International Seminar on Economics and Marketing of Tropical and Subtropical Fruits

THE POTENTIAL OF MALAYSIAN FRUITS IN MEETING GLOBAL DEMAND

By : Tuan Haji Samah Bin Hasan Deputy Director General FAMA
16 July 2007

Agenda
Introduction Issues Potential Market Market Strategies Conclusion

Introduction

THE GOVERNMENTS ASPIRATIONS FOR THE AGRICULTURAL SECTOR

Develop the Agriculture Sector as the 3rd engine of growth. To be a prominent player in food production by the year 2010 Net exporter of food by 2010 Agriculture is a Business

MALAYSIA:FOOD BALANCE SHEET 2006

PARTICULAR Supply (SS)* - Local Supply (MT) - Import (MT) - Total Supply (MT) Demand (DD)* - Local Demand (MT) - Eksport (MT) - Total Demand (MT) Shortage/Surplus ( SS - DD ) No. of farmer for selected comodity** (people) Total no. of farmer** (orang) VEGETABLES 642,796 265,808 908,604 1,007,979 76,094 1,084,073 -175,469 31,911 40,920 FRUIT 1,873,092 47,973 1,921,065 1,524,770 209,583 1,734,353 186,712 107,827 162,463 FLOWER 153,385,242** 2,954,839 NA NA 72,699 NA NA NA NA

*Source: FAM A 2006 **Source: Jab. Perangkaan M alaysia 2005 Vegetables (15 commodities): Chinese

Mustard, Long Bean, French Bean, Tomato, Cabbage Chilli, Okra, Pumpkin, Ginger, Chinese Kale, Engled Angled Loofah, Cucumber, Water Comvulvolus, Brinjal and Kacang Botol

Fruits (15 commodities): Pineapple, Watermelon, Starfruit, Papaya, Guava, Manggo, Durian, Rambutan, Sappodilla, Duku Langsat, Mangosteen, Jackfruit, Banana, Honey Dew

CAPITA CONSUMPTION OF FRUITS AND VEGETABLES IN MALAYSIA FOR 2004-2010

Capita Consumption ( Kg ) Commodities

2004 40.40 43.10 2005 41.25 44.01 2006 42.03 44.84 2007 42.83 45.69 2010 45.76 48.82

Vegetables Fruits

Source : FAMA

To move from net importer to net exporters by 2010.

RM Billion Export Import BOT Population (Millions) 2000 6.4 11.4 -5 23.5 2006 10.7 19 -8.3 24.8 2010 (target/
forecast)

15.5 14.3 +1.2 28.9

BALANCE OF TRADE PLAN (2005 -2010)

OF HORTICULTURAL CROPS
ambitious plan to reduce deficit in food import bill to

net exporter by the year 2010

Commodity Fruits Production Value Production Value 2005 1,587 211 771 96 2006 1,746 317 833 134 2007 1,920 463 900 173 2008 2,112 666 972 215 2009 2,323 952 1,047 263 2010 2,556 1,353 1,133 319

Vegetables

TOTAL

Production Value

2,358 308

2,579 451

2,820 636

3,084 881

3,370 1,215

3,689 1,672

Production 000 ton ; Value RM Mil

IMPORT AND EXPORT VALUES OF SEVEN AGRICULTURAL PRODUCE, 2001-2006

Seven (7) types of agriculture produce comprise cereals and cereal preparations, vegetables, fruits, sugar, sugar preparations and honey, coffee, cocoa, tea and its products; animal feeds, other food and its preparations Source: Ministry of Agriculture and Agro-Based Industry (Jan, 2007) = Provisional Data

Issues

Issue 1
HIGH COST PRODUCER Imported inputs Imported labour Competition of Land use Small scale Low technology

Issue 2
Inconsistency of Supply Small farm Scattered farm Small commercial farmers Suitable varieties

Issue 3 :
PRODUCT PRESENTATION AND DEVELOPMENT Little product differentiation - Products marketed as commodities Use of traditional packaging standards Minimum grading and labeling practices Minimal value adding and product development.

