Modernise Our Agriculture Sector For Greater Yield

As of mid-year 2024, Malaysia has experienced a mix of success and challenges across various sectors, as assessed by global observers and local institutions. The Corruption Perceptions Index, released in January, showed a promising uptick, from 47 to 50, in Malaysia’s index score, reflecting a positive trajectory in addressing corruption in the country and instilling confidence in our progress.

The World Bank report regarding our economic and education performance released in April emphasised that our country certainly needs to do more to strengthen foundational skills and enable Malaysia to sustain growth and transition into high-income status.

In June, the IMD World Competitiveness report revealed a concerning decline in Malaysia’s ranking from 27th to 34th, highlighting the pressing need for action.

Khazanah Research Institute (KRI) released a discussion paper highlighting the negative impact of rising food costs on the dietary choices of Malaysians.

Additionally, the National Health & Morbidity Survey 2023 (NHMS 2023) indicated that one-third of Malaysian adults have high cholesterol, and 54.4% of Malaysians can be classified as overweight or obese. Furthermore, it was reported that 95.1% of Malaysians do not consume adequate fruits and vegetables daily.

Excessive cholesterol and overweight are highly related to the unhealthy dietary habits of people, which are closely related to their income. KRI’s latest report echoes a similar statement.

KRI’s report examined the factors contributing to unhealthy dietary habits based on the five dimensions of food environments: food availability, affordability, properties, messaging, and vendor characteristics. In summary, they have concluded that income, time, and targeted marketing aimed at children are the top factors influencing unhealthy dietary practices. Specifically, individuals facing income and time poverty are most affected (KRI, 2024).

With the Consumer Price Index (CPI) for food and beverages rising from 117.9 to 132.8 between May 2020 and May 2024, and yet incomes remaining stagnant over the years, it is no surprise that low-income families are struggling to feed themselves, let alone maintain a healthy diet.

The increase in food costs can largely be attributed to two primary factors: our less-than-ideal food self-sufficiency and the weak performance of the Ringgit Malaysia (RM) against the United States Dollar (USD).

Insufficient agricultural productivity and inability to meet demand have fuelled our reliance on imported food at higher prices due to geopolitical issues and currency performance. Despite the government’s right course on de-dollarisation, it still has not been able to stabilise food prices effectively.

Needless to say, our agriculture sector needs to enhance productivity within the industry significantly. This can be achieved through a comprehensive blueprint based on notable success stories in food security, such as the one in Qatar.

In a previous publication titled “How Qatar Flourished in Food Security Despite Geographical and Geopolitical Challenges,” we explored Qatar’s strategy for elevating its food security status. We identified the core elements of their approach, which involve constant progression and adaptation of agro-technology, proper support for small farmers, and a careful balance between imports and local production.

To say Qatar has flourished in its venture to improve food security is an understatement. Not only have they managed to increase their dairy product self-sufficiency ratio (SSR) threefold within a year following the diplomatic crisis, but their vegetable SSR has also increased from a mere 10% in 2017 to 46% in 2023. This achievement is remarkable, especially considering that Qatar is a desert nation with very limited arable land and water resources.

Regarding food costs, their CPI for food and beverages, a month into the blockade, saw a rise of 4.2%, increasing from 99.7 in June 2017 to 103.9 in July 2017 (Planning and Statistic Authority of Qatar (PSA)). This increase was due to Qatar’s historical over-reliance on food imports, with 40% of their food entering via land transport through Saudi Arabia, which was affected by the blockade.

However, the swift response from the Qatari government to expand local production through technology integration and secure alternative food import sources and trade routes has helped them quickly stabilise the situation and prevent food inflation from spiralling out of control.

In fact, not only has the Qatari government managed to keep prices relatively stable, but their CPI for food and beverages already in Q4 2018 was 101.4—a 2.8% decrease compared to 104.3 in Q4 2017—due to the implementation of their strategy.

Given that Malaysia’s environmental factors are much more forgiving than those in Qatar, a similar strategy of full-speed and full-scale support and modernisation of our agriculture sector would most certainly yield profound, figurative and literal fruits for our nation!

Increased food productivity not only results in a higher local supply that can reduce food costs but also leads to an increased income for small farmers, which, in turn, translates into broader intergenerational impacts for a nation.

Moreover, integrating 4IR technologies into our agriculture sector would create more high-skilled employment opportunities for the youth. Simultaneously, it would promote STEM fields as an educational and career path for students and further empower our technology sector, a hallmark of an advanced economy.

In the IMD report that observed Malaysia’s competitiveness ranking decline, we notice a downturn in the majority of criteria examined by the organisation. Specifically, productivity, efficiency, and technological infrastructure significantly dropped in ranking (IMD, 2024). While these evaluations encompass our entire economy, modernising the agriculture sector would undoubtedly lead to substantial improvements in various areas.

Qatar data is an illustrative example of the possible transformative path from taking agriculture seriously to broader national impacts, as outlined in Figure 1.

In the years following the initiation of Qatar’s comprehensive national food security strategy (post-June 2017 blockade), we observe noticeable improvements in the country’s innovation index, a substantial increase in high-tech exports, and a rise in patent applications by residents. These developments have directly contributed to marked improvements in Qatar’s IMD rankings. As anticipated, Qatar’s Economic Complexity Index has also risen sharply since 2017, pointing directly towards increased domestic industry breadth and depth and indirectly underscoring that such national impacts are not solely attributed to the country’s rich national resources but reflect more profound structural changes.

Also, following 2017, Qatar’s unemployment rate sharply declined even further despite already being one of the lowest in the world. Additionally, its Gross National Income per capita has steeply increased since 2020.

Malaysia is facing various difficulties, including rising living costs and stagnant salaries, among other challenges. However, the modernisation of the agriculture sector will not only improve our food security but also provide opportunities to enhance our nation’s economic growth.

While the government(s) have been trying to expedite the process of integrating modern technology into the agriculture sector, progress has been lacking for several reasons, including historical over-reliance on subsidies that are also prone to leakages.

For this, local research house EMIR Research has suggested that the government should not stop short at monetary support but go the extra mile by comprehensively providing equally important logistical and technological support. This way, small farmers would have what it takes to utilise the equipment and minimise the interference of intermediaries (Refer to “Agriculture Sector Need More Than Subsidies to Boost Productivity and Food Security”). The suggestion was also formulated in reference to the Qatari government’s strategy of providing all-round support to their agriculture industry to help it flourish.

With a successful example at hand in the case of Qatar, which not only helped them weather the storm during the diplomatic crisis but also allowed them to utilise that experience to mitigate the impact of COVID-19 on global trade, there is no reason why we should continue to delay taking decisive action on such an opportunity for our nation.

Chia Chu Hang is a Research Assistant at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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