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1
MALAYSIAN TOBACCO FARMERS :
SHIFTING FROM TOBACCO TO KENAF
NATIONAL TOBACCO BOARD (NTB)
PREPARED BY
WAN BAHARUDDIN WAN ISMAIL
07TH OCTOBER 2008
MANILA, PHILIPPINES.
SOCIOECONOMICGOVERNMENT’S
REVENUE/ TAXATION
(RM3 billion/ year)
PUBLIC HEALTH
CONTROL
e.g. TAK NAK
Campaign &
FRAMEWORK
CONVENTION ON
TOBACCO
CONTROL (FCTC)
GLOBALIZATION
(AFTA/ WTO) - Free
in/ Free Out 2010
POLICIES IMPACTING TOBACCO INDUSTRY
1
3
2
4
2
INDICATOR 2004 2007 2010
1 Acreage (Hectare) 13,280 7,723 ?
2 Production of Cured Tobacco
(Million Kg)
14.260 7.600 ?
3 Value of Production
(RM Million)
194.938 99.717 ?
4 Cured Leaf Price (RM/ Kg) 14.00 13.00 8.00 - 10.00
5 Number of Farmers (Families) 11,708 3,140 ?
6 Number of Grower Curers
(Families)
4,340 3,066 ?
7 Number of Joint Venture Grower
Curers (Companies)
291
(Workers)
166
(Workers)
?
DECLINING TOBACCO PRODUCTION INDICATORS
0
5000
10000
15000
20000
25000
19741975
19761977
19781979
19801981
19821983
19841985
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
2008
0
2
4
6
8
10
12
14
16
Hectarage Production
Tobaaco Hectarage and Production (1974 – 2008)
Hecta
re
Mil
lio
n K
g
3
1) Disciplined/ well managed growers (cluster)
2) 15,000 hectares tobacco land (mainly Beach
Ridges Interspersed With Swales – BRIS soil)
3) Infrastructure, farm machinery and services
4) Tobacco barns for drying other crops
5) Successful commercialization of BRIS soil and
contract farming with multinationals – RM4
billion produced and successfully marketed
since 70’s.
AVAILABLE TOBACCO INDUSTRY RESOURCES
Project Hectare/
Quantity
No.of
Farmers
Production Value
(RM Million)
1. Melon
2. Corn
3. Paddy
4. Sweet Potato
5. Banana
6. Pineapple
7. Chili/ Vegetable
8. Mushroom
178
114
202
186
31
25
203
0.2
149
111
70
139
60
40
287
6
1,995 (Ton)
2,226,040 (Cob)
789 (Ton)
2,280 (Ton)
422 (Ton)
1,717 (Ton)
1,199 (Ton)
16.85 (Ton)
1.220
0.914
0.666
1.453
0.425
0.901
0.728
0.058
Sub Total 939.2 862 6.365
9. Sheep/ Goat
10. Cattle
11. Aquaculture
233
524
253 ponds
7
100
41
233
524
263 (Ton)
0.073
3.321
0.124
Sub Total 148 3.518
TOTAL 1,010 9.883
CROP INTEGRATION & DIVERSIFICATION PROJECT 2007
4
Project Hectare/
Quantity
No. of
Farmers
Production Value
(RM Million)
1. Melon
2. Corn
3. Paddy
4. Sweet Potato
5. Tapioca
6. Banana
7. Pineapple
8. Chili/Vegetable
9. Mushroom
10. Cocoa
11. Pitaya
127
123
153
59
49
53
8
69
0.2
140
6
119
93
56
50
58
44
90
89
7
138
11
646 (Ton)
1,131,707 (Cob)
593 (Ton)
352 (Ton)
849 (Ton)
244 (Ton)
1,194 (Ton)
10.17 (Ton)
-
-
0.490
0.464
0.524
0.224
0.086
0.855
0.128
0.725
0.035
-
-
Sub Total 781.2 755 3.531
10. Sheep/Goat
11. Cattle
12. Aquaculture
645
356
346 ponds
32
19
41
645
356
3,645,098 (Ton)
0.421
0.389
1.859
Sub Total 92 2.669
TOTAL 847 6.020
CROP INTEGRATION PROJECT 2008 (as at 30 June)
WHY INTEGRATE TOBACCO FARMING?
1. Single crop/ year cannot sustain growers income –need to integrate/ diversify and maximize income through annual cropping system.
2. Reduce cost – optimize utilization of existing resources
3. Benefit from “seed to market” tobacco package and utilize NTB’s experience & knowledge of successful development in tobacco cultivation on BRIS soil.
4. No sustainable equivalent alternatives to tobacco w.r.t scale, market, income, stability and suitable to challenging BRIS agro-ecological conditions.
5. Replace future tobacco cultivation parallel to Malaysia’s commitment to the FCTC (either; zero domestic tobacco content in cigarettes or relocation of cigarette manufacturing to other countries.
5
KENAF
WHY KENAF ?
