By HANIM ADNAN
nem@thestar.com.my
OVER the years, the agriculture sector has steadily become an important contributor to Malaysia's GDP, employment, export revenue, export tax and duty, as well as the economic and rural development.
Given the persistently high prices and strong demand in major local industrial commodities on the international market, export earnings of commodity and commodity-based products ranging from palm oil, rubber gloves, timber and cocoa posted a record of RM113.3bil in 2010, a 24% jump from 2009.
Last year, the export earnings of palm oil and palm-based products surged to RM62.8bil followed by the rubber sector at RM33.7bil with rubber gloves touching RM8.9bil, up 25% from a year earliier and cocoa beans at RM3.8bil from RM3.2bil a year earlier.
For palm oil, Plantation Industries andCommodities Minister Tan Sri Bernard Dompok recently said that export earnings could exceed RM65bil this year on the back of rising demand and higher prices.
He also expected higher average CPO price at RM3,000 per tonne in 2011 compared with RM2,500 to RM2,800 per tonne in 2010. On Feb 10, CPO price close at RM3,967 per tonne on concerns over disruption of harvesting and transportation of oil palm fruits affected by heavy rain in major producing countries like Malaysia and Indonesia.
Malaysian Estate Owners' Association president Boon Weng Siew says palm oil and palm products are top industrial commodities for the country with good export track records over the past four years.
“Even with the CPO currently trading at RM3,400 per tonne compared with the commodity's record price at RM4,486 per tonne in 2008, planters in Peninsular Malaysia and Sabah are still making sound profits as their average cost of production is still between RM1,200 to RM1,500 per tonne CPO,” explains Boon.
From the CPO sales, many local plantation companies are able to use the proceeds to make new investments particularly in terms of acquiring more land bank overseas to expand oil palm hectarage given the scarcity of agriculture land bank in Malaysia, says Boon.
In fact, many plantation giants like IOI Corp Bhd, Kuala Lumpur Kepong Bhd, Sime Darby Bhd and Felda Group have successfully diversified from being a mere producer and exporter of palm oil into the downstream sector with ventures in oils and fats business, oleochemicals and biomass projects among others.
The palm oil industry is indeed a success story for the Malaysian corporate sector, says Boon while stressing on the need to increase the stagnating production level and introduction of more value-added downstream products to enhance on the industry's growth, competitiveness and sustainability.
Rubber, meanwhile, has emerged as a strong competitor to palm oil in terms of export earnings contribution as both the natural rubber prices as well as rubber based products become the receipients to the economic growth driven by the emerging and developing economies.
On Feb 14 tyre-grade SMR 20 posted a new high of RM17.27 per kg while latex-in-bulk hit RM10.66 per kg.
Of the total export earnings of RM33.7bil last year, RM12.3bil was contributed by rubber product exports while raw rubber, other rubber and heveawood products provided RM9.5bil, RM4.3bil and RM7.6bil respectively.
According to Malaysian Rubber Board director-general Datuk Dr Salmiah Ahmad, the rubber sector in fact contributes about 5% to the country's export earnings.
“The contribution of the industry is much higher if we consider its spinoffs and multiplier effects on the Malaysian economy.
“Some notable spin-offs are in the fields of engineering, packaging and transportation,” adds Salmiah.
However, more importantly, the rise in rubber prices and the increasing demand for rubber products globally, had directly boosted the income of smallholders nationwide.
Depending on the size of their estate holdings, smallholders could now get a monthly income of between RM2,000 and RM3,000 from RM600 previously.
Over 90% of the country's total natural rubber production is supplied by smallholders.
She points out that the rubber industry is important in developing the national economy and providing opportunities for an estimated 300,000 smallholders.
The implementation of the Malaysian Rubber Industry Strategies and inclusion of the industry as one of the National Key Economic Areaprojects together with oil palm is expected to stimulate further growth of the industry.
Meanwhile, Malaysian Rubber Export Promotion Council (MREPC) chief executive officer Datuk Teo Suat Cheng expects the export of rubber products to be on an upward trend reaching RM13.7bil by year-end despite facing pressure from increasing raw material prices and the strengthening of the ringgit.
Of the total exports, she says rubber glove export is expected to increase to over RM10bil and remains the largest contributor to the total exports of rubber products in 2011.
Malaysia as the leading exporter of rubber gloves in the world, commanding about 60% of the global market share.
“MREPC has intensified its promotional efforts in emerging countries such as China, India, Russia and the South American countries to increase awareness of usage of rubber medical gloves.
“There is great market potential as per capita consumption of gloves is still very low in these countries compared to the US where per capita consumption of rubber medical gloves is about 40 pairs,” says Teo.
The Malaysian rubber product industry recovered strongly last year after a difficult 2009, to rebound with a 21.5% growth in exports year-on-year.
Last year, exports of rubber products registered RM12.86bil, surpassing by 14.5% the pre-crisis exports recorded in 2008 of RM11.2bil.
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