Livestock production and the feed industry in Malaysia - T.C. Loh

T.C. Loh
Animal Science Department
Universiti Putra Malaysia
Selangor, Malaysia

INTRODUCTION

The Malaysian livestock industry is an important and integral component of the agricultural sector, providing gainful employment and producing useful animal protein food for the population. It contributes about 18 percent to the total Food Sector Agriculture Value Added and export earnings (NAP, 1998). The gross output value of livestock in 1999 was RM5.2 billion (DVS, 1999 [RM3.8/US$ at 5 July 2002]). The industry can be classified into the non-ruminant and the ruminant sub-sectors. It has shown a steady growth over the years attributed mainly to the active participation of the private sector, particularly in the sub-sectors of poultry, eggs and pork. Within a relatively short period of time the pig and poultry industries have been able to transform themselves from backyard subsistence levels to highly modern, commercial and efficient production systems.

The ruminant sub-sector, however, is not well developed in spite of the emphasis and priority it has received from the Government in its development plans. Cattle, buffalo, goat and sheep constitute the ruminant sub-sector and smallholders are the principal producers within this sub-sector. Malaysia is able to produce its own requirements for pork, poultry meat and eggs but has to import milk, beef and mutton (Table 1). Self-sufficiency for milk, eggs and beef are below 20 percent. As a result, the country has seen an increase in its food import bill from RM4.6 billion in 1990 to RM10.0 billion in 1997. Thus, the Third National Agricultural Policy (NAP3, 1998-2010) emphasizes that “the further growth of the agricultural sector requires that the nation address the challenge of efficient and optimal utilization of existing resources in order to further improve competitiveness. Resource constraints and rapid changes in the global trading environment necessitate the development of a resilient agricultural sector and the enhancement of its global competitiveness ... The competitiveness of the sector will, among other things, be enhanced through productivity improvements, developing and strengthening markets, removal of market and trade distorting measures ...”.

TABLE 1
Gross output value of livestock (DVS, 1999)

Note: United States dollar = RM3.8; Source: DVS, 1999

LIVESTOCK INDUSTRIES
Poultry industry

This industry has been self-sufficient since 1984. The poultry sub-sector contributes RM4.0 billion (poultry meat RM2.9 billion and eggs RM1.1 billion) or 76.8 percent of the ex-farm output value of the industry (Table 1). During the years 1998-2000, the broiler and egg industries increased their output at a rate of 8.9 percent and 3.3 percent per annum, respectively (Table 2). ‘Integrator’ is a major commercial player in the production of broilers and eggs, and presently contributes 75 percent of total output in Malaysia. Per capita annual consumption of broiler meat is 31 kg and for eggs, 16.6 kg. The export earning from this industry was RM440 million in 1999 (Ministry of Agriculture, 2001).

Pig industry

This industry has been self-sufficient since 1981. It was one of the fastest growing industries before the outbreak of Nipah virus in 1998/99. It contributed RM906.8 million in 1999, representing about 17.4 percent of total livestock production (Table 1). In 2000, the country was only 79 percent self-sufficient in pork due to massive culling of pigs during the Nipah virus outbreak. Prior to that, the country was 137 percent self-sufficient in pork with the excess being exported to Singapore. The average annual per capita consumption is 30 kg, which is considered among the highest in the region (Table 2). Pork will continue to be the major meat diet for more than 30 percent of the Malaysian population.

Ruminant industry

Beef and mutton contributed 4.8 percent and 0.2 percent, respectively to total livestock production (Table 1). Both industries recorded progressive growth during the period 1998-2000 with an average rate of 34 percent and 19 percent, respectively (Table 2). Despite this growth in meat production however, beef and mutton still meet only 21 percent of total annual domestic demand.

Production of milk during the same period increased at a rate of 7 percent annually. The per capita consumption of milk in 1998 was 33 litres and by 2005 is projected to rise to 45.3 litres. The rate of self-sufficiency of milk was only 4.8 percent in 2000 and there is therefore a heavy dependency on the import of milk and milk products to meet local demands.

