20 Septembet. 2002 (Business Times) - MALAYSIA’S agriculture sector willremain as the third engine of growth despite a slower growth in 2002 at1.1 per cent compared with last year’s 1.8 per cent.

This year’s lower growth was mainly due to lower production of crude palmoil (CPO) and also in revenue from the fishing industry.

However, the positive growth of the forestry, rubber and other agriculturesub-sectors mitigated the smaller growth of palm oil and fishing.

Nevertheless, the Government’s efforts to revitalise the agriculturesector as the third engine of growth in line with the strategy todiversify the sources of growth remain.

Overall, the production of CPO is expected to register a drop of 3.4 percent or 404,000 tonnes this year, and prices are expected to average atRM1,305 a tonne compared with RM893 in 2001.

The drop in production is caused by a combination of factors, includingthe ongoing replanting programme implemented since 2001.

The oil palm trees are also undergoing cyclical tree stress as well aschallenges from the hot and dry weather conditions experienced from Marchto August.

In spite of the lower production, the palm oil sub-sector still maintainsits position as the major contributor and still adds value to the sector.

Palm oil leads with a share of 33.5 from 34.9 per cent last year.Peninsular Malaysia continues to account for the bulk of the output of CPOat 61 per cent followed by Sabah (34 per cent) and Sarawak 5 per cent.

In 2002, total hectarage planted is expected to increase by 2.9 per centto 3.6 million ha, taking into account new areas identified for thecultivation of oil palm, especially in Sabah and Sarawak.

Out of this, 69.2 per cent is under private sector ownership with theremaining 30.8 per cent organised by smallholder entities such as theFederal Land Development Authority and Federal Land Consolidation andRehabilitation Authority Bhd.

The price of CPO, which experienced a slump during the greater part of2001, has progressively strengthened since last November.

The stronger price is due mainly to reduced carry-over stock and lowerproduction at 11.4 million tonnes as well as lower production of itscompetitor, soyabean oil which is affected by poor weather conditions.

For natural rubber (NR), the first half of this year saw price rise by anaverage of about 10 per cent while output increased by 3.7 per cent to266,281 tonnes.

Total production of NR is expected to increase marginally by 0.5 per centto 550,000 tonnes this year from last year’s 547,000 tonnes.

The bulk of NR produced comprises Standard Malaysian Rubber (SMR)accounting for 75.5 per cent followed by latex (20 per cent) and RibbedSmoked Sheet (4.5 per cent).

Total land under NR decreased by 2.9 per cent to an estimated 1.34 millionha this year from 1.38 million ha in 2001.

To sustain the industry, efforts taken include increasing productivity byencouraging downstream processing and cooperating with other NR producersto stabilise prices.

The Government’s efforts have resulted in the formation of theInternational Tripartite Rubber Cooperation (ITRC) comprising Thailand,Indonesia and Malaysia.

The ITRC has agreed to implement Supply Management Scheme (SMS) and AgreedExport Tonnage Scheme (AETS).

SMS aims to reduce NR production by 4 per cent through diversification ofcultivation, limiting new cultivation and expediting the replantingprogramme.

AETS is aimed at reducing exports from member countries by 10 per cent.

In the forestry sector, production of sawn timber is projected to declineby 4.1 per cent.

Under the Eighth Malaysia Plan, the annual allowable extraction ofpermanent forests was reduced. The overall production of sawn timber isnot expected to experience any significant increase.

Sarawak maintains the bulk of the output and is expected to increaseproduction by 15 per cent to 14 million cu m.

In contrast, the production of sawn timber in Peninsular Malaysia andSabah is expected to decline by 3.7 per cent to 4 million cu m.

In the fishing sub-sector, marine landing and aquaculture harvest isexpected to decrease by 1.7 per cent in 2002.

Meanwhile, there is growing interest in aquaculture as a complement tomarine fishing.

A total of 290,200ha of land and water areas has been identified assuitable for various aquaculture projects.