Overview of the role of agriculture in Malaysia

2.1 Overview of the role of agriculture in Malaysia

The importance of agriculture in the overall national of Malaysia is clearly stated in the National Outline Perspective Plan (OPP) where the sector is now identified as the third engine of growth, after manufacturing and services. The New Agricultural Policy (NAP), formulated to achieve this objective, identifies several types of crops which are strategically and commercially important to the agricultural economy of the country. The crop for which the country has a strategic interest, for reasons of food security, is still paddy since rice forms the staple diet of the majority in the country. The production is however insufficient to meet the needs of the country, where at present a self sufficiency level of about 70 % is achieved and maintained; with the rest coming from or imported from neighboring countries.

Asides from paddy, the NAP is also specific on the types of fruit and vegetable crops which shall be developed and promoted in the country. Although the country is endowed with a wide range of indigenous tropical fruits, some of which are exotic in nature, the emphasis of fresh fruit crop development (e.g. research, extension, marketing, etc) is however confined to a few selected types of fruit crops only. The emphasis in this case is to develop the fruit industry for which the country has the comparative advantage in marketing the produce on the free world market. The reason for this direction of development is to ensure that the development of the crop commodities is in line with the agricultural vision of making Malaysia a net exporter of food by the year 2010.

2.2 Strategies to promote crop development

Several strategies have been identified to define and boost this competitive advantage in the development of the fresh fruit and vegetable sub-sectors in Malaysia. These are:

1) selecting crops (current as well as potential) that are agro-climatologically suitable for cultivation in the country and with potential for continuous planting throughout the year. This is to take advantage of the loss of production in competing countries when, due to unfavorable weather conditions, the year round production is not possible, e.g. water melon,

2) confining development to the cultivation of fruit crops for which the country has already the competitive advantage in world trade, especially crops that are presently and widely planted in the country, promoted and marketed in different parts of the world such as star fruits, papaya, watermelon, pineapple, etc.

3) increasing productivity and efficiency so as to make the produce more competitive in the world market – a strategy which is achieved through aggregation of farms into economically viable production entities (group farms), allocation of suitable land resources for the development of permanent food parks, mechanization of the production processes, injection of new technologies and commercialization of the agricultural operations.

The comparative advantage gained through choice of crops and increased productivity and efficiency are however insufficient to ensure the continued sustainability of the food crop industry in Malaysia.

In spite of these advantages, the fruit and vegetable industry also faces a number of challenges which, if left unattended, will result in a decline of the country’s share of the local and world market of these produce.

2.3.1 Free trade

One of the main challenges facing agricultural producers in Malaysia today is globalization and free trade, as expounded globally by the World Trade Organization (WTO) agreement and the ASEAN Free Trade Agreement (AFTA) for the South East Asian region. Under both agreements, signatory countries are committed to allow exporting countries free access of their commodities into the local market, without undue levy of import duties and tariffs which can be construed as barriers to trade. The advantages of this agreement are also mutually beneficial for both exporting and importing countries, since both are unrestricted in their export of their produce to the importing countries. In view of this globalization and free trade, the world market for trade is now very open and as a result strongly competitive in nature.

Despite the free trade agreement, the right to impose non-tariff conditions (technical barriers) for the import of commodities from the exporting countries is still permitted and retained by the signatory countries. This may be due to a number of technical reasons which the importing countries deem or consider important to ensure that the rights of the country are protected. One of the reasons that is used as a technical barrier to trade is the need of the exporting country to adhere to the international phyto-sanitary and sanitary (IPSS) requirements. Several reasons justify the right of the importing country to invoke this technical barrier to trade.

These are

1) to ensure that the bio-security of the importing country is not compromised due to the entry of exotic plant pests, a breach which can severely affect or damage the agricultural economy of the importing country

2) to ensure that the well being and health of the country’s populace is protected from commodities which are produced in a unsanitary and unsafe way. In addition to this, many countries are now subscribing and implementing measures to ensure that production and manufacture of agricultural commodities are undertaken in a sustainable manner; giving due attention to such parameters as food safety, preservation of the environment, ensuring workers safety and health and conservation of flora and fauna (biodiversity).

2.3.2 Expectations of consumers

Another challenge which agricultural food producers in Malaysia have to contend with in the globalized market is the rising trend of consumerism, where consumers are now demanding, expecting and trusting the food manufacturers and retailers to supply and demonstrate that the food they consumed are safe, of high quality and that they are produced in sustainable and environmentally friendly ways. As a result of this demand and expectations, the manufacturers and retailers of food produce are thus forced to source their products from suppliers and producers which meet the above mentioned demands of the consumers; a pressure which threaten their markets.