Issue 4
MARKET ACCESS Tariff & Non Tariff Barrier Farm accreditation Traceability Packaging & Labeling

Issue 5
Food Safety and Quality Standards
i) ii) More demanding consumers -Changing lifestyle and consumer preferences Farmers slow in adopting Good Agricultural Practices (GAP) or the Skim Akreditasi Ladang Malaysia (SALM) iii) International markets require compliance to food safety standards like EUREPGAP and traceability

Market Potential

FRESH FRUITS, VEGETABLES AND FLOWERS EXPORT , 2003-2005

Product / Year

Export Value (RM million) 2003 2004 283.9 103.4 132.3 2005 280.3 121.1 148.9

Fruits Vegetables Flowers

314.0 127.6 101.1

EKSPORT DESTINATION ( fresh & processed )

PRODUCTS A. Fruits (RM Million ) Singapura Hong Kong Indonesia Thailand Netherlands B. Vegetables (RM Million) Singapura Indonesia Netherlands Brunei UAE C. Flowers (RM Million) Jepun Singapura Thailand UAE Hong Kong 2003 186.0 98.2 10.3 50.4 23.0 163.2 51.6 0.7 4.2 1.9 49.7 44.7 1.5 1.1 1.0 2004 192.8 83.7 17.2 54.4 22.0 146.3 78.7 0.6 2.5 3.2 84.4 38.4 1.3 0.8 0.8 2005 202.9 95.2 19.3 68.6 24.0 134.3 84.6 0.7 2.5 3.7 94.2 52.0 2.1 1.1 (0.00)

Malaysia Fruits Export Vs World

Malaysias Fruit Exports (US$1000)
1985 1990 1995 2000 2004 Growth 85-94 9.23 18.50 95-04 3.64 3.20

World 7,606,682.21 13,818,849.00 19,657,841.78 18,488,305.78 27,266,595.10

Malaysia 5,253.00 15,720.00 27,095.00 36,038.00 36,153.00

Maket share (%)

0.07

0.11

0.14

0.19

0.13

Selected Fruit Type Market Share, Malaysia

Year/Fruit Type Bananas Guavas, mangoes, mangosteens Papayas Pineapples

1985 0.15 0.38 17.63 0.68 1.73

1990 0.17 0.14 22.46 0.74 3.85

1995 0.19 0.12 20.32 0.88 5.67

2000 0.20 0.36 16.63 0.62 4.71

2004 0.11 0.23 10.89 0.21 2.03

Watermelons

Prospects for market diversification for a product exported by Malaysia in 2005 Product : 08 E dible fruit, nuts, peel of citrus fruit, melons

50

Ir an ( Islamic Republic of )

A n a go t o p r n rc u tr simot f o t ew r b t e n2 0 - 0 5 % n u l r wh f at e o n ie p r s r m h old ew e 0 12 0 ,

45

40

35

Russian Feder at ion India

30

25

Thailand Swit zer land

20
Bangladesh China Saudi Ar abia

Net her lands

15
Kuwait

Fr ance Kingdom Unit ed Unit ed Ar ab E mir at es Canada Ger many Taiwan, Pr ovince of China

10
Indonesia

5
Singapor e Scale= 5%of wor ld impor t s

0 0

Br unei Dar ussalam

Hong Kong ( SARC)

10

15

20

25

30

35

40

45

Share of partner countries in Malaysia's exports, 2005, %

Competitiveness of suppliers to Malaysia for the selected import product in 2005 Product : 08 Edible fruit, nuts, peel of citrus fruit, melons
Average growth of M alaysia's imports for the selected50 product Egypt

45

40 Annual growth of partner countries exports to the world between 2001-2005, %

35
Gr owi ng wor l d ma r k e t sha r e de c United sha r e of M a l a y si a l i ni ng States i n America Gr owi ng wor l d ma r k e t sha r e gr owi ng sha r e i n M a l a y si a

30 United Arab Emirates

South Africa China Viet Nam Iran (Islamic Republic of) Saudi Arabia New Zealand Turkey

25

20
Spain Growth of total world exports for the selected product Australia Chile India Thailand Indonesia

15

Tunisia Argentina

10
France

Italy

Singapore

0 De c l i ni ng wor l d ma r k e t sha r e -30 -20

de M -10c l i ni ng sha r e i n 0 a l a y si a

De c l i ni ng wor l d ma r k e t sha r e

10

20

30

40

50

60

gr owi ng sha r e i n M a l a y si a80 70

90

100

Republic of Korea

-5

Hong Kong (SARC)

-10
Scale=5%of world exports Diagonal of constant market share M yanmar

-15 Annual growth of Malaysia's imports from the partner countries between 2001-2005, %

Worlds Main Exporting Countries in Processed Products Based on Fruits and Vegetables , 2004
Yearly Average Growth Rate Worlds Export 2000 - 2004 %

