Malaysia Agribusiness Report Q3
2011

Malaysia Agribusiness Report Q3 2011

BMI View: Malaysia's agriculture industry is expected to benefit significantly from the Tenth Economic Transformation Program (2010-2020). A total of 16 Entry Point Projects are aimed to revitalise the sector with the ultimate objectives of increasing contribution to the Gross National Income (GNI) from the current MYR20.2bn (US$6.6bn) to MYR49.1bn by 2020. A total of 74,600 jobs are also hoped to be generated as a result. The focus areas will be in concentrating on Malaysia's competitive advantages in crops like palm oil, herbal products and aquaculture, scaling up the value chain for agriculture and food products, as well as ensuring food security in key areas such as rice and livestock.

Key Views

• Palm Oil Production growth to 2014/15: 5.9%. We are optimistic that Malaysia will remain a top producer and exporter of the cheap vegetable oil and expect the country to delve deeper into downstream projects over the coming years.
• Cocoa production to 2014/15: 63.8%. This will be due to increased public and private investment into the sector, though we expect the country to remain heavily reliant on imports to supply its cocoa grinding industry.
• Sugar consumption to 2015: 1.8% to 1.3mn tonnes. The lowering of sugar subsidies as well as increased healthy awareness among consumers should keep consumption growth subdued.
• 2011 Real GDP Growth Forecast: 4.8% (predicted to average 4.2% from now until 2015).
• 2011 EoP Consumer Price Inflation Forecast: 2.5% (higher than 2.5% in 2010)

Industry Developments

The government's mandatory B5 blend programme, which has been implemented after a five-year delay, will place demand-side pressure on the oil, especially after the programme begins in June. To date, the Malaysian government has poured a total of MYR200mn (US$65mn) to build up blending nationwide facilities to aid implementation of the B5 mandate. The government has officially announced that it would subsidise biodiesel at the pump by between MYR0.05 and MYR0.07 per litre and also principally agreed to lift the 10% tax on biodiesel sales in Malaysia. These efforts are in line with the government's commitment to reduce the country's carbon emission intensity by up to 40% in the coming years. We also believe that it is a step in the right direction towards developing energy sustainability.

The rice sector is also receiving attention through the Economic Transformation Program as the government has chosen the industry as a key sector to ensure food security. This will be done through the government-led MYR2.7bn (US$886mn) Entry Point Projects that will focus on increasing the scale of rice production, with special emphasis placed on the Muda region in Eastern Malaysia because it produces higher-yielding rice. According to official estimates, the Muda area contributes to 40% of total rice produced and has an average rice yield of 5.0 metric tonnes per hectare, 34% higher than the national average yield.

In May 2011, Felda announced that it is planning to list its subsidiary MSM, which operates the country's only sugar plantation and sugar cane mill, at MYR2.46bn or MYR3.50 a share. We believe that the equity raised will be used to finance acquisitions of sugar companies in South East Asia - an intention stated in the company's draft prospectus.

• Executive Summary
• Key Views
• Industry Developments
• SWOT Analysis
• Malaysia Agriculture SWOT
• Malaysia Political SWOT
• Malaysia Economic SWOT
• Malaysia Business Environment SWOT
• Industry Forecast Scenario
• Malaysia Rice Outlook
• Malaysia Rice Production, Consumption & Trade
• Malaysia Rice Production, Consumption & Trade
• Malaysia Sugar Outlook
• Malaysia Sugar Production, Consumption & Trade
• Malaysia Sugar Production, Consumption & Trade
• Malaysia Cocoa Outlook
• Malaysia Cocoa Production & Consumption
• Malaysia Cocoa Production & Consumption
• Malaysia Dairy Outlook
• Malaysia Milk Production & Consumption
• Malaysia Butter Consumption & Trade
• Malaysia Cheese Consumption & Trade
• Malaysia Whole Milk Powder Consumption & Trade
• Malaysia Milk Production & Consumption
• Malaysia Butter Consumption & Trade
• Malaysia Cheese Consumption & Trade
• Malaysia Whole Milk Powder Consumption & Trade
• Malaysia Grain Outlook
• Malaysia Corn Production, Consumption & Trade
• Malaysia Corn Production, Consumption & Trade
• Malaysia Livestock Outlook
• Malaysia Poultry Production & Consumption
• Malaysia Pork Production, Consumption & Trade
• Malaysia Beef & Veal Production, Consumption & Trade
• Malaysia Poultry Production & Consumption
• Malaysia Pork Production, Consumption & Trade
• Malaysia Beef & Veal Production, Consumption & Trade
• Malaysia Palm Oil Outlook
• Malaysia - Palm Oil Production & Consumption
• Malaysia - Palm Oil Production & Consumption
• Commodity Price Analysis
• Monthly Softs Update
• Cocoa
• COCOA
• Coffee
• COFFEE
• Milk
• MILK
• Sugar
• SUGAR
• Monthly Grains Update
• Corn
• CORN
• Rice
• RICE
• Soybean
• SOYBEAN
• Wheat
• WHEAT
• Downstream Supply Chain Analysis
• Industry Forecast Scenario
• Consumer Outlook
• Food
• Food Consumption
  • Table: Food Consumption Indicators - Historical Data & Forecasts
• Confectionery
  • Table: Value/Volume Sales of Confectionery Sub-Sector - Historical Data & Forecasts
• Trade
  • Table: Malaysia Food & Drink Trade Indicators - Historical Data & Forecasts
• Mass Grocery Retail
  • Table: Malaysia Mass Grocery Retail Sales - Sales Value by Format - Historical Data & Forecasts
  • Table: Grocery Retail Sales by Format - Historical Data & Forecasts (%)
• Macroeconomics Forecast
• Malaysia - Economic Activity
• Industry Trend Analysis
• Domestic Demand To Stay Resilient As Economic Growth Moderates
• Company News Alert - Meiji Looking For Dairy Growth Across South East Asia
• Industry Trend Analysis
• Innovation and Geographical Diversification Key To Stronger Future Prospects
• Kuala Lumpur Consumer Index Composition
• Global Food & Drink View
• Food & Drink Roundup Q111: Core Views
• BMI FOOD & DRINK CORE VIEWS
• BMI Forecast Modelling
• How We Generate Our Industry Forecasts