KUALA LUMPUR: The agriculture sector is expected to remain stable in 2025, with a projected growth of 1.9 per cent supported by almost all subsectors and the oil palm subsector poised to increase at a modest pace.
According to the Economic Outlook 2025 report released by the Ministry of Finance (MOF) today, this stability is underpinned by high production and yield of fresh fruit bunches (FFB), following an expansion of harvestable oil palm areas, favourable weather conditions and a better labour market.
The Crude Palm Oil (CPO) price is forecast to stabilise within the range of RM3,500 and RM4,000 per tonne, in light of improved global production. In addition, higher global output of soybean oil and steady demand for CPO from major importing countries are anticipated to contribute to price stabilisation, according to the report.
The report also stated that the rubber subsector is projected to grow, underpinned by an increase in natural rubber output, particularly from smallholders, who remain the largest contributors to total production.
“Other factors catalysing growth in the subsector include stable rubber prices, proactive government support and the expansion of mature rubber areas. These factors are expected to bolster production and improve profitability for rubber producers, especially smallholders,” the report said.
The report said the government plans to strengthen the food supply chain and improve resilience in the agrofood industry, further propelling the performance of other agriculture, livestock and fishing subsectors.
These efforts include intensified research and development (R&D), commercialisation and innovation activities, as well as measures to manage post-harvest losses.
“Improved domestic spending and higher tourist arrivals will also stimulate the growth of these subsectors to cater to the growing demand for food items.
“Furthermore, the National Agrofood Policy 2021-2030, which aims to develop a sustainable, resilient and high-technology agrofood industry, will provide further support to the subsectors’ growth,” it said.
Overall, the agriculture sector is projected to increase by two per cent in 2024, as all subsectors are poised to record positive growths except for forestry and logging.
The report also stated that the oil palm subsector, which contributes more than 36 per cent of the agriculture sector, is estimated to expand, supported by improvements in labour supply and better fertiliser application, as well as strong performance during the first half of this year.
“Despite the expected increase in CPO production, it remains below potential levels due to the impact of dry weather and an increase in the percentage of aging oil palm areas, following low replanting rates.
“In terms of prices, CPO is projected to record an average of between RM3,800 and RM4,300 per tonne due to constraints in global palm oil supply,” the report said.
According to the report, the rubber subsector is anticipated to record marginal growth supported by stable natural rubber production, as the recovery in rubber prices encourages tapping activities by smallholders.
The report said government initiatives such as the improvement of the Latex Production Incentive (IPL) and Rubber Production Incentive (IPG) will provide additional support to the subsector’s growth.
In addition, the report said the livestock, other agriculture and fishing subsectors are anticipated to grow through concerted efforts to enhance national food security, including expanding the Large-Scale Smart Padi Field Programme, which covers 79 areas spanning 35,348 hectares nationwide.
“In addition, sustained consumer spending and improved tourism activities are expected to provide further impetus to the subsectors’ growth,” the report said.
