One of the EMIR Research’s key findings under the Government Satisfaction Index (GSI) has been the 29% of dissatisfaction over the government approach and action in employing agricultural policy to manage high unemployment and food imports.
As 2020 sets in, policy actions in addressing the perut economy or bread and butter issue become even more critical, especially in the context of youth unemployment which could be addressed through dignifying the agricultural sector.
What are the issues faced in the agricultural sector?
Malaysia’s Agrofood Policy (NAP 2011-2020): “Performance and New Direction” by the Malaysian Agricultural Research and Development Institute (MARDI) indicated that skilled labour in the agricultural sector continues to decline over the years.
Based on its statistics, out of 31.8 million Malaysians, around 44% are youths. However, from this figure, only 15% of youths are involved in the agricultural sector.
The report claimed that the agricultural sector still fails to attract the interest of younger generations. In 2018, there were only 1.4% graduates with an agricultural background employed in the sector as compared to 1% in 2017.
This phenomenon of very low youth involvement in the agricultural sector is mainly associated with factor such as negative perception of high risks and low returns.
Also, farming is deemed as a backward industry resulting from lack of manpower, funding and technical support. Ultimately, most farmers still lack the technical knowledge to innovate their agricultural practices and improve productivity with particular reference to food produce that are still heavily imported.
Farmers also face the supply chain issue of the distributors or the middlemen. With production and marketing being the two components in the supply chain, farmers are normally reliant on middlemen to distribute and sell their crops in the market.
An example of this is when farmers sell their Kailan at RM1.80 per kg to the middleman, the end-consumers buying it at RM8.00. In between, the middlemen take up the high margin that is passed to the end consumers.
This situation exists because farmers are reliant on the middlemen for market information on prices. Such dependency is often exploited by the middlemen to the financial disadvantage of the farmers.
Therefore, the profit margin of farmers is exceedingly low and serves as a disincentive to the youth to enter the agricultural profession.
As such, the distribution and marketing channels need to be secured to ensure that farmers obtain their fairer share of income. This can be done, for example, by promoting the role of cooperatives and youth organisations to substitute the role of middlemen and be more dominant in the supply chain.
This arrangement could take place under the framework of the Ministry of Agriculture (MOA’s) three-tier marketing system as per the Eleventh Malaysia Plan which are the production of high-quality products complemented by more marketing channels and expansion of new markets.
This would entail the government acting as matchmaker bringing together the farmer and retailer (domestic and overseas) in the form of, for example, contract farming.
By extension, such production agreements between the farmer and retailer can lead to the establishment of farm collection centres, packing house facilities, trading and wholesale markets, etc that will minimise transaction time and post-harvest losses.
Again, youth agropreneurship can be integrated with young entrepreneurship as a whole with respect to the entire supply chain. This requires collaboration and cooperation among relevant ministries such as MOA, Ministry of Entrepreneur Development (MED), Ministry of Rural Development, Ministry of Domestic Trade and Consumer Affairs, and Ministry of International Trade and Industry (MITI).
Dignifying Agricultural Sector
A concerted strategic effort therefore, needs to be undertaken by the government to further encourage youth participation in the agricultural sector. Actually, there have been past policies to encourage more youths to take up farming.
Under Strategy 2 of the Eleventh Malaysia Plan (EMP) in relation to the agricultural sector, the government is committed to promoting training and youth agropreneur development through collaboration across agencies and the private sector to modernise farming techniques and nurture agrobusiness start-ups under the Agropreneur Muda (Young Agropreneur) and agriculture as business programmes.
Under the present government, the MOA has approved 863 applications from young agropreneurs for grants totalling RM14.08 million. The target is for grants totalling 20 million and 1,200 young agropreneurs by 2020.
Young agropreneurs can also take advantage of the National Agrofood Policy (NAP4), 2011 – 2020 by the Ministry of Agriculture and Agro-based Industry, particularly the new sources of wealth programme as an action plan to increase income and improve the welfare of farmers.
This programme aims at increasing the participation of farmers in the downstream industry as well as to develop capacity of farmers, fishermen and agropreneurs.
Fruits such as durian, coconut and pineapple have been identified as new sources of agricultural wealth. These crops are usually sold fresh for local markets while processed fruit produced are marketed in the form of paste or pulp for exporting purposes. This is where young agropreneurs should leverage on the exporting opportunities to increase their profit margin.
Progressing to a modernised agriculture is also a way to attract more youths into the agricultural sector. And since the youth are generally tech-savvy, there is no prospective barrier inhibiting them to adopt and adapt technologies in agriculture.
Modernising agriculture may include employing sustainable agriculture development by leveraging on technology application in the operation – be it building facilities to control the elements of farming like sunlight, humidity or building a proprietary watering system where the right amount of water required by the crops to grow is provided.
Modern and precise agriculture improved yields and provide higher income to the farmers, which in the long run, if managed properly, would become a generational wealth creation.
Take for example the case of Cultiveat, a company based in Klang, which was formed by John-Hans Oei who has had the experience in food waste management using enzyme (microbial) technology.
By way of backward integration, the by-product of the food waste is now used for farming purposes. This farming innovation – which centres around quality control (QC) – has received the support of MaGIC (Malaysian Global Innovation & Creativity Centre).
Besides the farmers themselves, the modernised agricultural sector will create jobs all along the supply chain including logistics providers, researchers, analysts, drone manufacturers, food technicians, nutritionists, ecologists and veterinarians. These represent the jobs of the future which would be naturally filled by the younger generations.
All in all, the conditions for developing young agropreneurship in Malaysia are already present and taking place albeit at a pace that is slower than expected. However, given time and government support and backing, young agropreneurship will be the key driver of growth of the agricultural sector in Malaysia which in turn will act as a catalyst and impetus of economic growth.
Dayang Shuzaidah is a Research Analyst at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.