In addition to pressures which threaten their markets, buyers of agricultural produce, i.e. the manufacturers and retailers, are also subjected to pressures that threaten their supplies. Sourcing of agricultural produce must, as a result, be made from suppliers and producers who share the consumers’ expectation of the availability of agricultural food that are safe, of high quality and which are produced in an environmentally and sustainable way. This pressure, which threatens their supply, is further aggravated if the existing food farms supplying the produce to them are not managed in line with sustainable best practices; often resulting in adverse effects on environment, product safety and workers health. Many of the new food crop plantations, for example, have been established without due consideration being given to rain forests and natural habitats, where land clearing are done using unsustainable clearance techniques. This large scale deforestation often results in loss of biodiversity, displacement of wildlife, pollution and social conflicts.

2.3.3 Corporate management policy of agricultural food buyers

Due to consumers’ concern, a concern that threatens the buyers market, there is now demand on buyers of agricultural produce to adopt a more radical attitude of doing business in sourcing for food and other agricultural produce from their suppliers and producers. Many fresh food buyers and manufacturers of processed foods, especially those in Europe, are now committed to the principles laid down by the Rio Summit, the International Chamber of Commerce in its Business Charter for Sustainable Development and Sustainable Agriculture. Sustainable agriculture, as commonly defined, is agriculture that meets the needs of today but without sacrificing the ability of future generations to meet their needs.

Towards this desire to be in line with safe and sustainable agriculture, many food importers and buyers of agricultural food produce are now committed to the principles of sustainable agriculture and, depending on the companies involved, have introduced varying corporate management policies of buying agricultural produce, either for fresh consumption or as raw materials of processed food. In general, many manufacturers are now implementing management systems that integrate issues which relate to quality, the environment, food safety and safety and health of workers. Some have in fact encouraged their business associates and suppliers to aim for the same high standards of environmental protection and safety as those to which they aspire. An example of this commitment is demonstrated by a major food manufacturer who, in sourcing for its supplies, evaluates the safety, health and environment performance of its suppliers and contractors. Some buyers are also encouraging their suppliers to strive for food safety, health and environment standards equivalent to their own while some buyers are committed to purchasing agricultural produce only from suppliers who meet the criteria or standard as set out by the company.

The importance placed on the performance in food safety, health and environmental protection is also, for some, an integral part of the process of selecting business alliance and of maintaining contracts. Some buyers will only work closely with suppliers who are willing, able and committed to deliver agricultural produce as per their criteria and who share their enthusiasm on quality assurance and sustainability. In view of these, many buyers have now developed and completed guidelines for sustainable management of key crops for products that are sourced by the buyers. These include amongst others guidelines for sustainable management for crops such as oil palm, tomatoes, tea, etc.

2.3.4 Compliance to sustainable management

Asides from corporate policies and guidelines, some buyers of Malaysian food products have also developed and maintain systems to verify performance in food safety, health and environmental protection; with the objective of ensuring that its management system is being complied with. To ensure compliance by producers to sustainable best practices, compliance audits of the producer are often required by the purchaser. These are either undertaken by staff of the company buying the products or by auditors appointed by the buyer. In some instances, some buyers are committed to independent verification of compliance with its criteria by auditors appointed by the buyer or moving towards the use of independent certification against an international standard. Some of the major buyers and retailers are also in favor of a development of a globally accepted agriculture certification system designed specially for food crops such as for fruits and vegetables.

As such, major manufacturers and buyers are now demanding agricultural food products that are produced in a safe and sustainable way and with the assurance that they are truly conforming to standards of Good Agriculture Practice (GAP), i.e. an agricultural production system that is safe to the environment, safe to workers health, safe to the crop and producing food that are safe for consumers; all done or achieved in a sustainable way. The agricultural production processes that conform to standards and are certified by approved certifying bodies are now gaining momentum and are favored by the big manufacturers when sourcing for fresh agricultural produce and crop based products such as palm oil. There is also now a rising trend for many countries and producers in the use of globally accepted and auditable systems and standards in international trade

2.3.5 Evidence of traceability

Traceability, defined as the ability to trace the history, application or location of that which is under consideration, is also another challenge which many Malaysian food producers have to contend with in the international as well as local markets. In this case, traceability is closely linked with product identification and recall procedures that relate to the origin of materials and parts, processing history and the distribution and location of the product after delivery. The importance of traceability for public health and consumer protection has, since the 1980s, steadily increased and grown as a mandatory requirement in the production and market access of food products, particularly now when food production and marketing have been removed from direct consumer control. Traceability of food products is now an essential marketing requirement which is deemed necessary to meet heightened consumer expectations, particularly with respect to food safety.

