Malaysia is well known as the second-largest producer of palm oil in the world. The country also produces other valuable agricultural commodities, including natural rubber and Malaysia’s staple food, rice. Nevertheless, challenges like flooding and other natural disasters caused mainly by climate change, as well as labor shortages, have put the agriculture sector at risk.
Key agricultural commodities
The agriculture industry in Malaysia relies heavily on the farming sector and its cash crops, palm oil and rubber. These crops are grown mainly for their commercial value to be exported all over the world. The value of Malaysia’s agricultural exports increased by more than 22 percent in 2022, with palm oil and palm-based products as its major export commodities.Food crops, including rice, fruits, and vegetables, were the second most important commodities. However, the country’s production of food crops was not enough to meet local demands. Malaysia’s imports of rice reached more than 1.2 million metric tons in 2022, making up about 30 percent of the country’s demand for the staple food commodity.
Livestock was also essential for the country’s agriculture sector, with the poultry industry’s contribution to GDP reaching around 10 billion Malaysian ringgit in 2022. That same year, chicken was the most popular type of meat among the Malaysian population, of which 63.5 percent are Muslims. The per capita consumption of poultry in Malaysia was ten times higher compared to other livestock products.
The challenge of climate change
Climate change and natural disasters have become the main challenge farmers in Malaysia now have to face. In 2023, the financial damage caused by flood to the agriculture sector reached more than 120 million Malaysian ringgit. The government has allocated 2.6 billion Malaysian ringgit in the 2024 budget to help mitigate the impact of extreme weather phenomenon this year.Moreover, the country also had to deal with a shortage of foreign workers. Many large palm oil plantations mainly rely on labor force from neighboring countries. There were around half a million non-Malaysians employed in the agriculture sector in 2022, a decrease compared to the previous year. The temporary labor shortage could have an impact on Malaysian palm oil production.
The future of the agriculture sector in Malaysia is still uncertain amidst current challenges. The ongoing El Niño phenomenon and an impending monsoon season which will bring heavy torrential rain could negatively affect the agriculture sector. Nonetheless, with additional efforts from the Malaysian government to support this sector, the agriculture industry will likely survive these challenges.
