KUALA LUMPUR: The agriculture sector is forecast to expand 3.9 per cent in 2022 even though the sector is projected to decline marginally by 0.8 per cent in 2021, mainly supported by the commodity segment.

The Ministry of Finance (MoF), in its Economic Outlook 2022 report released today, said the oil palm subsector is anticipated to rebound, in tandem with a higher output of crude palm oil (CPO), following improved fresh fruit bunches (FFB) production and better oil extraction rate.

"The relaxation of cross-border foreign workers restrictions expected during the second half of 2022 will increase the labour supply, thus improving the subsector's output," it said.

The MoF said the continuation of the national B20 biodiesel programme for the transportation segment, along with higher demand of CPO from India and China, are expected to further support the production of CPO.

Rubber output is estimated to expand as tapping activities are anticipated to be buoyed by firm rubber prices.

"The world demand for natural rubber, which is expected to increase, will stimulate domestic rubber production.

"The development of the East Coast Latex Corridor and adoption of digitalisation in the industry through the My Rubber Online (MyROL) platform and RRIMniaga smartphone application are anticipated to boost the subsector," it said.

The ministry said the livestock and other agriculture subsectors are expected to record an uptick on account of higher demand for food items, primarily during festivities.

Furthermore, the government's policies, which emphasise the sustainability of the agro-food and agricommodity industries will outline strategies to further enhance the agriculture sector to ensure food security.

In the first half of 2021, the agriculture sector contracted 0.7 per cent due to lower production in all subsectors except livestock and other agriculture.

"The contraction in the plantation-related subsector was due to shortage of foreign labour following the COVID-19 pandemic containment measures, including border closures and restrictions on the new intake of foreign workers.


"The limited labour supply is expected to continue in the second half of 2021, thus resulting in a decline of one per cent in the sector," it said.

Meanwhile, the mining sector is forecast to decline by 0.3 per cent in 2022, attributed to lower crude oil and condensates production, following the scheduled shut down of oil and gas plants and facilities for maintenance.

However, it is expected to turn around by 1.5 per cent in 2021.

Meanwhile, the mining sector rebounded by 3.5 per cent in the first half of 2021, supported by higher natural gas production and increased crude oil and condensates output, particularly during the second quarter.

The sector is projected to decline marginally by 0.7 per cent in the second half of 2021, weighed down by lower natural gas production.

"The reduction in output is also in line with heightened uncertainties in global oil and gas demand following concerns over the spread of COVID-19 variants," it said.

"However, natural gas output is expected to increase, supported by the production from new gas fields in Sabah and motivated by high demand from major trading partners, especially China and Japan," it said, adding that the increase in global economic activities and reduction in COVID-19 infections are also anticipated to drive higher global energy consumption.

Thus, the average Brent crude oil price is projected to increase to around US$66 (US$1=RM4.15) per barrel in 2022, slightly lower than the expected price in 2021 at US$68 per barrel.

The MoF, however, said the estimation is still subject to global price movement, which is highly influenced by the level of oil production by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+), as well as the United States oil stockpiles.

-- BERNAMA