Integration provides vast agricultural opportunities

Agriculture is a vital sector for the ASEAN community accounting for over 25% of GDP in some member states and providing more than 40% of total employment in the case of Myanmar.

Food security is a priority to meet the needs of the Region’s expanding population as well as underpin the steadily growing role in the export of agricultural and forestry products to global markets.

There is no shortage of resources with arable land totalling around 60 million hectares. The Regions’s forests and waterways also contain some of the richest habitats on earth. These valuable natural resources include the Greater Mekong Subregion which covers vast swathes of tropical forests and rivers in Cambodia, Lao PDR, Myanmar, Thailand and Vietnam. Borneo, in addition, comprises 24 million hectares of equatorial rainforests stretching along the borders of Indonesia, Malaysia and Brunei.

ASEAN countries are established as important world suppliers of commodities. Indonesia, Thailand and Malaysia, for example, cultivate some 3.3 million tonnes a year of rubber, accounting for around 70% ofthe world’s production.

Indonesia and Malaysia are the Region’s main palm oil producers and provide nearly 90% of global output. Indonesia exports around 18 million tonnes a year of this versatile commodity whose uses range from production of vegetable oil for cereal products, crisps and confectionery to soaps, detergent, cosmetics and biofuel. Agricultural output is increasingly important in the composition of the Regions exports. Between 2003 and 2010, agro-based exports increased threefold with the total value rising from US$11.8 billion to some US40 billion. Food processing and manufacturing contributed up to13.5% of GDP.

The Philippines is one of the world’s largest producers of coconuts and pineapples, and a major producer of rice and sugar. Some of the biggest global food producers and domestic industries have developed large scale cultivation and processing facilities. These include domestically based San Miguel and other corporations including foreign companies such as Del Monte, Kraft Foods, Unilever, Nestle and Dole Food Company.

According to figures given at 2013s ASEAN-EU Business Summit held in Hanoi, agro-food sales account for 17% of total exports for Vietnam and Indonesia and 14% for Thailand. The latter’s food exports are running at around US$30 billion a year with exports to other ASEAN countries representing some US$6 billion of the total. With some 1.4 million hectares of land under cultivation for sugar cane, Thailand is the world’s second largest sugar producer after Brazil with exports of 6.5 million tonnes a year, valued at more than US$3.6 billion.

The country also ranks as the world’s largest producer of shrimp, processed chicken and canned tuna and provides high quality food products for markets in Europe, Japan and North America as well as the ASEAN Region. Closer regional cooperation could see the percentage of export sales within ASEAN countries rise up to 30% in the next few years, according to Petch Chinabutr, Director of the Thai National Food Institute.

The ASEAN area is already Thailand’s largest export market accounting for 20.6% of sales, followed by Japan at 14.6% and the US at 12.8%. The National Food Institute (NFI) is urging small and medium sized enterprises to cooperate with companies in other ASEAN countries to utilise new technologies and improve the free flow of goods and raw materials. The NFI, which operates independently under the Ministry of Industry, focuses on implementing international quality standards, technology and food safety research and development. This has helped establish Thailand as one of the top five net food exporters in the world. Sales of canned and frozen fish including catfish, shrimp, prawn, carp and tilapia are a growing export for Thailand and others in the Region.

Around 17% of the world’s aquaculture production is produced here. Indonesia is the largest producer with an annual production estimated at 3.9 million tonnes followed by Vietnam, Philippines and Thailand with production of around 2.5, 2.4 and 1.4 million tonnes a year respectively.

Export growth is also part of the strategy of less developed countries in the Region. Cambodia’s Rice Policy is designed to promote diversification of its economic sectors by catalysing growth in paddy rice production and milled rice export to match growth seen in the country’s garment and service sectors.

Agriculture, led by rice farming, contributes to roughly a third of the country’s GDP and has immense potential for strengthening Cambodia’s economic growth and to accelerate poverty reduction.

