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Expanding the Malaysian Herbal Industry by Developing the Farmer-Government-University Nexus
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Expanding the Malaysian Herbal Industry by Developing the Farmer-Government-University Nexus

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Expanding the Malaysian Herbal Industry by Developing the Farmer-Government-University Nexus

Expanding the Malaysian Herbal Industry by Developing the Farmer-Government-University Nexus

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  • 1. Murray HunterUniversity Malaysia PerlisThe 7th Malaysian Agro-Bio International Business Conference with the 12th Malaysian International Food & Beverage Trade Fair (MIFB 2011) 13-15th July 2011.
  • 2. Raw Herbs Traditional Herbal Medicines Fresh Dried Consumption Fermented Medicinal Medicinal Powders Beverages ExtractsStandardised Extracts Fractions & Isolates Phytopharmaceutical Bioactive Products Compounds Prescription & OTC Enzymes Essential Oils & Drugs Other Volatiles Agricultural Personal Care Flavour & Aromatherapy Application & Cosmetics FragranceFigure 1: The Family Tree of Herb Derivatives
  • 3. Types of herbal products Type DefinitionNutritional Supplement Vitamins which are defined as complex chemical substances that are needed for the functioning of the body, but that generally cannot be produced by the body and must therefore be obtained from food or nutraceuticalsNutraceutical Is a product isolated or purified from foods and generally sold in medicinal forms not usually associated with food for the purpose of physiological benefits or to provide protection against illnessDietary Supplement Includes preparations of vitamins, minerals, amino acids and mixtures of these ingredients as well as herbs and other botanicalsHerbal Medicines Includes herbs and traditional medicine, which means any product employed in the practice of indigenous medicine, whereby the drugs used consist of one or more naturally occurring substances of a plant, animal, or mineral or part thereof, or in extracted form or non-extracted form, or any homeopathic medicine.Indigenous Medicine Is a system of treatment and prevention of diseases involving the traditional use of naturally occurring substances.Homeopathic Medicine Any drug in a pharmaceutical dosage form that is used in the homeopathic therapeutic system in which diseases are treated by the use of minute amounts of such substances which is capable of producing in healthy persons symptoms similar to those of the disease being treated.
  • 4. The Issues
  • 5. Obtaining Finance
  • 6. Technology
  • 7. The Necessary Skills
  • 8. Finding New Business Models
  • 9. Farmers
  • 10. The Major Blocks to Development • The current “psych” of farmers • Growing rural unemployment • Unbalanced affluence (town-rural) The Probable Causes
  • 11. Lack of IdeasLack of education and skills Narrow mindsetFeeling of powerlessness – lack of access to markets Lack of resources Lack of will
  • 12. The Essential Oil Value Chain (Flavour & Fragrance Industry) Flavour & Consumer Essential Trading Fragrance End Oil Compoundi Product Wholesal RetailerProduction ng Manufactur er e1.0 1.6 2-3.0 (6-9) 2-2.5 (18-24) 1.1-1.2 (19.8- 1.2-1.4 28.8) (23.76-Relative and (Absolute) Value Added Through Chain 40.32)
  • 13. Essential oils exported to international customersRegional or Country Based Wholesaler/Exporter Domestic sales Local Collectors and Wholesalers Subsistence Farmers
  • 14. Customers Cooperative company with central distillery (harvest equipment) and carrying out marketing role. Determines production levels Controls quality Negotiates R&D with research institutions Offers advisory services Run by farmer representativesHarvested foliage sent to Some growers central elect to selldistillery own oil Farmers who are members of a cooperative let the cooperative distill and sell the oil on their behalf
  • 15. Venture Focus Along Different Parts of the Supply Chain Manufacture of end products. Focus on Consumers formulation and end Consumer product Trends development Important Wholesalers & retailersVertical Integration Along the Supply Chain Essential oil as an ingredient in a product. Focus on uses and applications Technical Branding research Trends Theme Manufacturers Important Consumer Marketing Essential oil as Reaching Application primary Product. Mass or Focus Flavour & Fragrance Focus on market Technology selected Markets Houses demand & supply Focus and meeting New Product standard IP Focus (?) Development Specific Demand & Customer Traders & Brokers Supply, Buying Criteria Important Technical Primary Producer Focus General or Niche Customers Agro Industrial Consumer Orientation Orientation Orientation
  • 16. Universities & Research Institutes
