Malaysian Economics: Agricultural Sector

 

2. COVID-19: Impact on Malaysia’s agricultural sector and economic growth. What do you think?

Agricultural sector is one of the most important sectors in Malaysia.  The agricultural sector plays a vital role in producing food, processing raw materials for industry, and creating job opportunities for millions of people.  However, due to the COVID-19 pandemic, all economics activities including the agricultural sector were forced to shut down.  As a result, the agricultural sector has been impacted in negative way.  

First, the Movement Control Order (MCO) impacted the supply chain in agricultural sector. Travel restrictions due to the COVID-19 mitigation efforts affected the supply of farming materials and food supply.  The farmers were having difficulties to sell their crops.  Before the pandemic, most of them will sell their crops in the nearby markets, at local groceries store or to the restaurants.  However, when MCO was still ongoing, many shops were closed.  People were staying at home and limit the place they were going to to avoid the infection of COVID-19 at that time.  This situation decreased the demand of crops they were selling as well as their income.  Hence, since the farmers could not sell their crops due to the low demand, the vegetables grown by them were damaged and had to be disposed.  According to the local newspaper, Berita Harian (2020), nearly 40% of the vegetables were damaged and wasted almost every day due to vegetables dumping and declining demand.  

Farming materials including seeds, fertilizers and pesticides were relatively difficult to obtain following the COVID-19 outbreak.  Things got worse as China is the major supplier for pesticides.  The production of pesticides fell drastically after the COVID-19 outbreak.  Thus, in 2020 and 2021, low availability as well as high prices of farming materials such as fertilizers and pesticides would impact on Malaysia’s crop yields and production.  In this case, it will not only impact crops like vegetables, but also impact rubber and palm trees which are the most valuable commodities of Malaysia. To conclude, the agricultural sector in Malaysia would have direct impacts due to the strained plant protection product.  

Next, the pandemic also decreases the oil price.  Global oil demand has been affected by Covid-19 and many countries have decided to restrict air travel, and even the world’s population has chosen not to travel abroad to hinder the virus from spreading.  As we can see, the COVID-19 outbreak has slowed the economy globally and reduced the use of transportation since most of the countries including Malaysia were in lockdown.  This situation might reduce the demand for oil consumption, and it will further the government revenue.


Lastly, due to the high demand of medical glove, the market price of rubber increased. This would increase the demand for Malaysian rubber gloves throughout the pandemic.  Driven by high demand and limited supplies, this would give a bright future in Malaysia’s rubber glove industry.  Other than gloves, rubber element also been used to produce catheters, a surgical equipment that is also an important device in healthcare sector.  The high demand of rubber would increase Malaysia GDP and its national income since Malaysia’s rubber sector received an unexpected demand. As reported by the Department of Statistics Malaysia, rubber gloves are the largest export item, with a value of RM4.6 billion in December 2020, rising to RM5.6 billion in January 2021, or 21.6 percent increase. Rubber gloves are imported in large quantities by the developed countries, namely the United States, Germany, and China.

In conclusion, COVID-19 has impacted on Malaysia’s agricultural sector and economic growth in both negative and positive ways.  The government also plays an essential role in helping to revive the country's agriculture economy by offering incentives to local sellers and business owners.


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