KUALA LUMPUR: The agriculture sector is projected to grow 2.0 per cent this year, as all subsectors are poised to record positive growth except for forestry and logging, according to the Economic Outlook 2025.
The oil palm subsector, which contributes more than 36 per cent of the agriculture sector is estimated to expand, largely supported by improvements in labour supply and better fertiliser application as well as strong performance recorded during the first half of the year.
"Despite the expected increase in the crude palm oil (CPO) production, it remains below the potential level due to he impact of dry weather and increase in percentage of ageing oil palm areas following low replanting rates," said the report.
The CPO is projected to record an average of between RM3,800 and RM4,300 per tonne this year due to constraints in global palm oil supply.
The report also said that the rubber subsector is anticipated to record marginal growth supported by stable natural rubber production as recovery in rubber prices encourages tapping activities by smallholders.
Similarly, the livestock, other agriculture and fishing subsectors are anticipated to grow through concerted efforts undertaken to enhance national food security, among others, by expanding the Large Scale Smart Paddy Field Programme which covers 79 areas spanning across 35,348 hetares nationwide.
For the first half of 2024 (1H24), the agriculture sector recorded a growth of 4.5 per cent attributed to robust performance of the palm oil subsector.
The subsector posted a rebound of 10.7 per cent following higher production of fresh fruit bunches (FFB) and better CPO yield.
The rubber subsector grew 1.3 per cent as it recovered from the impact of the Pestalotiopsis leaf fall disease as well as benefitting from a favourable weather condition.
The livestock subsector logged a 5.2 per cent growth while the fishing subsector expanded 4.3 per cent.
The agriculture sector is expected to decline 0.2 per cent in the second half of the year mainly due to subdued performance in the oil palm subsector.
"The FFB yield, anticipated to be noticeable s early as the fourth quarter of 2024, is forecast to affect CPO production in the second half. This is due to dry weather condition, which began in 2H23 and intensified further in the beginning of 2024," it said.
The rubber subsector is expected to contract, while the forestry and logging subsector is projected to continue recording a significant decline.