The document summarizes agricultural sector trends and government policies in Malaysia as they relate to organic farming. It notes that agriculture contributes around RM40.7 billion to Malaysia's GDP, with the government supporting the growth of organic farming through various development plans and financing programs. Specifically, the Malaysian government has increased financing for organic projects through Agrobank and introduced certification standards to promote organic agriculture. However, organic farming currently makes up only 0.02% of total agricultural land in Malaysia, and the document discusses some challenges and suggestions to further expand the organic sector.

1. International Symposium on Marketing and Finance of the Organic Supply Chain
Seoul, Republic of Korea 23-26 September 2012

2. Overview of Agricultural Sector in Malaysia
Agriculture sector contribution in GDP:
• In 2010, RM40.7 billion / US$12.87 billion
• In 2000, RM30.6 billion / US$9.67 billion
• Ranked third after services and manufacturing sector
(Agrofood Statistics, 2011)
The Malaysian government sees potential in organic
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The Malaysian government sees potential in organic
farming as there is an increasing demand for organic
products in the domestic and export market.

3. Government Policy in Support of Agriculture
• To transform food agribusiness industry into a competitive
sector producing safe and quality products through
sustainable farming practices.
3rd National Agricultural Policy (NAP3) (1998-2010)
9th Malaysia Plan (9MP: 2006-2010)
3
9th Malaysia Plan (9MP: 2006-2010)
• The government included organic farming in this policy.
• 460 OA projects implemented with land area amounting to 359 hectares
and expenditure of RM2.27 million (US$0.72 million) over a 5-year period.
10th Malaysia Plan (10MP: 2011-2015)
• In 2011, 2 projects with 25 hectares have been implemented.
• The maximum allocation rate raised from RM10,000 (US$3,161.56) per
hectare to RM30,000 (US$9,484.67) per hectare.

4. Growth Factors for Organic Farming in Malaysia
More health-conscious
urban households
Supermarkets andEnvironmental
4
Supermarkets and
hypermarkets demand
Overcome chemical
residue
High quality and safe
food
Environmental
awareness

5. 71,208 (0.13%)
79,992 (0.67%)
34,079 (0.17%)
30,000
40,000
50,000
60,000
70,000
80,000
90,000
hectares
Land Area Under Organic Farming
1,582
(0.02%)
0
10,000
20,000
30,000
Indonesia Malaysia Philippines Thailand
• Malaysia lagging in terms of land areas utilised for organic farming
• Only 0.02% of agriculture land in Malaysia is devoted to organic farming.
Source: International Federation of Organic Agriculture Movements

6. Malaysia Organic Certification (Sijil Organik Malaysia) (SOM)
• Established in 2003 by Department of Agriculture.
• To certify organic farmers and entrepreneurs.
• Focusing mainly on vegetables, herbs, medicinal plants and fruits and
integrated farming with mixed cropping.
• The requirements cover:
• Operations, preparation, storage, transport & labelling.
• Does not cover the downstream processed products derived from the
unprocessed plants and plant products.
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unprocessed plants and plant products.

7. 3
2
3
1
* SOM Certified Farmers
Location of Organic Farmers* by State in Malaysia
18 STATE No of Farmers
Johor 13
Kedah 3
N Sembilan 5
Pahang 18
Penang 1
Sabah 2
Sarawak 3
Selangor 17
Total 62*
17
13
5
*Source: Department of Agriculture, Malaysia 2010*
Latest status @ April 2012, indicates now there are
75 SOM certified farmers.

8. Suggestion from CETDEM
Centre for Environment, Technology and
Development, Malaysia (CETDEM) Viewpoint
The NGO, CETDEM, started organic farming around 1986 on a one hectare (ha) plot in Sungai Buloh, Selangor .
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• No incentive for land and credit.
• Consumers unwilling to pay
premium price
• Farmers mindset
• Labour shortage
• Lack of knowledge
• Stringent certification criteria
• insufficient capital and low yield
Challenges in Organic Farming
• Government Support
• Raise public awareness
• Farmers to cooperate through:
Integrated farms
Centralised marketing
practice better farm
management
quality control.
Suggestion from CETDEM

9. 2,000
2,500
3,000
3,500
RM mil
Palm Oil
1,036
33%
Livestock
672
21%
Others
173
5%
Agrobank’s Agriculture Loan Balance Agrobank’s Loan Balance
by Sector (% share, June 2012)
Agrobank’s Primary Agriculture Financing
0
500
1,000
1,500
2008 2009 2010 2011 Jun/12
Food Crop Primary Agriculture
Food Crop
771
25%
Fishery
398
13%
Forestry
88
3%
• Agrobank’s loan balance for primary agriculture has
increased from RM2.5 bil (US$0.8 bil) in 2008 to RM3.2 bil
(US$1.0 bil) in 2011.
• Loan balance for food crops rose to RM0.75 bil (US$0.2
bil) in 2011.
• In Agrobank’s primary agri portfolio, the
largest financing went to palm oil (33% of
total), followed by food crop, livestock
and fishery sectors.

