KENAF DEVELOPMENT IN MALAYSIA

MALAYSIAN TOBACCO FARMERS :
SHIFTING FROM TOBACCO TO KENAF
PREPARED BY
WAN BAHARUDDIN WAN ISMAIL
07TH OCTOBER 2008
MANILA, PHILIPPINES.
NATIONAL TOBACCO BOARD (NTB)
POLICIES IMPACTING TOBACCO INDUSTRY
1
2
GOVERNMENT’S
REVENUE/ TAXATION
SOCIOECONOMIC
(RM3 billion/ year)
3
4
PUBLIC HEALTH
CONTROL
e.g. TAK NAK
Campaign &
FRAMEWORK
CONVENTION ON
TOBACCO
CONTROL (FCTC)
GLOBALIZATION
(AFTA/ WTO) - Free
in/ Free Out 2010
1
DECLINING TOBACCO PRODUCTION INDICATORS
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)
?
Tobaaco Hectarage and Production (1974 – 2008)
25000
16
14
20000
12
Million Kg
Hectare
10
15000
8
10000
6
4
5000
2
08
07
20
06
20
04
03
05
20
20
20
02
20
00
01
20
20
99
20
97
96
98
19
19
19
95
19
93
94
19
19
92
Hectarage
19
90
89
91
19
19
19
88
19
86
85
87
19
19
19
83
82
84
19
19
19
81
19
79
78
80
19
19
19
76
77
19
19
19
19
19
75
0
74
0
Production
2
AVAILABLE TOBACCO INDUSTRY RESOURCES
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.
CROP INTEGRATION & DIVERSIFICATION PROJECT 2007
Project
1.
2.
3.
4.
5.
6.
7.
8.
Melon
Corn
Paddy
Sweet Potato
Banana
Pineapple
Chili/ Vegetable
Mushroom
Sub Total
9. Sheep/ Goat
10. Cattle
11. Aquaculture
Sub Total
TOTAL
Hectare/
Quantity
No.of
Farmers
178
114
202
186
31
25
203
0.2
149
111
70
139
60
40
287
6
939.2
862
233
524
253 ponds
7
100
41
Production
1,995 (Ton)
2,226,040 (Cob)
789 (Ton)
2,280 (Ton)
422 (Ton)
1,717 (Ton)
1,199 (Ton)
16.85 (Ton)
Value
(RM Million)
1.220
0.914
0.666
1.453
0.425
0.901
0.728
0.058
6.365
233
524
263 (Ton)
0.073
3.321
0.124
148
3.518
1,010
9.883
3
CROP INTEGRATION PROJECT 2008 (as at 30 June)
Project
1. Melon
2. Corn
3. Paddy
4. Sweet Potato
5. Tapioca
6. Banana
7. Pineapple
8. Chili/Vegetable
9. Mushroom
10. Cocoa
11. Pitaya
Hectare/
Quantity
No. of
Farmers
127
123
153
59
49
53
8
69
0.2
140
6
119
93
56
50
58
44
90
89
7
138
11
Sub Total
781.2
755
10. Sheep/Goat
11. Cattle
12. Aquaculture
645
356
346 ponds
32
19
41
Sub Total
TOTAL
Production
646 (Ton)
1,131,707 (Cob)
593 (Ton)
352 (Ton)
849 (Ton)
244 (Ton)
1,194 (Ton)
10.17 (Ton)
-
Value
(RM Million)
0.490
0.464
0.524
0.224
0.086
0.855
0.128
0.725
0.035
3.531
645
356
3,645,098 (Ton)
0.421
0.389
1.859
92
2.669
847
6.020
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.
4
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.
5
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
KENAF PRODUCTS
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
© 2006 NTB
6
KENAF PRODUCTS
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
© 2006 NTB
KENAF PRODUCTS
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)
© 2006 NTB
7
Kenaf: The Tobacco Alternative
Development of the Kenaf Industry
Under the National Tobacco Board
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.
Source : ECER
Supply Chain Management
Logistics
Management
Inputs
(seeds etc)
Production
Collection, Processing
& Packaging Centre
(CPPC)
Factories
Shipping &
Forwarding
Export Market
Hypermarkets
& Retail outlets
Consumers
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
8
Conceptual Implementation Strategy for Nucleus Farm Model
GOVERNMENT
(MPIC/ NTB/
State)
Anchor
Company
INVESTORS
• Seed production
• Soft loan
• Organised
smallholders
• Kenaf
development
fund
• Infrastructure
MANAGEMENT
Contract
Farmers
• Extension
FINANCING
• R&D
(downstream
products)
• Manufacturing
companies
• Marketing
• Mechanization
• Transport
• Quality control
(GAP)
CPPC/ CPMC
Output
GAP Certified
• Contract farming
• Grade
specifications
FACTORIES
Composite (wood, roofing, panels), brown paper, insulator, plaster ceiling,
biofuel, textile, animal feed
Source : ECER
Official Launch of the CPPC & Malaysia’s
1st Export of 1000 Tonnes of Kenaf Fiber to Korea, 22/8/08
9
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
10
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 (biocomposite, 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
11
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
12