The Ministry of Modernization of Agriculture and Native Customary Rights Land and Regional development has been assigned a strategic role in modernizing the agriculture sector, accelerating native land and regional development. This is crucial to accelerate the economic growth and development of the State under the Socio-Economic Transformation Plan (SETP).
SETP, a comprehensive, integrated and balanced development plan will focus on accelerating income growth and reducing income disparity among the regions to achieve the desired objectives. The plan covers a period of 15 years from 2016 until 2030 starting with the implementation of the 11th Malaysia Plan, now entering the second year.
The Plan, which covers all sectors of the economy, outlines various strategies, action plans and budgets, projects that Sarawak will grow at 6.5% per annum, a more conservative figure, to achieve a high income status by the year 2030. This is far more realistic as compared to 8.5 per cent growth per annum if Sarawak were to achieve a high income status by the year 2020.
With a projected growth rate of 6.5%, the nominal Growth National Income per capita by the year 2020 is RM44,100 which is still below the World Bank definition of a high income nation. However, by the year 2030 the nominal GNI per capita will reach RM82,600, which will exceed the minimum threshold of a high income nation at RM79,000 by the year 2030.
The State, under SETP, will focus efforts on creating high-income opportunities in new potential sources rather than diluting attention on marginal improvements in old industries. Private investments will be the main driver in the new sources of growth leveraging on the non-oil industries with the Government acting as facilitator to explore these potentials.
The Minister of Modernization of Agriculture and Native Customary Rights Land and Regional development, Datuk Amar Douglas Uggah Embas, in his winding speech during the debate on the Motion of Thanks to the Yang di Pertua Negeri, in the recent sitting of the State Legislative Assembly, said concerted efforts would be made to further increase the contribution of the agriculture sector in uplifting the livelihood of the Rakyat.
For example, the Ministry, realizing the need to focus on the Regional Development, will endeavor to reduce regional disparities in development by leveraging on the development of the vast potentials of an area according to its resources so that the economic benefits derived can be shared and enjoyed by the people of all regions.
Datuk Amar Douglas Uggah said the Ministry would revamp the land approval process to accelerate the development of NCR land in rural areas. The new process will ensure that development of the NCR land can be implemented successfully speedily by the investors and landowners; this will be a strategic new direction in the development of NCR land in rural areas.
He said concerted efforts must be pursued by the Ministry to further develop and increase the contribution of the agriculture sector in eradicating poverty and uplifting the livelihood of the rakyat in the State. Last year, the agriculture sector contributed 13.7 percent to the State economy and provided approximately 300,000 employment opportunities.
The State agriculture sector, taking cognizance of the new strategic thrusts of the Ministry, has the main objectives to eradicate poverty especially the hardcore poor; increase the income of the farmers to RM4,000 per household by 2020; reduce income disparity between urban and rural areas; achieve food self-sufficiency as well as food security and be the net exporter of agriculture produce.
The Ministry, through its agencies will implement transformational initiatives namely the Modernization and Commercialization of Agriculture Sector; Acceleration of Native Land Development and Consolidation and streamlining of all Regional Development programs and projects towards realizing the desired objectives.
He said the past and present efforts to commercialize the agriculture sector have generally focused on providing subsidies to smallholder producers and small entrepreneurs. The subsidies are usually in the form of production inputs, materials and small equipment.
The approach, which has been focusing on primary production, does not address issues along the supply chain. Its main drawback is that it does not give enough attention to post-harvest handling, value added processing and marketing. As a consequence, serious bottlenecks in the supply chain still remain.
He said the other major weakness in the present smallholders system is the lack of organized efforts that can ensure reliability of supply in terms of volume and product quality that the market demands.
Datuk Amar Douglas Uggah said the Ministry would adopt new business models that can accelerate agricultural growth if it were to bring about a transformation and achieve a quantum leap in production and trade to raise the income of the people, the rural communities in particular.
Datuk Amar Douglas Uggah believes the new business models would be able to harness the financial resources and business acumen of the private sector, while leveraging on their management and technical expertise. This means that agriculture businesses must be developed and managed by corporate entities.
He also believes by giving a bigger role to the corporate sector in developing and managing commercial agriculture, it would be able to, not only to ensure the viability of a commercial agriculture while at the same time reduce the financial burden on the Government.
In this connection, the Ministry proposes to establish a Special Purpose Vehicle (SPV), which will be tasked to identify the viability of agriculture businesses for investment purposes. Subsequently, the Ministry proposes to form a subsidiary company to manage and operate the business.
The SPV may finance the business either from its own resources, or form joint ventures with suitable private partners. The key feature of the SPV business model is that the SPV will divest its equity in the venture and once the business becomes successful.
Then the equity, belonging to the SPV, will be offered at par to cooperatives or business organizations formed by the participating farmers and land owners. The proposed SPV will be a new corporate entity created under an existing state statutory body.
Datuk Amar Douglas Uggah says the State Government has decided to provide a sit grant or venture capital to the tune of RM100 million to enable SPV to function and operate. The funds will be used as investment capital in the establishment of the new agriculture businesses by the SPV.
