Special Report: The State of the Nation: Bridging the gap between agriculture and food security

This article first appeared in The Edge Malaysia Weekly, on July 6, 2020 - July 12, 2020.

Structural issues that have long plagued the agriculture sector need to be re-examined so that a resilient ecosystem to securitise our food supply can be developed as soon as possible. (Photo by Haris Hassan/The Edge)

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FOOD security has become an increasingly hot topic in Malaysia as food imports continue to grow year after year, prompting questions over its sustainability. The Covid-19 pandemic has also highlighted the country’s inability to fully feed itself on basic grains such as rice should rice-exporting countries hold onto their stockpiles for themselves.

Malaysia ranks 28th on the 2019 Global Food Security (GFS) Index, while neighbouring Singapore, which hardly produces its own food, has topped the index two years in a row, in 2018 and 2019. Why the disparity and is the comparison fair?

Dr Niaz Asadullah, professor of economics at Universiti Malaya and a member of the National Agricultural Advisory Council, says the GFS Index uses a narrow concept of food security and completely disregards production and self-sufficiency.

“Only three dimensions of food security are considered: affordability, availability, and quality and safety. No weightage is given to sustainability of supply. Less than 1% of Singapore’s land mass is allocated to agriculture and 90% of the food consumed originates outside the country.

“For Malaysia, only about a quarter [of its food] is imported. So, if anything, Singapore remains highly vulnerable to any disruption to the global food supply chain,” he tells The Edge.

However, there is an elephant in the room that Malaysia does need to address and that is its neglected agriculture sector, which is a vital part of food security.

Structural issues that have long plagued the sector need to be re-examined so that a resilient ecosystem to securitise our food supply can be developed as soon as possible.

 

Disparity in utilisation of resources

To say that Malaysia has been underdeveloping its agriculture sector would not be an accurate observation, as a lot of financial resources have been ploughed into industrial crops, with the country’s most prized commodity being palm oil.

The agriculture sector contributed 7.3% to Malaysia’s gross domestic product in 2018, of which palm oil was a major contributor at 37.9%.

“The industrial crops, mainly oil palm, have contributed significantly to the Malaysian economy. On the other hand, food production — comprising crops, livestock and fishery — is still lagging, with a net import of around RM18 billion yearly,” says Datuk Dr M Nasir Shamsudin, a professor at Universiti Putra Malaysia’s department of agribusiness and bioresource economics.

“This has yielded a disparity in terms of optimal utilisation of resources and the contribution to the country’s economy, especially in terms of food security.”

Nasir, who is also a member of the National Agricultural Advisory Council, says in food production, there are very few commercialised farms that operate on the large scale of industrial crops.

“The average farm size is generally very small, which is not conducive to efficient and profitable farming. For example, in rice production, the farm size of [two-thirds of the nation’s] paddy farmers is below one hectare, and for fruit farmers, only 33% of their farms can be considered commercial farms, as [a majority] of their farms are less than half a hectare.

“As for vegetable farmers, about 80% of their farms are less than two hectares,” says Nasir.

And that is precisely Malaysia’s farming predicament today.

Tan, a vegetable farmer from Johor, tells The Edge that to obtain decent returns from a commercialised farm, a fairly large acreage of land is needed. According to him, the capital outlay for an acre of land is about RM10,000.

“Most vegetable farmers do not own their own land; instead we lease it from the oil palm estates,” he explains.

Certain vegetable farmers, however, choose to grow their crops on land that is obtained illegally, without seeking approval from the authorities.

The Star recently reported that the Perak state government is encouraging small-scale farmers occupying state land illegally to come forward to legalise their plantations.

A scarcity of land has also made it possible for only a select few crops to be grown in abundance.

“We plant a lot of leafy greens and cucumbers. About 20% of the vegetables grown in our farms are exported to Singapore. However, due to lack of land and workers, we don’t go into things like planting chilli,” Tan says.

Chillies are used in almost all types of Malaysian food, but we only produce a third of our domestic needs, with the remainder imported from Thailand. According to data from the Department of Statistics Malaysia, our self-sufficiency rate (SSR) for chilli was 31.9% in 2018, compared with 65.6% in 2013 — a significant reduction in just five years.

For clarity, an SSR below 100% shows that the supply of the agricultural commodity in the country is still not sufficient to meet domestic needs. Aside from chilli, Malaysia’s SSRs for round cabbage, beef and mutton are also below 100%.


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Ageing farmers and shortage of domestic skilled labour

In Malaysia, most farmhands are foreign workers and it is an open secret that the vast majority employed on farms are undocumented and unskilled workers.

Khazanah Research Institute research associate Ashraf Shaharudin says the agriculture sector has the largest share of foreign workers in a sector, at more than 30% — and this does not include undocumented workers.

“The problem is not with the nationality of the workers but the differential treatment between Malaysian and foreign workers. Foreign workers are paid low wages and working in worse conditions. Consequently, the availability of cheap foreign labour to do the jobs considered as 3D (dirty, difficult and demeaning) provide little push for the agriculture sector to innovate and adopt new technology. As a result, most jobs in agriculture are low-skilled,” he says.

Wages for any job need to be attractive enough to draw, motivate and retain workers, but low wages have been an issue for the agriculture sector for decades.

“Agriculture offers the lowest wages compared with other sectors. The median wage of workers in agriculture (RM1,392) is lower than that of workers with primary education (RM1,518) and around a third of that of workers with tertiary education (RM3,648).

“This discourages youths, especially those with education, from joining the agriculture sector — not only because the sector does not offer decent wages and the working conditions are poor, but also because there may be many job opportunities for educated workers,” says Ashraf.