TABLE 2
Production and consumption of livestock products (1998-2000) in Malaysia and percentage self sufficiency (SS)

SOURCE: MINISTRY OF AGRICULTURE, MALAYSIA; 2001

ISSUES OF LIVESTOCK PRODUCTION

Land/farm zoning

Many farms have to cease operations because of the public’s non-acceptance of farming. The authorities suggested all the farms should be concentrated in a ‘safe’ area. With the endorsement of the Government (1991), pig farms were relocated to a designated area known as pig farming area (PFA) to abate pollution and to allow a systematic development of the pig industry. To date, the proposal has not been well received by the state authorities. The PFA guidelines included a 1 km buffer zone between the PFA perimeter and the first pig house. In addition, poultry farms were encouraged to cluster into certain areas.

Effluent management

A 3-phased compliance schedule initiated in 1990 was introduced for pig farms. In 1997, the second compliance phase was implemented. One of the parameters, Biochemical oxygen demand (BOD₅), was set at 250 mg/litre for this second phase, while 50mg/litre was set for the third phase in the year 2000. Currently, no specific technical effluent standards have been set up for other livestock farms.

Globalization and Lliberalization

An important issue is the livestock industry’s need to prepare for the full implementation of the Asian Free Trade Area (AFTA) by 2003. Initially this will only affect livestock products, but by 2010 it will include whole chicken, whole eggs, day-old-chicks and swine. AFTA is essentially meant to:

• create an integrated domestic market among the Association of Southeast Asian Nations’ (ASEAN) 13 million population;

• promote ASEAN as an efficient and competitive base to attract foreign direct investment;

• benefit from the increased scope for complementary trade among ASEAN member countries;

• promote greater intra ASEAN trade and industrial linkages.

The major elements are to reduce tariffs to 0-5 percent and to remove all non-tariff barriers. Since almost all livestock products carry 0 percent tariff for imports into Malaysia, the industry is already exposed to the liberalization of trade. As noted in the NAP3, globalization and liberalization will open new opportunities for export of livestock production, and facilitate competitive sourcing of raw materials. The country has the capability to specialize and to be competitive in the production of certain livestock products, especially the poultry sub-sector. The sub-sector is expected to integrate and consolidate further to become more efficient and more productive in order to capitalize on the export market. To strengthen competitiveness and institutional support, the NAP3 suggests that the installation of effluent treatment systems will should be encouraged through the abolition of import tax for specialized on-farm treatment equipment. Suitable incentives for investment in automation will also be provided and the import tax on all specialized livestock farm and processing equipment will be abolished. In the area of strategic sourcing, it encourages overseas investments in meat and feed production (Chiew, 2001).

FEED INDUSTRIES

Feed constitutes a large proportion of the cost of production in any livestock industry. Raw ingredients for animal feeds are not produced in Malaysia. As such the intensive livestock industries, particularly pig and poultry, are dependent on imported feedstuffs. The imported ingredients range frorm cereal grains, vegetable and animal proteins such as soybean meal, corn gluten meal, fish meal and meat and bone meal, mineral sources and various micro-ingredients - vitamins, minerals and other additives used to improve feed efficiency and growth (Table 3).

In contrast, the ruminant industry depends primarily on locally available feedstuffs, with only some supplementation provided by imported ingredients. The major local materials used are crop residues and other agro-industrial by-products such as rice bran, copra cake, palm kernel cake (PKC), oil palm frond, sago, tapioca and broken rice. There are 43 compound feed mills in West and East Malaysia ranging from small to medium to highly complex operations, which produced 3.9 million tonnes annually. However, there are also home-mixers which supply of 275,000 tonnes annually (Raghavan, 2000). Table 4 shows the sources of imported feed ingredients used by the livestock industry.

TABLE 3
Raw materials used by the local feed industry

Note: ** commonly used by the industry, * less availability;
Source: Modified from Raghavan, 2000

TABLE 4
Sources of imported feed ingredients

Non-ruminant feeds

Most compound feeds for non-ruminants (poultry and pig) are based on maize mixed with other ingredients and numerous additives to provide the necessary amino acids, vitamins and minerals. The quantity of imported maize from 1992-1999 is shown in Table 5. Most of the ingredients used in the rations are imported, although to some extent locally produced ingredients are also included. However, use of locally produced ingredient depends on supply, cost and also quality. The locally produced ingredients are tapioca and fishmeal. However, the amount produced is not sufficient to meet the requirements of the local feed industry. The by-products of oil extraction and the milling factories that produce rice bran, soybean meal, wheat bran and pollard, are always available and usually included in pigs and poultry feeds.