  • 17. Information seeking and Begin with an Planning Planning entrepreneurial Research and management style, then Phase orientation collaborative move to marketing orientation orientated style and eventually corporate R&D management style Phase Seeking of information, looking for ideas, screening for opportunities, Commercial Phase setting of a vision and planning out Start-up Growth Maturity the project Start-up Develop company, production andTest hypothesis, review early customermarket, confirm viability, base, usually Maturity develop applications, very personal & Corporate orientation increase knowledge, hands on. with well defined learn how to operate depts. Formalised commercial operation. marketing & production Growth roles in organization, Collaborate with Develop value-added products, take strategic outlook customer & R&D new market, customers, expand for business. Institutions production, move to more formal management
  • 18. • Fundamental research• Applied research• Assist in technology scale up• Coordinate research through national committee• Graduates into industry• Product marketing and entrepreneurial skill development
  • 19. Government
  • 20. • Not as a direct player• Take on a support role• Organize the industry• Develop extension• Partly fund research• Act as a general promoter• Set up Herbal Finance Corporation• Set up national research committee
  • 21. Kunzea ambigua Mentha Piperita
  • 22. Blue Gum Eucalyptus(Eucalyptus globulus) Lavandula angustifolia
  • 23. Tasmannia lanceolata BlackcurrentRibes nigrum
  • 24. Boronia Megastema
  • 25. Opium poppy Papaver somniferum pyrethrum
  • 26. wasabi Fresh Asian Vegetables
  • 27. Wine Native Spices Herbal teas Native herbs New Activities to Tasmania Asian vegetablesNew and existing essential oils Wasabi Herbal Tourism Aromatherapy pyrethrum Opium
  • 28. The Tasmanian Essential Oil Industry Structure Industry Growers Associations Research Advisory Committee Field Processing Government Development Corporations (RIRDC/HAL) Processing andMarketing Company (Essential Oils ofTasmania Pty. Ltd.) Research Provider (University of Tasmania/TIAR) Agents The World Market
  • 29. What Can Be Done?
  • 30. Marketing Farmers CompaniesManufacturers Researchers Regulators Government
  • 31. • Coordinated Research• Creating farmers’ organizations• Producer and marketer association• Industry association• Industry levy for research• Participatory action research• New approach to finance (Herbal finance Corp.)
  • 32. Social Systems Agriculture Participatory Action Agricultural professional Research stance that emphasizes Emphasis on co-learning farming as a social practice through farmer and Discipline Orientation that uses technology community participatory research and empowerment programs Shift from theoretical and technical to community collaboration and Traditional Academic Farming Systems problem specific Based Research Research research Based on developing On-farm technical problem technology and principals, diagnosis and adaptive models and possible research practicesTechnical General Domain Focus Local
  • 33. Conclusion
  • 34. The set of opportunities for an essential oil producerGeneral Trading Other Aromatic Aromatic Chemical Agro-Tourism Agricultural (marketing) Essential Oil Extract (bio-route) By-Products Region’s production Specialised single oil marketing General multi-oil marketing Mulches Aromatic Chemical (physical route) Bio-fuelCommodity Oil Single Crop Portfolio of Crops Business through select supply chains Specialty Oil Flavour & Cattle feeds Fragrance Builds brand image and support.Aroma Chemical Complements other activities. Aromatherapy & Paper CosmeticProduction &marketing of Pharmaceutical Other diversification products Production of herbs and spices Agro-chemical Higher differentiation and value adding Diversification of activities Utilisation of wastes
  • 35. Sustainability of the venture for long-term R&D Underlying survival KnowledgeGovt./institutional support Access to capital JV, partnerships, strategic alliances, etc Unexploited Opportunity or idle Cost and resources performance benefits of product Economies of scale or Impact on competitive advantage and from through differentiation local community Access to market/network Market driven selection of crops and product Customer driven management
  • 36. • Creates wealth Economic growth & •Commitment to business (state • Develops human capital diversity enterprises don’t work)•Makes Malaysia internationally • Private enterprise most competitive effective •Follow Islamic economic • Need to nurture multiple principles Farmer Market Groups Groups businesses •Diversifies agriculture • Role in regional development Entrepreneurship as a national development strategy Coordinated Industry Body Universities & Government Research Institutions •Part source of funding for R&D •Undertake fundamental research • Regulator •Undertake applied research • Organizer •Undertake participatory action • International representative bodies research • Standards • Quality assurance role •Infrastructure •Provide trained human capital
  • 37. Thank You