10. 50,000
60,000
70,000
80,000
90,000
100,000
No of borrowers
Palm Oil
17,575
19.97%
Forestry
132
0.15%
Livestock
6,378
7.25%
Others
5,366
6.10%
Agrobank’s No of Borrowers
by Sector (% share, June 2012)
Agrobank’s No of Borrowers
Agrobank Financing: Number of Borrowers
0
10,000
20,000
30,000
40,000
50,000
2008 2009 2010 2011 Jun/12
Food Crops Primary Agriculture
Food
Crops
53,459
60.74%
Fishery
5,101
5.80%
• The number of borrowers in primary agriculture rose
from 39,196 in 2008 to 90,077 in 2011
• Borrowers of food crops rose to 52,178 in 2011
(2008:17,179)
• Food crop segment makes up the largest
number of borrowers of 53,459 or 60% of
total

11. Agrobank’s No of Borrowers for
Fruits & Vegetables
Agrobank’s Financing of Fruits &
Vegetables
200
250
300
350
RM mil
15,000
20,000
25,000
No of borrowers
Agrobank Financing: Fruits & Vegetable Segment
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• Financing for fruits and vegetables increased to RM230
mil and RM285 mil respectively in 2011, from RM135 mil
and RM85 mil in 2008.
• Financing of Organic Farming >USD 1.26 mil. (>RM 4 mil)
(2% of total financing to the vegetable sector)
• The number of borrowers for fruits and
vegetables rose to 8,273 and 21,038
respectively in 2011.
0
50
100
150
200
2008 2009 2010 2011 Jun/12
Fruits Vegetables Spices And Herbs
0
5,000
10,000
2008 2009 2010 2011 Jun/12
Fruits Vegetables Spices And Herbs

12. Titi Eco Farm Resort Sdn Bhd :
spinach, cucumber, corn
papaya, etc.
Zenxin Agri-Organic Food Sdn
Bhd: various vegetables
Ganofarm Sdn Bhd :
mushroom
Leo Kim Ong :
Vita Agrotech Sdn Bhd:
mushroom
About 10 operators with
SOM certification are
Agrobank’s clients , out of
total 60-70 nationwide.
Loan amount reached
Organic Farmers Receiving Agrobank Financing
12
Permatang Cabaran Sdn Bhd:
dragon fruit
N&N Farm Sdn Bhd:
vegetables
Nasuha Enterprise: herbs
Leo Kim Ong :
Chinese broccoli, Swamp
cabbage
Bindu Florikultur : dragon
fruit, pea, sprouts
Mazlina Kahar: mushroom
Loan amount reached
RM8.0 mil (or 3%) out of
RM285.4 mil to finance
vegetable segment
Expect more clients in
future as organic farming
expands

13. • Located in southern Malaysia (Johor). Operated since 2001.
• Since 2008, certified from Nat. Assoc. Of Sustainable Agriculture
Australia (NASAA), member of IFOAM.
• Leading grower & retailer of organic produce in Malaysia and Singapore.
• 80% of its customers are repeat buyers
• Believes organic products would thrive in the next 5 years.
• Enjoyed double-digit growth in sales and the number of customers has
grown steadily. Growing 60 varieties of vegetables
• Zenxin believes that they have more than 50,000 regular customers.
Agrobank Client : Zenxin Agri-Organic Food
• Zenxin believes that they have more than 50,000 regular customers.

14. • Produces organic fertilizers from palm oil waste that is the empty
fruit branches (EFB).
• Their unique products improve crop productivity, land
rehabilitation, soil fertility, soil health and environmental
sustainability.
• They have R&D and bio-manufacturing capabilities to produce
bio-fertilizers, bio-pesticides and bio-remediation products.
• An example of their product is “aGricare BIO-ORGANIC”
Fertilizer from palm oil wastes (EFB and other green wastes)
Agrobank Client: Myagri Nutribio Sdn Bhd
Fertilizer from palm oil wastes (EFB and other green wastes)
composted using the latest technology containing beneficial
microorganisms.
Isolated and cultured in Malaysia

15. TYPE
Micro Financing
(MUS1M-i )
Fund For Food
(3F)
Commercial Fund
Target Customers
Micro entrepreneurs
with projects of more
than 1 year
Entrepreneurs with
projects for food
production
Entrepreneurs and
Corporate with projects
for food production
Financing Size Maximum of RM20,000 Maximum of RM10 mil Maximum up SCL
3.75% per year for
Agrobank Financing Products for Food Sector
Profit Rate 15% per year
3.75% per year for
amount <RM5 mil
BLR + Margin
Financing Tenure Maximum 60 months Maximum 60 months Maximum 10 years
Collateral Not required Full collateral Based on Credit Ratings
Guarantors
1 guarantor for loan
amount ≥ RM20,000
Rebate/Incentive
20% of profit rate for
prompt repayment

16. • Agrobank to contribute towards the production of safer foods and environmental-friendly
agriculture that will make Malaysians healthier.
Conclusion
Agrobank will support the development of the
food crop sector, including organic farming in
line with the government’s policy towards
sustainable farming, good farming practices and
producing safer food for human consumption.
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agriculture that will make Malaysians healthier.
• Potential of organic farming in Malaysia is bright because people are becoming more
health and environmentally conscious.
• While organic farming is a small percentage of Agrobank’s total financing, the amount
is likely to increase in future years, in line with the growing demand for organic foods.
• Agrobank will continue to play its role to support organic farming.

17. Thank you

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