Trade Performance of Meat and Meat Preparation Sector in Malaysia: The Case of Non-Ruminant

Trade Performance of Meat and Meat Preparation Sector in
Malaysia: The Case of Non-Ruminant
Mohd Mansor Ismail1* & Mohammad Amizi, A.2
1

Institute of Agricultural and Food Policies Studies (IKDPM)
Universiti Putra Malaysia 43400 Serdang, Selangor.
2
Integrated Agrotechnology and Resource Management Center
University Technology MARA Perlis, 02600 Arau Perlis
*e-mail: mmi@upm.edu.my

Abstract
Over the years Malaysia has undergone a substantial and persistent food
trade deficit. It is continue to grow at an alarming rate as the figures climbed to
a staggering RM 10.1 billion in 2008. Registered at 3.4 billion in 2005, it swelled
to RM 4.9 billion in 2000. If this detrimental trend continues unimpeded, the food
trade deficit is expected to reach RM12.4 billion by 2010 with food imports at
RM27.3 billion, far outweighing exports worth RM14.9 billion. This phenomenon
has to be arrested, which requires Malaysia to boost its food exports and it is a
need of the policy makers, practitioners, producers and the government agencies

to undertake appropriate action related this issues. This study is to evaluate the
related factors and to evaluate the competiveness of 10 food commodities in the
meat and meat preparation sector. The data cover non ruminant commodities in
the HS 6 digits group which are expected to have high potential in the future. The
studies will be based on the concept of revealed comparative advantage (RCA).
The basic logic behind RCA is that it evaluates comparative advantage on the basis
of a country’s specialization in (net) exports relative to some reference group. A
different interpretation of comparative advantage is furnished by Vollrath indices,
which are adopted in this study. Vollrath offers three alternative specifications of
revealed comparative advantage, they are; relative export advantage (RXA), relative
import advantage (RMA) and relative trade advantage (RTA). From this studies
contributed and demonstrated the potential performance of sub selected sector in
the non ruminants.
Keywords: meat preparation, non-ruminants, sub sectors, trade meat performance

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Introducton

Malaysa has undergone a substantal and persstent food trade defct. It
contnues to grow at an alarmng rate as the fgures clmbed to a staggerng RM
10.6 bllon n 2009. In lne wth the global food crss n 2008, t has heghtened
government awareness and brought ths ssue to the forefront of publc nterest. Ths
phenomenon has to be addressed, whch requres Malaysa to boost ts food exports
and to substtute mports. There s a need to determne the local commodtes that
are capable of substtutng mported products and at the same tme, searchng for
varetes of potental products for export. Ths s partcularly mportant for the food
processng ndustry, as the scheduled lberalzaton of trade under the World Trade
Organzaton (WTO) and the ASEAN Free Trade Area (AFTA) would produce
greater challenges and stff competton to Malaysan food producers. Thus, to
penetrate a wder range of foregn markets, along wth the effort to curtal the food
trade defct, t s crucal for Malaysan food processors to dentfy food sub-sectors
that are nternatonally compettve and vable.
The meat and meat preparaton sector n Malaysa has been chosen as to date, t
s manly an mported tem. It s the am of ths study to evaluate the compettveness
of 10 food commodtes n the meat and meat preparaton sector (dvson 01) coverng the perod of 1997 to 2008. The data cover only the non rumnant commodtes
n the HS 6 dgts group whch are expected to have hgh potental n the future.
Our nvestgaton s based on the concept of revealed comparatve advantage
(RCA). Vollrath offers three alternatve specfcatons of revealed comparatve

advantage. The major dfference between the Balassa ndex and the Vollrath ndces
s that the latter elmnate country and product double-countng. Tme seres data
were obtaned from Global Trade Atlas (GTA) and Internatonal Fnancal Statstcs
(IFS).
The remander of ths paper s structured as follows: Secton II reports a revew
of some of the related lterature. Secton III dscusses the methodology. Secton IV
reveals the fndngs and the conclusons are summarzed n Secton V.