1. 1001 uses – not gunny sacks/
cordage, but new non traditional
applications in green building,
auto, furniture, bio-composites,
pulp and paper.
2. Green/ Sustainable – replace
artificial petroleum based and
forest based raw materials.
3. Kyoto Protocol, climate change,
increasing petroleum prices and
depleting forest resources.
6
WHY KENAF ?
4. Blue Ocean opportunities to
pioneer an integrated agricultural
industry where growers are not
sellers of cheap raw materials,
but partners in a supply chain
and benefiting from more
lucrative midstream/ downstream
opportunities and returns
(Contract Farming Plus).
5. Support Government policy –
new sources of growth
1) Absorbents
Cat / Poultry Litter, Horse Bedding
Industrial absorbent
Feminine Products, Diapers
2) Paper Products
Whole stalk can be efficiently made into paper
Use as filler with other cellulose
3) High Quality Paper Pulp
Cigarette paper
Archive grade paper
Filtration paper
KENAF PRODUCTS
© 2006 NTB
7
4) Automotive Panels &
Components
Substitute for Carbon,
Glass and other mineral
fibers
Offers weight, strength and
environmental advantages
5) Cordage, Rope and Twine
6) Textiles
Industrial fabrics & lay-up
composite materials
Geo-Textiles
Commercial fabric
KENAF PRODUCTS
© 2006 NTB
7) Fibrous Reinforcement of
Plaster, cement and other
binders
Structural support building
materials
Lightweight, insulated
building blocks using local
binder
Blend in slurry with gypsum
for a wall board product,
8) Cellulosic ethanol
9) Fodder (Animal feed)
KENAF PRODUCTS
© 2006 NTB
8
Plantation of Kenaf
• Development of kenaf as an
alternative crop to tobacco in medium
to long term.
• The target area is 10,000 hectares:
Bachok / Pasir Puteh
Setiu / Marang
• Kenaf industry is expected to create
more jobs and increase income of
about 10,000 marginal tobacco
farmers.
• The project will be implemented on a
nucleus farm model whereby anchor
companies will plant kenaf as an
estate (nucleus) to support organised
smallholders.
• The anchor company will also
undertake processing of the kenaf
fiber.
Kenaf: The Tobacco Alternative
Development of the Kenaf Industry Under the National Tobacco Board
Source : ECER
Inputs
(seeds etc)Production Collection, Processing
& Packaging Centre
(CPPC)
Factories Hypermarkets
& Retail outletsConsumers
Shipping &
Forwarding Export Market
Logistics
Management
Supply Chain Management
Advantages of Supply Chain Management:
• Less market intermediary
• Reduce post harvest losses due to better handling
• CPPC will act as one stop centre
• Ensure quality of product
Source : ECER
9
Conceptual Implementation Strategy for Nucleus Farm Model
CPPC/ CPMC
MANAGEMENT FINANCINGContract
Farmers
Output
GAP Certified
GOVERNMENT
(MPIC/ NTB/
State)
INVESTORSAnchor
Company
FACTORIES
Composite (wood, roofing, panels), brown paper, insulator, plaster ceiling,
biofuel, textile, animal feed
• Organised
smallholders
• Kenaf
development
fund
• R&D
(downstream
products)
• Manufacturing
companies
• Seed production
• Soft loan
• Infrastructure
• Extension
• Marketing
• Mechanization
• Transport
• Quality control
(GAP)
• Contract farming
• Grade
specifications
Source : ECER
Official Launch of the CPPC & Malaysia’s
1st Export of 1000 Tonnes of Kenaf Fiber to Korea, 22/8/08
10
KENAF PLANTED AREA
(FIBER AND CORE)
Year Hectarage
2004 1 ha
2005 42 ha
2006 112 ha
2007 285 ha
2008 1,250 ha
SEED PRODUCTION
Year Hectarage
2006 58 ha
2007 152 ha
2008 260 ha
11
TRIPARTITE R&D APPROACH
1) Applied and fast track R&D involving Upstream (NTB and growers), Downstream (industry partner) and R&D institution.
2) Collaboration with 4 anchor companies (bio-composite, high quality fiber, building insulator, and powdered core applications) to develop integrated commercial model with supporting machinery, systems and services.
3) Collaboration with USM in the commercialization
of kenaf for pulp/ paper, high quality fibers, building materials and bio-composites.
ISSUES AND CHALLENGES
1. Growers mindset – change, new skills, less
lucrative crop.
2. Consumers mindset – willingness to pay
premium for green and environmentally
friendly products.
3. Maximum mechanization to be competitive
– affordable and suitable to local
environment.
4. Specifications/ price which commensurate
with costs, income and market configuration
12
ISSUES AND CHALLENGES
5. Development of contract farming plus concept
with growers as partners in supply chain and
sharing returns from more lucrative downstream
activities.
6. Fast track and applied R&D - BRIS adapted
technology and techno economically viable.
7. Investment for new and unproven industry.
8. Human capital development.
9. Increasing input costs for fertilizers,
agrochemicals and mechanization.
THANK YOU