The lack of interest from youths explains why there is no impetus to improve the livelihood of farmers, most ageing and trapped in the bottom 40% (B40) of the income spectrum.

Universiti Malaya’s Niaz, who is also the Southeast Asian lead for the Global Labor Organization, says this is a legacy issue, as a high dependence on agriculture for income and employment was perceived as a cause for underdevelopment in the country and, therefore, the economic transformation involved a push for structural change in the post-independence years.

“Graduation to an upper-middle-income country was achieved through rapid industrialisation. Thousands left farming for higher manufacturing wages. Within agriculture, some sub-sectors such as palm oil did experience modernisation and evolved as a valuable export.

“But paddy production expanded in an import substitution regime, with very limited value chain development and without significant income growth among farmers. That remains an important explanation for the connection between B40 and farming,” he says.


A lack of incentives and technological know-how

Dr John Tey Yeong Sheng, a senior researcher at Universiti Putra Malaysia’s Institute of Agricultural and Food Policy Studies, says a common explanation to the question on why farmers are still poor in Malaysia is middleman exploitation.

“I do not rule out the intermediary effect, but long-term and broad thinking should apply here. Sustained productivity and production growth in the context of value chain development is a precondition in agricultural transformation,” he says.

Tey adds that palm oil is a testimony of successful agricultural transformation, with palm oil value chains having gone from primary production to milling (the first stage of processing), refining (second stage), ­ole­ochemical and biodiesel manufacturing (third stage) and beyond.

“However, most agricultural subsectors [with the exception of poultry] continue to centre on primary production and consumption. Processing remains uncommon and there is little sourcing competition,” he says.

With virtually no demand push, Tey says farmers continue to face supply-side questions when it comes to the “4Ps”: place (where to sell?), people (to whom can I sell?), price (at what price to sell?) and pace (how quickly can I sell and get paid?).

“As a result, ex-farm prices continue to be flat in the long run and do not incentivise farm investments for productivity and production growth,” Tey explains, pointing also to underinvestment in terms of research and development (R&D) in the agriculture sector, and inadequate extension services.

For clarity, agricultural extension officers are intermediaries between research and farmers, and operate as facilitators and communicators to help farmers in decision-making processes.

“Spending on agricultural R&D as a share of agricultural GDP has been declining. It retreated from its peak of 1.88% in 2002 to 0.85% in 2016,” he says.

“As for extension units, there are only a few that remain active in knowledge and innovation diffusion. For example, in Sabah, the ratio of extension officer to total rice-growing area is 1 to 700-1,200 acres.”

Farming is still fairly labour-intensive, and exactly how much of farm work in Malaysia has been mechanised is not known.

“The objective of bringing farm machinery within the reach of farmers is to improve labour productivity. It is quite different from the common understanding of using machinery to reduce labour input. Productivity and efficiency growth are also desired.

“For example, automatic drip irrigation transports and drips water and nutrients to the intended root points of plants. When paired with analytical insights, optimal solutions can be reached. It prevents under- or over-application of inputs while enhancing yield growth,” says Tey.

In cases where machinery is available, the cost of acquisition and the return on invested capital are primary issues.

“Compatibility and complexity are equally important concerns,” Tey adds.

 

How do we fix this?

When the problems are structural, there is never a one-size-fits-all solution. But it does not mean that they cannot be fixed.

In general, when we talk about Malaysia importing too much of the food that we use on a daily basis, such as onions, chillies, garlic and ginger, to the common man, the solution would be to literally “grow ourselves out of this situation”. But in reality, it is not that simple.

“In general, our country can produce most basic food items, except those that can only be produced in temperate countries. But the biggest challenge is that we currently do not have a favourable ecosystem to productively produce basic food items.

“To ensure the supply of quality and safe food at affordable prices, investment in food production should not only be evaluated in terms of private benefits but also social returns and the country’s security. This requires an ecosystem and a mix between food policy, smart technology and entrepreneurship,” says Universiti Putra Malaysia’s Nasir.

He adds that to boost investment in food production, the private sector must be incentivised — the return on investment in food production should be at least comparable to that of industrial crops and other sectors of the economy.

“In addition, the government needs to implement land-use policy to enhance food security through the setting aside of agricultural land and aquatic and other natural resources for food production and other sources of nutrition,” says Nasir.

As for the lack of agricultural system technology application in farm practices, he says there should be incentives for investment, research and adoption in agricultural system technology.

“Examples of this technology are ­mechanisation, soil and water sensors, weather tracking, satellite imaging, automation, vertical agriculture, artificial intelligence, nanotechnology, agricultural GPS technology, robotics and precision agriculture.

“In addition to producing basic food items, Malaysia should consider high-value farming to produce roselle, figs, pineapple, papaya, banana, jackfruit and vegetables, among others. This farming must be complemented by supportive policies and smart farming technology and, more importantly, must be carried out by entrepreneurs,” Nasir says.

The government has announced an allocation of RM1 billion to a Food Security Fund to ensure that there is sufficient supply of food in the country amid the Covid-19 pandemic. In the larger scheme of things, the appointment of the members of the National Agricultural Advisory Council by the Ministry of Agriculture on June 25 is one of the government’s efforts to address issues on food security as well as the agriculture and agri-food industry.

While the committee is expected to play a more technical advisory role, policymaking would still be the task of the cabinet committee on food security, comprising 11 ministers and headed by Prime Minister Tan Sri Muhyiddin Yassin, which is expected to hold its first meeting this month.

It is hoped that the meeting will come up with a win-win solution, one that will boost Malaysia’s position in any food security index to one that actually reflects an effective and efficient use of resources in its agriculture sector, especially in agri-food.

 

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