THE OXFORD BUSINESS GROUP, 20 SEPTEMBER 2016
Brunei Darussalam looks to sustain agricultural growth
Rising productivity and higher output from the processing segment is keeping Brunei Darussalam’s agriculture sector on track to meet the government’s medium- and long-term goals.
Strong performance in most areas of the agriculture and agri-foods sector saw the industry’s revenue rise by 6.8% year-on-year (y-o-y) in the first quarter of the year to reach BN$97.1m ($71.2m), according to data issued by the Department of Agriculture and Agri-food (DAA) in late July. This came despite dry weather conditions, which impacted the production of rice, vegetables and cut flowers.
Growth was supported in large part by double-digit growth in the livestock and processed agricultural products segments. Livestock output was up 14.1% y-o-y at BN$6.9m ($5.1m), while processed agricultural goods expanded by 16.9% over the same period, bringing the agri-food segment’s earnings to BN$28m ($20.5m).
By contrast, the broader economy expanded by 3.6% y-o-y in the first three months of the year, the Autoriti Monetari Brunei Darussalam reported at the end of July.
Long-term plan for value-added growth
In its long-term development plan, Wawasan Brunei 2035, the government has set a target of boosting agricultural output to BN$1bn (733.3m) by 2020 and BN$3.9bn ($2.9bn) by 2035 – almost 11 times the sector’s contribution to GDP last year.
While ambitious, the last five years have already seen significant progress in agricultural development. Gross agricultural output increased from BN$230m ($168.6m) in 2010 to BN$366m ($268.4m) last year.
Future growth is expected to be fuelled by a combination of improved technology, higher levels of foreign direct investment in the sector, the use of high-yield crop varieties and the expansion of the downstream value-added component.
Boosting value addition should take on greater importance in the coming years if Brunei Darussalam it to reach its ambitious agricultural targets. With relatively limited land available for agricultural purposes, and the increasing encroachment of built-up areas into farming districts, the Sultanate will have to create more value from the land it has.
The whole country is approximately 577,000 ha in size, with only 7193 ha in use for agriculture as of 2013, according to the most recent figures from the DAA.
A key avenue for bringing in investment and increasing value addition in agricultural production is the Sultanate’s burgeoning halal segment, which feeds into the growing focus on processed foods.
In March of last year Brunei Darussalam invited investors from countries such as China and the UK to take part in a $300m halal industry park, known as the Bio-Innovation Corridor, located north-west of the capital Bandar Seri Begawan.
Led by the Ministry of Industry and Primary Resources, the 500-ha park aims to transform Brunei Darussalam into a regionally and internationally recognised destination for halal industries.
The worldwide halal food market is worth an estimated $1.1trn, according to a study by Thomson Reuters, and is considered one of the fastest food segments in the world.
While specialisation in value-added niches such as halal could go some way towards achieving the government’s goals, a dwindling workforce in rural areas presents something of a challenge.
According to the most recent Labour Force Survey conducted by the Department of Economic Planning and Development, out of a population of 411,900, and a total labour force of 203,600, the percentage working in the agriculture, forestry and fisheries sector was around 0.6% in 2014.
As young Bruneians increasingly opt for professions in urban centres, the ageing of the rural workforce also presents productivity challenges, according to Suria Zanuddin, the head of the agricultural extension division at the Ministry of Primary Resources and Tourism.
“We try to involve and recruit young farmers as most of our current farmers are now ageing,” she told local media at the end of May.
The government is stepping up efforts to reverse the flow of young Bruneians into urban centres by expanding educational programmes and promoting the business opportunities of the agriculture sector through training courses.
At the Rice Farmer Field School, for example, close to 300 paddy farmers have been trained since the programme was founded in 2010.
While the expected increase in technology in the agriculture industry could help ease some of the workforce requirements, primary production is likely to remain a labour-intensive industry, meaning that government efforts to promote farming as an attractive and viable career path will be crucial to developing both food security and the broader sustainability of the sector.