He says agriculture production in Sarawak especially in the agro food sector faces many obstacles when it comes to marketing and sales. The domestic market is small to necessitate the State to look to export markets to enable the sector to grow.
Therefore, there is a need to organize and facilitate the marketing process along the whole supply chain, starting from production to post-harvest handling, processing, packaging and finally marketing to ensure that local agriculture produce can find ready markets both locally and abroad.
Datuk Amar Douglas Uggah says the export market in particular has very stringent standards for product quality, packaging and labeling that that must be complied with. Besides, different markets would be expected to have their own specific requirements. Access to them may also be subjected to non tariff barriers imposed by the importing country.
An example is the Sanitary and Phyto-Sanitary (SPS) requirements that most countries put in place to protect their local industry. Trade in agriculture produce may also be governed by bi-lateral or multi-lateral agreements, which are generally designed to facilitate trade in specific products between countries.
Besides, the agriculture products must also be contented with the logistics of delivering our goods from local farms to consumers abroad in addition to the regulatory impediments. Obviously, proper management of logistics is crucial in order to reduce costs and increase competitiveness with the generally under-developed transport infrastructure and distance from potential markets.
As the local production base is quite diversified, comprising smallholders, small entrepreneurs and large-scale producers, there is a need to develop strong linkages between producers and exporters in order to ensure reliability of supply in terms of volume and quality.
Much of the marketing activities will inevitably involve business to business (B2B) arrangements between local exporters and their businesses partners in the importing countries. Besides, given the multi-faceted and complex nature of the processes involved, there is a need for a corporate entity to manage export of agriculture produce from the State,
Datuk Amar Douglas Uggah says his Ministry has proposed to set up Sarawak Agriculture Products Export Corporation, which is expected to be the gateway for the export of all agriculture products from the State, to play relevant roles in managing the export of agriculture produce from the State to market overseas.
The Corporation will make greater use of information and communication technologies (ICT) in linking producers with buyers. This will be in line with the State Government’s vision of a digital economy for Sarawak.
He believes the agriculture production from corporate entities, entrepreneurs and smallholders can have better access to overseas markets with the establishment of Sarawak Agriculture Products Export Corporation and application of ICT, Promoting Anchor Out-Grower Farming and Establishment of Collecting and Processing and Packaging Centers.
Datuk Amar Douglas Uggah says his Ministry is promoting the Anchor Out-Grower Farming approach that will leverage on the strength and capacity of the private sector as the Anchor Farmer in large – scale farming in major food production areas.
The agreed quantity, quality standards and prices of agricultural produce will be determined through the negotiation between the anchor company and smallholder growers.
The anchor farm would act as a prime mover in driving the production of large volume of quality agricultural product and at the same time provide assured market access for smallholder producers, which will become the out grower farmers to the anchor farm and to be linked through contract farming mechanism.
Datuk Amar Douglas Uggah says his Ministry, through its relevant agencies will set up several Collecting, Processing and Packaging Centers (CPPC) at strategic locations in the State as one of the critical issues being faced by smallholder farmers is the lack of access to market for their agricultural produce.
In this connection, the Department of Agriculture and Federal Agricultural Marketing Authority (FAMA) will work closely to ensure sufficient produce and efficient and effective marketing operation of the CPPC.
The Ministry, with the anchor farming and CPPC initiatives put in place, should be able to enhance the production of large volume of quality agriculture produce to meet the domestic and export market requirements and also to resolve the marketing issues being faced by the smallholder growers.
Datuk Amar Douglas Uggah believes his Ministry, which is in full supports of the State’s agenda to develop the digital Economy, will give high emphasis on the application of Information and Communication Technology (ICT) along the whole value and supply chain to develop the agriculture sector in the State.
Its immediate efforts will be to would focus on the development of a comprehensive agricultural database with ICT application and e-Commerce for agricultural business transactions.
The Ministry, in the near future, will also encourage more private companies to venture into a high-tech agricultural production technology such as precision farming in the State to increase production to meet local demands.
Datuk Amar Douglas Uggah says the high food import bill of the State at RM4 billion in 2015 is a great concern to the State Government. The State’s Self Sufficiency Level (SSL) in 2015 for fruits and vegetables, rice and fish were at 64%, 48% and 93% respectively.
Obviously, more efforts are needed to improve the current farming system including new development approaches with the adoption of modern technology, which is still very low, so that food production system can become more efficient.
He believes, besides providing all the prerequisites of modern farming inputs such as farm infrastructure and facilities, seeds, crop care and maintenance, post-harvest and marketing, farm productivity could be further boosted through the adoption of smart farming technologies, which should to be transferred to the farmers to resolve issues related to productivity.
The Ministry is focusing on strengthening agriculture extension as the “Way Forward” to transform agriculture, in the overall efforts of modernization and commercialization of agriculture to meet the objective of high income farming community.
In this connection, the Department of Agriculture Sarawak should continue to intensify agriculture extension services to the target groups.
Therefore, it is pertinent that the Department of Agriculture should revamp the current Extension System to include the training of specialist technicians on various subject matters at the grass root level.
