Contract farming as a mechanism for developing Malay smallscale farmers: perception of a local farming community of the capability of the FAMA contract farming project in northern Peninsular Malaysia

Within the current Malaysian context of enhancing domestic agrofood production and the ‘agriculture -is - business’ campaign the Federal Agricultural Marketing Authority of Malaysia (FAMA) has embarked on a Contract Farming project to assist small-scale farmers in marketing their produce, a move that should go a long way in turning them into successful agro-entrepreneurs. To gauge the performance of this project, a field study was conducted in the northern states of Peninsular Malysia in early 2009 involving the administration of questionnaires on 200 respondents from local farming communities. It was found that the majority (51.0%) of them perceived the FAMA project as having been of a very limited success . Four reasons for the poor performance were cited viz.: (1) poor farm maintenance led participants to discontinue cultivation ; (2) FAMA’s below market purchase prices de-motivated participants; (3) steep maintenance costs compounded by FAMA’s low purchase prices kept participants’ incomes stagnant; and (4) FAMA’s perceived unrealistic quantity and quality delivery terms. While noting that this situation reflects deeper shortcomings on the part of the various institutions related to Malaysian agricultural development, this paper concludes that given the negative perceptions of the local farming community observed, the FAMA contract farming project cannot as yet be regarded as capable of serving as a mechanism for the advancement of small scale Malay farmers.