12

10

NETHERLANDS ITALY

SPAIN

CHINA

8 USA

Worlds Export Size %

BELGIUM 6 BRAZIL THAILAND GREECE 2 PHILIPPINES 0 -2 5 MALAYSIA 10 (Kedudukan ke 47) 15 20 25 MEXICO UK ARGENTINA HUNGARY FRANCE GERMANY CANADA TURKEY

POLAND

0 -5

Yearly Growth - 2004%

Top 20 World Exporting Countries 2004

16 14 USA SPAIN Yearly Average Growth World Export 2000 - 2004%

World Export Market Size %

12 10 CHILE 8 6 ECUADOR 4 2 (Kedudukan ke 52) 0 -10 -5 -2 0 MALAYSIA COSTA RICA INDIA BRAZIL 5 PHILIPPINES ARGENTINA 10 15 20 25 30 MEXICO ITALY USA TURKEY NEW ZEALAND IRAN BELGIUM NETHERLANDS

SOUTH AFRICA GERMANY CHINA

Yearly Growth 2000 - 2004%

IMPORT OF FRESH TROPICAL FRUITS : IMPORT OF FRESH TROPICAL FRUITS : Major Countries 1998 - 2002 Major Countries 1998 - 2002
Import Quantity (mt)
Others 9,180,705 39% United States of America 5,967,280 26%

Import Value (US$000)

France 657,796 6%

Others 4,578,654 42%

United States of America 1,944,544 18%

Germany 1,771,088 8% Canada 943,651 4% Japan 1,499,720 7%

Belgium 713,060 7% United Kingdom 810,586 7% Japan 1,036,184 10% Germany 1,084,210 10%

France 1,050,209 5%

Belgium 1,171,433 5%

United Kingdom 1,266,881 6%

Source : FAO Statistical Database, FAOSTAT

Focus Fruits
Existing
Starfruits Papaya Pineapples Melon Banana Mangoes Rambutan Mangosteen Durian Guava

New
Dragon Fruits Pomelo Jackfruits Sallaca Longan Pulasan Dokong

Focus Markets
Traditional
Singapore Hong Kong Saudi Arabia UAE Brunei EU - Netherlands

New
China Canada Turkey Pakistan India CIS - Poland

Strategies

a. Improve Productivity
Modern farming mechanize , new technology, Cluster Farming all facilities in one area Precise farming variety, time, quantities Less wastage post harvest handling , logistic

b. Market Access
FTAs , Bilateral/Trilateral Farm accreditation GAP, EUREPGAP SPS One Stop Treatment Centre , PRA Packaging , Labeling & Grading Agriculture Attach ( 7)

c. Promotion
Trade Fairs, Trade Mission, Buss Matching In-Store Promotion Branding Malaysias Best Promotional material pamphlets, leaflet Articles in magazine, journal

 Promotional Programs
International Trade Fairs
2005 - 15 promotions -Fruit Logistica Berlin -Gulf Food Dubai

- Product promotion - exposure to private sector - market testing

IN-STORE PROMOTION

 Promotional Programs
v. Branding
Malaysias Best seal of quality and safety
Starfruits Papaya Mango Watermelon Pineapples Pithaya Pomelo Banana

 Promotional Programs
Investment Mission (AMIM)
- Attract foreign investors - Networking

d. New Products
Minimally processed products New varieties Pithaya, pomelo Frozen, chilled Processed chips, freeze dried, dried

e.Improve Quality
Improve product presentation through grading, packaging and labeling Encourage farmers to adopt the Good Agriculture Practice (GAP) Scheme Use facilities in Centers Of Excellence to improve quality Require farmers compliance to the Grading, Packaging and Labeling Regulation . Encourage farmers participation in contract farming

f. Intensify Market Research & Intelligence

Conduct market studies to identify and understand the world market status of horticultural produce. Monitoring, reporting and dissemination of real time information on market situations and prices

g. Regional Approach
Common interest, products, season, market

Challenges
Spirit of ASEAN Share of market and production information TF Net as a medium of communication Exchange of expert (production, technical ) Regional market access initiatives

h. Formation of Business Council Among TF Net Members

Follow-up by the business people Active participation by private sector in regional business meeting Share of market information among members

Conclusion

Conclusion
Vast potential for Malaysian tropical fruits to cater global demand for exotic segment. The success lies on the ability to produce at cost competitive, high quality, comply to international accreditation, innovative product and market access.

 Terima Kasih