Crop Diversification in the Asia-Pacific region - United Nations in ...

The Natural Rubber (NR) industry contributes to national development in terms ofexport earnings, Gross Domestic Product (GDP) as well as employment and income,involving about 420,000 smallholders and 53,000 estate workers. The NR industry alsoprovides employment opportunities in other ancillary activities such as in trading, processingand manufacturing. In 1995, export earnings from NR and rubber products amounted toRM7.9 billion (USD 2.1 billion), representing 3.9 percent of the total export value. Between1985 and 1995, production contracted by 27.2 percent from 1.47 million tonnes to 1.07million tonnes and the decline was experienced by both the smallholder and estate sectors(Table 5). This was due to the weak rubber prices prevailing during the period. The declinein production led to the closure of many processing factories, especially the smaller and lessefficient ones, due to the shortage of raw materials. The remaining factories are operating atan average of 55 percent capacity. The import of raw materials from other producingcountries will be on the increase to meet the demand of local processors and rubber productmanufacturers.The oil palm industry has evolved from a mere producer and exporter of crude palmoil (CPO) into a more diversified entity, creating new downstream and supporting industries.Over the years, it has remained resilient in the face of many challenges and has continued tocontribute significantly to the national economy. Its contribution to GDP amounted toRM6.8 billion in 1995 or 5.7 percent, up from RM3.6 billion in 1985. Among the primarycommodities, palm oil is the country's largest export earner, totaling RM13 billion (US$3.4billion). About 250,000 families in Government land schemes and independentsmallholdings as well as 80,000 workers in the private estates of Peninsular Malaysia aredependent on this industry for their livelihood. Concurrent with the rapid expansion in oilpalm planted areas, the number of oil palm mills also increased. At the end of 1995, therewere 281 oil palm mills with an annual operating capacity of 50.8 million tonnes of freshfruit bunches (FFB), 41 refineries and 13 oleochemical manufacturers with an annualoperating capacity of 10.15 million tonnes and 0.82 million tonnes, respectively. Processedpalm oil exports grew from 3.4 million tonnes to 6.5 million tonnes during the period 1985-95 (Table 6).Over the 1985-95 period, the country recorded an increase in average yield and totalrice production (Table 7). National yield recorded an increase from 2.7 tonnes per hectare to3.2 tonnes per hectare during the period. Peninsular Malaysia recorded an average yield of3.7 tonnes per hectare in 1995, while Sarawak and Sabah averaged 1.2 and 2.7 tonnes perhectare, respectively. Total rice production increased from 1.7 million tonnes in 1985 to 2.1million tonnes in 1995. The eight main granary areas, which accounted for more than 70percent of rice production, recorded an increased yield from 3.3 tonnes per hectare in 1985 to4 tonnes per hectare in 1995. Over the 1985-95 period, domestic production accounted forabout 77 percent of the total domestic consumption. In 1995 importation of rice amounted to427,570 tonnes valued at RM356.1 million (US$94 million).Cocoa production increased from 108,000 tonnes in 1985 to 247,000 tonnes in 1990but subsequently declined to 132,000 tonnes in 1995. Cocoa remains an important agrobasedindustry for the country. During the 1990-1995 period, exports of these products haveincreased by about 48 percent, from RM307 million (US$81 million) to about RM453million (US$119 million) (Table 8). The cocoa industry is a source of livelihood for about120,000 smallholder families and provides employment for about 36,000 workers in theestate sector. Additionally, a substantial number is employed in supporting industries suchas65