Food Supply Chain in Malaysia
Global trend in the agriculture sector points to industrialization of the sector, which indicated by expanded global production, growing demand, new, simplified technology, competitive metrics & returns. This results in Increased concentration, consolidation & structural change, increasing risk, production of differentiated products, formation of food supply chains, precision (information intensive) production, increased diversity, expansion of industrialize agriculture and emergence of ecological agriculture. Many of the current agriculture industry concerns arise due to poor supply chain management issues. However the agriculture supply chain is facing several challenges today and by introducing best practices into the supply chain, the agri-food sector can have a competitive advantage to achieve its growth targets. In order to make Supply Chain Management (SCM) a success, the agri-food sector needs integration, proper coordination and operate commercially in order to be competitive in the global markets.
Agribusiness Industry Overview
Agriculture has evolved into an industrial specialisation which creates significant impact around the world. It is no longer just a way of life, traditional small-farm practices are fast disappearing. As a result of these evolving key drivers and sociological changes around the world, the giant food-retailers – with multinational presence have taken the opportunity to revolutionise the industry with new ways of doing business. The domestic agribusiness industry has also acted and reacted to the global environment. Generally, the agribusiness industry comprises of 3 major components, namely (1) Industry framework and drivers, (2) Industry set up and (3) Knowledge Infrastructure.
Sectoral Investment Opportunities
The fishery sub-sector has been an important sector in agriculture with GDP contribution of 1.6% in 2001. However, Malaysia is still a net importer of fish even though there are still resources that can be exploited especially in Sabah and Sarawak. Local supply of fish for food is still not sufficient to fulfill the domestic demand. World export market for fish and fishery products which value at US 51.27 billion ( 1998 ) can still be tapped. Supported by good local and international transportation networks, Malaysia could expand market in countries with growing demand especially United State of America (USA), European Union ( EU ) and Japan.
A few potential areas have been identified as opportunities in Malaysian fishery sub-sector. Private sector investors are invited to participate in any of these areas;
i. Deep-sea fishing
iii. Ornamental fish
iv. Hatchery/nursery industries
v. Surimi-based fish products.
Investment opportunity in fishery industries ( pdf )
Livestock sub-sector contributes 18% to the food sector in term of value in 1999. Malaysia is not self sufficient in most of livestock products except for poultry and egg. Malaysia is only 21% self sufficient in beef, 5% in mutton and 46% in milk. The shortages has made Malaysia net importer of these product, which are valued at around RM 3 billion in 1999.
The government has incorporated the development of halal food as one of the strategies in Industrial Master Plan ( IMP2), National Agricultural Policy 9 NAP 3) and other related policies. The aim is to position Malaysia as a halal food hub for the world. Department of Veterinary Services, Malaysia is developing the halal food hub for meat based products which provides business opportunities in halal food processing. The department estimated that the world market for Halal meat based products to be worth USD 45 billion in 2005 while domestic market size is estimated around RM 2.2 billion a year.
Investment Opportunities In Livestock Industry (ppt)Available only in Bahasa Malaysia
Turning Malaysia Into The Halal Food Hub For The World ( ppt )
The Ministry of Agriculture has set sales target of RM27 Billion for crops, which include paddy, fruits, vegetables, coconut and floriculture products. Malaysia’s self sufficiency level for paddy is only 70% which prompts the Ministry to increase production to 6 MT/ha per season under NAP3. For some special projects, a target of 10 MT/ha per season is set. The increase in production is expected to support the local industry over our too dependency on the imported rice.
Our fruit industry has yet to reach its true potential when compared to similar industry in our neighboring country especially Thailand. There is still a lot of potential to be expected from this sub sector. The export potential alone is more than RM200Million in 2000 and the value is increasing with greater accessibility in new markets. Malaysia is also importing more than RM500 Million worth of tropical fruits, which could also justify the need for more investment in our local fruit industry. With the increasingly high price paid for tropical fruits, investment in this industry is also very profitable.
Potential of the vegetable industry has also been documented. In 2000, Malaysia imported RM500M worth of vegetables from various sources. Temperate produce such as potatoes, onions and cauliflower are imported in large quantity from Thailand, Indonesia and Bangladesh due to the lower cost of production in those countries. This is RM500M worth of import substitution if we can emulate their cost efficiency in their production. Investment in vegetable industry can also be very attractive. New technology and machinery has also been adapted into this sector in order to increase efficiency and to bring greater return to the investor.
Investment opportunities in crop (X-zip com -pdf) Available only in Bahasa Malaysia