requires a strategy that optimises
resource use for agricultural and forestry
development. Towards this end, an agroforestry
strategy to integrate agriculture and forestry
development outside Permanent Forest Estates
(PFEs) is adopted for NAP3. This agroforestry
approach views agriculture and forestry as
mutually compatible and complementary and
therefore provides a scope for joint development
that can bring about mutual benefits. The approach
will bring about a larger productive base for
agriculture and forestry, allow for a wider range
of agroforestry enterprise mix, optimise resource
utilisation, particularly land outside the PFEs
and enhance the income generating potential of
agroforestry investments. The agroforestry
approach will, thus, enable policy formulation to
address resource constraints such as land and
labour.
19. Consumers world-wide are increasingly
demanding products that are more specific to their
needs and preferences. They are now accessible to
information technology which support their ability
to seek, identify and procure these products.
Current commodity-based strategies limit the
effectiveness to serve markets that are of higher
value and more segmented. This requires a new
orientation for agricultural development to serve
the needs of these markets and secure higher value-