The last three decades had been a period of significant and massive structural change in the Malaysian economy. The process of industrialization had led to the steady growth and development of the industrial sector, particularly manufacturing and construction. Concomitantly, the strive for economic diversification had brought about the sustained expansion of the services sector including business, private and trade services as well as tourism.

The transformation of the economy had seen a change in the role of agriculture. In the early 1960s agriculture was the leading sector, contributing around 50.0 percent to employment and exports and about 40.0 percent to the Gross Domestic Product or GDP. By the mid-1990s the agriculture sector's contribution to employment had declined to just around 20.0 percent. Its contribution to exports had concomitantly decreased to just over 10.0 percent and its share in the GDP had been about 13.5 percent (1995).

It must be noted, however, that the above figures relate to only the primary production component. If the agro-based and downstream processing activity of agriculture is taken into account the proportionate share of agriculture in the national economy would clearly be much higher. The under-estimation of the role and contribution of agriculture stems from the conventional statistical procedure of treating agro-based manufactured products as an output of the manufacturing sector; and this is something which we have little choice but to accept it.

Despite the rapid growth of the non-agriculture of the economy, agriculture will continue to be accorded strong priority in national development planning. This is for several major reasons. Firstly, agriculture constitutes a large sector in the rural economy. A large number of the rural households are directly dependent on agriculture. Given the still significant incidence of relative and hardcore poverty in the rural sector and among the target poverty groups of smallholders, fishermen and paddy farmers, the need to sustain agriculture for poverty eradication remains important.

Secondly, the prospective increasing demand for agricultural raw materials by the processing, palm-oil based and rubber-based industries which are planned to be promoted under the Second Industrial Master Plans (IMP2) will necessitate continued expansion of agricultural output.

Thirdly, government's emphasis on food security and on the need to enhance the level of food self-sufficiency means that the food sub-sector of agriculture will have to expand. This is also part of the policy to reduce the country's food import bill which has now touch RM 10 billion a year in gross terms.

Fourthly, the government accepts the fact that Malaysia still possesses substantial comparative advantage in the production of agriculture products particularly primary commodities such as rubber, oil palm and cocoa. Given the heritage and long history of primary commodity production in the country it will be irrational if we are to forgo our agricultural primary crop production in which we have proven our competitiveness.

Having said that, the agricultural scenario both at the national and international levels is changing very fast. Agricultural trade liberalization stemming from the Uruguay Round is progressing unabated. All countries are expected to eliminate protection of their domestic agricultural industries and conversely to open up their markets. The UNCED provisions are also in full swing and in agriculture this is aimed mostly at sustainable agriculture, namely, the application of sustainable farm practices that takes into account environmental quality and ecological preservation. The process of globalization and economic integration is gradually but surely leading towards a borderless world with its implications on competition and competitiveness.

Internally, that is, within this country, the structural transformation of the economy has resulted in a number of structural constraints that are affecting the resilience of the agricultural sector. Foremost, the massive rural-urban migration among productive rural labour force into the urban areas and growth centres in the 1960s through the 1980s had led to labour shortage in the agricultural sector. Given the labour intensiveness of most of our agricultural sector had to contend with an aging labour force. The plantations are reported to face a labour shortage of 12,000 workers, mostly rubber tapers and oil palm harvesters.

The uneconomic size of most of our smallholdings and crop farms stemming from land fragmentation and customary practices imposes a barrier to their commercialization and technological upgrading efforts. Their potential to attain the potential yields is also hampered due to lack of economies of scale in their operations. We now have around one million smallholdings and farms whose productivity is stagnating or at best improving only slightly.

The lack of diversification manifested by an unbalanced on perennial and export crops in the past had led to a preponderance of rubber, oil palm and cocoa and a relative neglect of food and other industrial crops, livestock (especially cattle and goats) as well as agro-based processed products. Perennial crops presently still constitute almost 80.0 percent of the total cultivated area and production. The remaining 10.0 percent are accounted for by paddy, leaving 10.0 percent for miscellaneous crops like fruits and vegetables. Such an unbalanced output mix of our agriculture is risky particularly in the event of sharp fluctuations in the commodity prices. It also results in less optimal utilization of resources.

The low level of private sector investment in coastal fishing and to some extent livestock sub-sectors poses yet another major constraint to our strive for agricultural commercialization. On-farm investment by the smallholders is glaringly minimal, due to their relatively low incomes. This has the impact of curbing technological innovations and adoption of improved practices on the farm holdings. The same situation prevails in the inland and coastal fishery sub-sector. The government has hitherto provided various assistance to these smallholder and fishermen to mechanize and adopt new technologies but this cannot be seen to provide a long-term solution.

The government is fully aware of these structural constraints facing the agricultural sector. Where as the government has attempted to solve them through extension and training, institutional development, credit and finance, infrastructure and human resource development, there is a limit to what the government can do and hope to achieve. In the final analysis it is the farmers, smallholders and fishermen themselves who have to change for the better. This requires not only structural adjustments and reform but also a change in the mind-set.

The prospect for Malaysian agriculture becomes more challenging when the government begins to lessen its direct intervention in the sector in line with the requirements of agricultural liberalization and the Uruguay Round. This implies that until and unless the sector improves and consolidates itself the outlook will certainly remain uncertain in the light of globalization and liberalization.

It is against this backdrop that the government formulated the (Third) National Agricultural Policy. The purpose of the policy is to provide a planning and development framework for the agricultural sector. In drawing up this Policy all factors that impinge on the sector are considered thoroughly. What emanates therefore is a pragmatic blueprint for a sustained and sustainable development of our agriculture.

The NAP is indeed exercise to re-position the agricultural sector to enable it to face the impending challenges and to fully exploit its inherent strengths. It aims to create not only comparative but also competitive advantage in our production of crops, livestock and fish products.

Among the strategies laid out to re-position the agricultural sector are: efficient and productive utilization of resources. This takes the form agro-forestry, integration and downstream activities. This will not bring about better factor input combination but will also lead to higher returns and incomes. The other strategy involves the development of the food industry in which the government believes we have the required technical know-how and agri-support services.

The strategy of venturing into new agricultural industries like pharmaceutical crops, herbs and industrial crops, and others that are based on bio-technology applications is aimed at identifying innovative agricultural products in which we can create competitive advantage. This is based on the premise that we have considerable strength in research and development and the technological infrastructure in bio-technology , bio-products and natural products.

In this regards I would like to encourage universities and research organizations, both public and private, to intensify their R&D efforts, and to come up with more scientific and technological discoveries that can support the development of these new agricultural products and industries.

With the NAP now well in place, let us hope that all those entrusted with the development of the agricultural sector will make a full commitment to ensure that its strategies and programmes will be implemented properly and effectively. The Ministry of Agriculture has embarked on a national road-show to explain and elucidate the Policy to the policy makers, planners and implementers in the states, as well as to the private sector. It is hoped that this endeavour will bring about a coordinated and integrated approach to agricultural development in the country.

Finally, let me congratulate the organizers of this Seminar for coming up with a theme which is both timely and pertinent in our strive to establish a vibrant, resilient and competitive agricultural industry .

On that note, with great pleasure and the Grace of Allah, I declared the Seminar on the Repositioning of the Agricultural Industry in the Next Millennium officially open.