If the country’s rice export sector were to reach its full potential, it could produce three million tonnes of milled rice, with a total export value estimated at US$2.1 billion. At present, an under utilisation of arable land and high energy costs are stalling expansion. Agriculture plays a vital role in Indonesia’s economy and contributes 15% of GDP, the third largest total after hydrocarbons and manufacturing. The country’s food crop production, livestock and fisheries output is valued at some US$90 billion a year with rubber, palm oil and forestry production providing an additional US$22 billion.

Indonesia is the world’s third largest cocoa producer providing some 450,000 tonnes a year and a significant coffee producer with an output of 700,000 tonnes in 2012. Indonesia is also the world’s eighth largest tea producer according to the UN’s Food and Agriculture Organisation. Indonesia in common with other countries in the Region is seeking to move agriculture further up the value chain to attract investment from global agro-industry and domestic companies. Following the World Economic Forum on East Asia in 2011, the Partnership for Indonesian Sustainable Agriculture was set up to assist this process.

The aim is to facilitate private sector investment and achieve a 20% increase in yields of commodities such as corn, soybeans, rice, poultry, livestock and aquaculture. Founding partners include Indofood, McKinsey & Company, Nestle, Sinar Mas, Syngenta and Unilever.

As the world’s largest rubber exporter, Thailand has a long history in the cultivation and harvesting of the commodity and operates some of the largest plantations and rubber processing facilities in the world.

Downstream applications are well established with tyre manufacturers including Michelin, Goodyear and Bridgestone among them. The country’s rubber exports are valued at more than US$13 billion a year. Annual production is expected to increase by 7% by 2017, as a result of a plantation expansion strategy.

Malaysia, which is the Region’s third largest producer of rubber after Thailand and Indonesia, exported around US$11 billion of the commodity in 2012, an amount it aims to triple through investmentsover the next seven years. (Malaysian Rubber Board annual report)

Plantations and its agriculture sector are important drivers of economic growth in Malaysia, contributing more than 11% to GDP and providing employment to a similar percentage of the working population. The country also ranks as one of Asia’s main furniture producers and is among the top ten exporters in the world. Malaysia is seeking to more than double its timber exports to more than US$13 billion a year by 2020. An economic transformation programme is also seeking to expand cultivation of rice, fruit and vegetables and in other areas where Malaysia currently is a net importer.

As expansion strategies take hold in the Region, issues of environmental sustainability, and the handling of its water resources, are also paramount concerns. One of the biggest threats to the Mekong River’s ecological system is long term deforestation of the river basin. One of the most important freshwater fisheries at Tonle Sap in Cambodia is reported to have seen larger migratory species of fish decline significantly. The wetland area, that stretches over 16,000 square kilometres, is the largest freshwater lake in the Region. Regional cooperation has emerged through initiatives such as the Mekong River Commission, formed by Cambodia, Lao PDR, Thailand and Vietnam. The Commission is using the Biodiversity Conservation Corridors Initiative which is backed by the Asian Development Bank, tospeed up efforts to address conservation and climate change issues. The Heart of Borneo Project by Brunei Darussalam, Indonesia and Malaysia, is driving cooperation among the three countries to protect, conserve and sustainably manage remaining forest land and nearby areas.

Malaysia and Indonesia are the largest contributors to certification of sustainable palm oil trees with one million hectares of certified production area under the Forest Stewardship Council. However, there is an urgent need for ASEAN countries to increase their collaboration on deforestation. An increasing frequency of forest and land fires over the last few years has had huge consequences by creating smog conditions in major cities across the Region. Avoiding and reversing the loss and degradation of forests is a crucial element of sustainable development.

The deployment of a Brazilian type satellite observation system to cover the Region’s forests and regular checks on the ground have been suggested as a way forward for future monitoring. The Region has prodigious natural resources that if carefully used and nurtured will be of long term benefit to every country in the area.