The importance on the requirement of traceability is amply demonstrated in the EurepGAP (consortium of European food retailers and producers) Protocol on Good Agricultural Practice for Fruits and Vegetables and other standards developed by them, such as those developed for aquaculture and integrated farming where in each of these, the element of traceability

(a criteria which is a major must) needs to be proven prior to certification of Good Agricultural Practice. Traceability has now become a fundamental part of the management and audit systems that have been developed to provide assurance to the consumers that the food they consumed originate from a production unit that complies with the criteria of good agricultural practice .

2.4 Existing status of legislation and standards initiatives

2.4.1 Legislation

Malaysia, as a country committed to safe and sustainable development, has formulated and put into legislation several laws which are relevant and applicable to the concept of Good Agricultural Practice. These, to identify a few that have direct and strong bearing to the management of the identified hazards of food production, are the Pesticides Act 1974, Environmental Quality Act 1974, Food Act 1983, Occupational Safety and Health Act 1994 and their associated Regulations. The specific legal provisions of these different Acts, discussed in relation to the different impacts of agricultural production, i.e. environment, food safety and workers health and safety, are briefly described below.

2.4.2 Environment

The concern of Malaysia on the hazards of agricultural production on the environment is recognized as early as 1974, when in the same year the Environmental Quality Act was legislated by Parliament. The scope of the Act is wide ranging, covering activities such as environmental impact assessment, open burning, disposal of solid and scheduled wastes (empty pesticide containers, discharges of effluents from mills, etc.

2.4.3 Food Safety

Like environment, specific laws to manage hazards which affect food safety have also been formulated in Malaysia. The main legislation in force in Malaysia is the Food Act 1983 and later the Food Regulation 1985. The importance of food safety is clearly spelt out in Section 13 of the said Act where any person who prepares or sells any food that has in or upon it any substance which is poisonous, harmful or otherwise injurious to health, commits an offence and shall be liable, on conviction, to a fine not exceeding RM 100,000 or to imprisonment for a term not exceeding ten years or to both. In determining whether any food is injurious to health, regard shall be had not only to the probable effect of that food on the health of the person consuming it but also to the probable cumulative effect of the food of substantially the same composition on the health of a person consuming the food in ordinary quantities.

The substances which are poisonous, harmful or otherwise injurious to health, as defined under Section 37 of the Food Regulations 1985, are categorized as incidental constituents such as metal contaminants, microorganisms and their toxins, drug residue and pesticide residue. The specific provisions of the incidental constituents which are provided for agriculture as well as packaging are as follows:

a) Metal Contaminant
No person shall import, prepare or advertise for sale or sell any food which contains the metal contaminant as set out in the Fourteenth Schedule in a proportion greater than the specified maximum permitted proportion. The metals identified in the said Schedule are arsenic (As), lead (Pb), copper (Cu), tin (Sn), zinc (Zn), mercury (Hg), cadmium (Cd) and antimony (Sb). The maximum permitted proportions for different types of food, applicable to agriculture, are given in the said Schedule of the Act.

b) Pesticide Residue
In the case of this incidental constituent, as provided for in Section 41(3), no person shall import, prepare for sale or sell any food:

1) containing pesticide residue in a proportion greater than the proportion specified for that food in relation to that pesticide residue as set out in the Sixteenth Schedule,

2) containing pesticide residue in a proportion greater than the proportion specified for that food in relation to that pesticide as recommended in the Codex Alimentarius, where the pesticide is not specified in the Sixteenth Schedule or

3) containing more than 0.01 milligram per kilogram (ppm) of any pesticide residue, where the pesticide is not specified for that food in the Sixteenth Schedule or Codex Alimentarius.

c) Packaging
To ensure food safety, use of harmful packages for food is prohibited under the Food Regulation 1985. This is provided for in Regulation 27 where the following is specified: No person shall import, manufacture, advertise for sale or sell, or use or cause or permit to be used in the preparation, packaging, storage, delivery or exposure of food for sale, any package, appliance, container or vessel which yields or could yield to its contents, any toxic, injurious or tainting substance, or which contributes to the deterioration of the food.

The use of packages of non-food product for food is also prohibited under the law. This is specified in Regulation 31 which states that no person shall use, or cause or permit to be used in the preparation, packaging, storage, delivery or exposure for sale of any food, any package, appliance, container or vessel that had been used or intended to be used for any non-food product. Recycling of packages is also prohibited under the Regulation except for packages that are recycled for similar products. In addition, except as otherwise provided for, no person shall use or cause or permit to be used in the preparation, packaging, storage, delivery or exposure for sale of any vegetable or fruit, any box or crate that has previously been used for another food (Regulation 33). However, as specified in Regulation 33A, any box or crate that has previously been used for vegetables may be used in the preparation, packaging and storage of fruits and vice-versa.