TABLE 5
Importation of maize in Malaysia from different countries (1992 to 1999) (tonnes)

Source: US FGC, June 2000

Ruminant Feed

The ruminant industry is not well developed in Malaysia and is mainly operated by smallholder farmers. The systems of production vary from extensive to semi-intensive and depend on native pasture often supplemented with locally available feedstuffs, for instance PKC, palm oil sludge, oil palm frond and soy waste (Table 3).

FEEDSTUFFS PRODUCTION IN MALAYSIA

As mentioned previously, the majority of feedstuffs used in rations for monogastric livestock (i.e. pig and poultry) are imported. Maize and soybean meal are the major imported ingredients. Locally available raw materials make up about 30 percent of the total feed ingredients in Malaysia.

PKC is obtained after extraction of oil, a by-product from the oil palm industry. It contains 15-17 percent crude protein and 16 percent crude fibre, but its palatability is poor. Moreover, it lacks several amino acids and has a low lysine availability. Its use is often determined by its price in relation to other protein supplements and the cost of balancing amino acids content. In Malaysia, PKC has been successfully used as a ruminant feed rather than as a feed for monogastric animals.

Amino acid profiles for local feed ingredients have not been fully determined. In normal practice, if any local ingredients are used; extra amino acids must be supplied or other more protein rich ingredients added for maximum performance. Locally produced fishmeal supplies only 17 percent of the total requirement (Table 6). The quality is poorer than imported fishmeal because the ash content is higher and the protein concentration not usually greater than 55 percent (Raghavan, 2000). Furthermore, local fishmeal production depends on the supply of fish waste, and the fish industry is not large enough to support production for fishmeal as well as for human consumption. This may cause the supply to be irregular and as a consequence, the local feed millers prefer to import rather than use locally produced fishmeal.

Soybean meal is produced in small quantities and is obtained after extraction of oil from soybean and after the production of soybean curd and soybean drinks. It is estimated that locally produced soybean meal provides 50 percent of the total requirement (Table 6).

TABLE 6
Requirement of major feed ingredients and importation

Source: Raghavan, 2000

THE FUTURE OF THE FEED INDUSTRY

The growth of the feed industry was badly affected during the economic crisis in 1997 and the pig Nipah virus outbreak. However, the industry is still growing and this is mainly due to the growth of the poultry industry. It had been projected that the increase in production of animal feed would be proportionate to the increase in demand for food (Table 7). The major problem of this industry is its heavy dependence on imported feedstuffs which account for 30 percent of the total food bill and amounts to RM10 billion a year. Moreover, the price of imported feed ingredients is often subjected to price instability. In addition, alternative formulations of feed using locally available raw materials is poorly developed. It has been suggested that by growing the major feedstuffs, or fully utilizing agricultural wastes the importation bill problem could be solved. However, the domestic production of grain for animal feeds is not feasible (Chiew, 2001); probably due to several factors such as poor returns, lack of arable land and high cost of cultivation. In addition, utilization of agricultural waste is not encouraged due to its poor palatability and nutrient content. Table 7 shows the projected livestock feed production from 1996 to 2008 which is predicted to grow at an average of 2.8 percent per year for another 5 years.

TABLE 7
Projected livestock feed production (1996-2008) (thousand tonnes)

Note: ‘000 metric tons

CONCLUSION

In Malaysia, poultry and pig production has developed to a stage where it is self-sufficient and internationally competitive. This is mainly due to successful technology transfer into the poultry and pig production systems. In contrast, the ruminant sub-sectors are not competitive, underlining the dichotomy between these and the monogastric sectors. Domestic feed-grain production is not financially or economically feasible at the present level of productivity. Nevertheless, more research and development are required to identify and improve the grain varieties in order to suit local agro-climatic conditions and to further improve yields. Government should provide more incentives to encourage farmers to plant improved varieties of feed grain and to recycle livestock manure as a fertilizer for this feed grain. All these are necessary before Malaysia can hope to reduce its dependence on imported feed grain and improve the competitiveness of its livestock industry.

REFERENCES

NAP. 1998. Third National Agriculture Policy (1998-2010).

DVS. 1999. Department of Veterinary Services, Ministry of Agriculture, Malaysia.

Raghavan, V. 2000. Managing risks by the feed industry for safe food. 22^nd MSAP Annual. Conference., p. 27-48.

Chiew, F.C. 2001. Globalization and trade liberalization implications on livestock industry in Malaysia: Threat or opportunity. Proceedings. of the 23rd MSAP Annual. Conference., p. 27-29.