Recent Studes on Compettveness and Comparatve Advantage
For many decades, the concept of compettveness has been wdely used n
economc research and economc polcy from varous ponts of vew. A large and
growng body of lterature attempts to assess the ssue theoretcally and emprcally. The defnton of compettveness tself may also vary wth respect to the
level consdered (Havrla & Gunawardana, 2006). The dversty of the concepts and
measures largely pertans to the varety of polcy analyss needs, perspectves and
objectves of the research.
Recently, a study carred out by Bojnec and Ferto (2009) attempted to nvest-

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Proceeding of the 2nd International Seminar on Animal Industry | Jakarta, 5-6 July 2012


gate the level, composton, and dfferences n agro-food relatve trade advantages/
dsadvantages for eght Central European and Balkan countres on the European
Unon (EU) markets and ther mplcatons for food polcy. Hgher and more stable
relatve trade advantages were found for bulk prmary raw agrcultural commodtes
and less so for consumer-ready foods, mplyng compettveness shortcomngs n
food processng and n nternatonal food marketng. Duraton analyss showed that
the EU enlargement has had a negatve mpact on agro-food relatve trade advantages for all eght analyzed countres. Estmatons mply that the duraton of agrofood relatve trade advantages were the hghest for Hungary and Poland, and also
for Bulgara n dfferentated products, ndcatng ther agro-food trade potental n
the EU-15 markets.
Bojnec and Ferto (2006) examned the comparatve advantage and compettveness of Hungaran and Slovenan agro-food trade n the EU markets. Applyng
a hghly dsaggregated trade dataset, they descrbed the pattern of agro- food trade
n Hungary and Slovena usng the Balassa ndex. Ther fndngs ndcated that both
countres have lost ther comparatve advantage for a number of product groups over
tme. The ndces of specalzaton have tended to converge. For partcular product
groups, the ndces dsplayed greater varaton. They are stable for product groups
wth a comparatve dsadvantage, but product groups wth a weak to strong comparatve advantage show sgnfcant varaton.
Wth the am to move the attenton away from advanced ndustralzed economes, Uchda and Cook (2005) examned the trends for trade and technologcal specalzaton among the East Asan developng economes. The analyss s confned to
seven East Asan economes: Hong Kong, South Korea, Sngapore, Indonesa, Malaysa, the Phlppnes, and Thaland. Important dfferences are found n the patterns
of specalzaton, and n the relatonshp between them among the advanced East

Asan economes and those catchng up. The country level analyss ndcated that a
dfference n the patterns of compettve advantage among the East Asan economes
was greater for technology than for trade. Cumulatve or path-dependent technologcal change was found to be mportant n Hong Kong, South Korea, and Sngapore.
As too lttle attenton has been pad to examne the developng countres’ comparatve advantage n servces, Seyoum (2007) attempted to fll ths gap by analyzng the compettveness of selected servces: busness, fnancal, transport and travel servces n developng countres n relaton to that of the rest of the world based
on three ndces of revealed comparatve advantage. Strong comparatve advantages
exst for many developng countres n transport, and travel servces. There s substantal room for mprovement n fnancal and busness servces. Trade lberalzaton and lack of adequate preparaton appears to have resulted n a weakenng of
ther comparatve advantages over the years. However, ther revealed comparatve
advantages reman, by and large, stable and do not show a fundamental shft n the
structure of ther comparatve advantages.

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665

.+$'4#.+5+08'56/'06
Vollrath
(1991) ponted out that the apprasng of comparatve advantage at
#0&64#&'5*17.&6#-'+014&'461':2.1+6+06'40#6+10#.&+(('4'0%'5+0241&7%6#0&(#%6145722.;
aggregate and ds-aggregated levels can ‘dentfy the overall drecton and drve n
whch a country’s nvestment and trade should take n order to explot nternatonal

dfferences n product and factor supply and demand’ as well as ‘to evaluate socally
desrable specalsaton patterns along narrow product lnes’. He further argued that
the estmaton of comparatve advantage may be partcularly benefcal when consderng trade between countres wth dfferent factor endowments.