2.4.4 Pesticides

The legal requirements covering control, minimizing or eliminating the hazards of using pesticides in agricultural food production are governed by the Occupational Safety and Health Act 1994 (OSHA) and the Pesticides Act 1974. The impact to workers safety and health, in this case, is substantially controlled, minimized or eliminated if the legal provisions of OSHA are strictly adhered to by agricultural producers in the country. The use of pesticides is also a cause and source of various other hazards which can impact the environment and food safety. These hazards, as shown earlier, manifest in the form of pesticides contamination in food exceeding the permitted levels, the presence or occurrence of unregistered and highly toxic pesticides in food and the environment, asides from exposure of employees to pesticides that are hazardous in nature.

The elimination of some of these hazards which impact food safety, linked to pesticides in agricultural production, is also achieved through legislations that are formulated to control the importation, manufacture and sales of pesticides in the country. In Malaysia, the legal provisions to achieve these controls are provided for under the Pesticides Act 1974 and its Regulations. The scope in this case is also wide ranging, covering such elements as 1) control of importation and manufacture of pesticides, 2) control of manufacture, sale and storage of pesticides, 3) control of presence of pesticides in food, 4) death and injury occasioned by pesticides, 5) analysis, 6) enforcement, etc.

2.4.5 Standards

Asides from legislation to reduce the hazards of agricultural food production, guidelines in the form of standards have also been formulated by the relevant national authority to assist agricultural food producers achieve the objective of safe and sustainable agriculture. The most important of these, developed by SIRIM, is MS 1784 on Good Agricultural Practice (GAP) for Crop Commodities and the soon to be published Standard of Good Aquaculture Practice. The GAP standard, which is essentially a document that provides, for common and repeated use, rules, guidelines and characteristics for the activities or their results aimed at the achievement of the optimum degree of order, defines the following elements: a) traceability b) record keeping and internal audit c) planting materials and rootstocks d) site history and site management e) soil and substrate management f) fertilizer management g) irrigation and fertigation h) crop protection i) harvesting k) post harvest handling l) pesticide residue analysis m) waste and pollution management n) workers health and safety o) environmental issues and p) records of complaints.

2.5 Important supportive activities

Taking cognizance of these challenges and to achieve the objectives of the New Agricultural Policy and to ensure that public health is protected, a National Food Safety Policy was formulated by the Government in 2002 and endorsed by all stakeholders in the country, Since then, the country has embarked on a series of programs to ensure that the agricultural food production system and food safety in the country are also in line with the concept of safe and sustainable agriculture. Towards this end, action plans have been formulated and agreed to ensure that the National Food Safety Policy is implemented in a coordinated and integrated manner. Some of the measures currently being implemented or planned by Malaysia at the different levels of food supply chain are briefly summarized below:

A. Farm Level

B. Transportation and Storage

C. Preparation and Processing

D. Food Import and Export

2.6 Progress and issues

Since its adoption in 2002, various measures to implement the National Food Safety action plans have been undertaken by the implementing agencies. Some of these activities, such as surveillance of pesticide residues and quality of imported food, training of handlers, etc are already on-going prior to the drafting and adoption of the policy. New initiatives to implement some of the plans, such as creation of an up-to-date food information system and traceability, benchmarking for equivalence, code for transport, etc are apparently still in the infancy or rudimentary stage. The main progress is only seen in the upstream part of the food supply chain, where to-date three types of quality assurance schemes to manage the hazards of primary food production have been developed and implemented by the executing agencies. These are the a) the Farm Certification Scheme of Malaysia (SALM) for crops implemented by the Department of Agriculture b) Aquaculture Farm Certification Scheme of Malaysia for freshwater fish (SPLAM) by Department of Fisheries and c) SALT or Certification of Good Animal Husbandry Practices implemented by the Department of Veterinary Services, Malaysia.

Amongst some of the progress achieved in SALM (a prerequisite for “Malaysia Best” branding) are: a) development of guidelines for GAP implementation b) design of templates to capture important data of production c) classification of food production criteria which must be fulfilled for certification d) development of checklist and conformance criteria for auditing and e) criteria for certification. In addition to these, training is also given emphasis in the SALM program where at present hundreds of manpower covering government personnel and crop entrepreneurs are trained on the importance of GAP, its implementation, advisory services, auditing and certification.

The adoption of good agricultural practice for SALM, SPLAM and SALT certification is, as experience has shown, not without problems in its implementation. One of the key issues which needs to be resolved is whether the participating farm is able to comply with the requirement of traceability, where in the standard (MS 1784), the criteria is viewed as a major must for compliance. Under the present implementation structure, the simple evidence of tagging or labeling the produce (using SALM ID number) or packages to denote its origin is considered sufficient to satisfy the conformance criteria of the SALM scheme. However, the conformance criteria is still far short from the ideal requirements of a true traceability system, where data and information of the processes of production of the produce must be captured and interlink with other operators and other processes involved at the different levels of the food chain.