Results and Dscusson
The analyss of the Vollrath ndces (RXA, RMA and RTA) outlned the tradng
specalzaton of Malaysa n the non rumnant sector. Through analysng Malaysa’s
ndces, the results that we obtaned were somewhat ambguous. In the relatve
export advantage ndex (RXA), as presented n Table 1, we can see that the duck
products (Duck, Goose & Gunea Fowl Meat & Meat Offal Prepared or Preserved
Excludng Lvers, Ducks, Geese And Gunea Fowls, Domestc, Whole, Frozen and
Duck, Geese or Gunea Fowl Cuts And Edble Offal, Domestc, Frozen) have the
hghest value whch are all more than 1. The rest, especally chcken products, can
be consdered to have a comparatve dsadvantage. The relatve mport advantage
(RMA) shows that none of ths sub sector has RMA values of more than 1. The
hghest value for Malaysa s observed n, Duck, Geese or Gunea Fowl Cuts and
Edble Offal, Domestc, Frozen whch represents the major mportng product n
ths sector. As ndcated above, negatve values (postve) ndcate a compettve
trade dsadvantage (advantage). Thus, from the table t s apparent that Malaysa s
compettve n the producton of non-rumnant sub sector. Of the 10 commodtes n

meat and meat preparaton, all the postve values are less than 1.

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Proceeding of the 2nd International Seminar on Animal Industry | Jakarta, 5-6 July 2012

Table 1. Average relatve export, relatve mport and relatve trade advantage for selected
meat and meat preparaton sectors n Malays
HS Code

Commodty

HS 020711

Chckens and Capons, Whole, Fresh
or Chlled
Chckens and Capons, Whole, Frozen
Chcken and Capon Cuts and Edble
Offal, Fresh or Chlled
Turkeys, Whole, Fresh or Chlled

Ducks, Geese or Gunea Fowls,
Domestc, Whole, Fresh or Chlled
Ducks, Geese and Gunea Fowls,
Domestc, Whole, Frozen
Ducks, Geese/Gunea Fowl Cuts &
Edble Offal, Excludng Fatty Lvers,
Fresh or Chlled
Duck, Geese or Gunea Fowl Cuts and
Edble Offal, Domestc, Frozen
Chcken & Capon Meat & Meat Offal
Prepared or Preserved Excludng
Lvers
Duck, Goose & Gunea Fowl Meat
& Meat Offal Prepared or Preserved
Excludng Lvers

HS 020712
HS 020713
HS 020724
HS 020732

HS 020733
HS 020735

HS 020736
HS 160232

HS 160239

RXA

RMA

RTA

0.7961

0.0043

0.7918


0.5531
0.7833

0.1470
0.0017

0.4062
0.7815

0.0565
0.4570

0.0091
0.0013

0.0473
0.4558

21.334


0.0283

21.053

0.0757

0.0229

0.0528

12.677

0.3509

0.9168

0.1123

0.0183

0.0943

190.304

0.0338

189.967

Source: Author’s calculaton

Concluson
The analyss provded here revealed that Malaysa s generally very compettve
n the non rumnant sector. A good compettve performance was observed n HS
160239 (Duck, Goose & Gunea Fowl Meat & Meat Offal Prepared or Preserved
Excludng Lvers) whch s confrmed by both ts relatve export advantage (RXA)
and relatve trade advantage (RTA) ndces, whereas the RTA ndex shows strong
compettveness. Malaysa demonstrates a good performance n ths selected sub
sector. A great deal of attenton should be gven, through aggressve research and
development of new products and producton technques, to mantan and mprove
the compettveness of the Malaysan food sector.

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667

References
Bojnec, S., & Ferto, I. 2009. Agro-food trade compettveness of Central European
and Balkan countres. Food Polcy. 34(5):417-425.
Bojnec, S., & Ferto, I. 2006. Comparatve Advantages and Compettveness of Hungaran and Slovenan Agro- Food Trade n the EU Markets. Paper prepared
for presentaton at the 98th EAAE Semnar ‘Marketng Dynamcs wthn the
Global Tradng System: New Perspectves’.
Havrla, I. a. 2003. Analysng comparatve advantage and compettveness: an applcaton to Australa’s textle and clothng ndustres. Australan Economc
Paper, 42(1):103-117.
Seyoum, B. 2007. Revealed comparatve advantage and compettveness n servces:
A study wth specal emphass on developng countres. Journal of Economc
Studes 34(5):376-388.
Uchda, Y., & Cook, P. 2005. The Transformaton of Compettve Advantage n East
Asa: An Analyss of Technologcal and Trade Specalzaton. World Development 33(5):701-728.
Wangwe, S. M. 1995. Exportng Afrca-Technology, Trade and Industralzaton n
Sub-Saharan Afrca. Routledge, London

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Proceeding of the 2nd International Seminar on Animal Industry | Jakarta, 5-6 July 2012