SMALL-SCALE FOOD PROCESSING ENTERPRISES IN MALAYSIA Ghani Senik Food Technology Research Station MARDI, 16800 Pasir Puteh Kelantan, Malaysia ABSTRACT Small-scale food enterprises have played a very important role in the Malaysian economy, particularly in terms of employment generation, better income distribution and as a training ground for entrepreneurs before they invest in larger enterprises. Small-scale food enterprises also have important linkages to related industries such as the manufacture of machinery, and food packaging materials, and suppliers of food ingredients. It is envisaged that small-scale food enterprises will continue to expand in line with policies and incentives introduced by the government. INTRODUCTION enterprise is one with net assets of US$200,001 - US$1.0 million. Food It is usual to discuss small- and processing companies are generally perceived medium-scale industries in Malaysia as a as agro-based industries which have a strong single group. There are an estimated 30,000 backward linkage. However this is not the such enterprises in Malaysia. A recent survey case in Malaysia, where it is estimated that conducted by the Ministry of International over 70% of the raw materials used in food Trade and Industry showed that they are of processing are imported (Ministry of four main types: processed foods (33%), wood International Trade and Industry 1993). This products, (24%), fabricated metal (15%) and is particularly true in the production of animal building materials (9%) (Malaysian Industrial feed and wheat-based products. Development Authority et al. 1985). These small and medium-sized industries play a very Profile of Small-Scale Food Processing important role in the Malaysian economy, especially in terms of generating employment. Small-scale food processing enterprises They also have a favorable impact on income exhibit certain characteristics which distinguish distribution in the country, and serve as a them from their large-scale counterparts (Chee training ground in developing the skills of 1986). industrial workers and entrepreneurs. They are usually organized as a family business, or have a single proprietor. THE FOOD INDUSTRY However, as the enterprise expands, a partnership normally evolves, leading There are more than 9000 food eventually to the formation of a limited processing factories in Malaysia, of which company. The location of the enterprises 95% are classified as small-scale. Small-scale tends to be evenly distributed. They are enterprises are defined as those which have found in both rural and urban areas, although shareholders’ funds or net assets of some have already been relocated in industrial US$200,000 or less, while a medium-size areas. Keywords: Small-scale food processors, resource utilization, potential products, issues and problems, relevent policies and incentives. 1 Many small-scale food enterprises operate Fish Products under a simple organizational structure, consisting of the manager-owner assisted by a On the coast of Peninsular Malaysia, few workers. especially in the states of Kelantan, The products are generally relatively Terengganu and some parts of Pahang, fish cheap and of rather low quality. Marketing is are processed into snacks called ‘keropok’ done directly or through agents. (dried fish crackers). More than 100 small- scale processors are engaged in this business. CURRENT STATUS OF FOOD RESOURCE The crackers are made by mixing minced fish UTILIZATION meat with sago flour, tapioca flour, salt and monosodium glutamate. The mixture is then The utilization of food commodities such moulded into cylinders, steamed, cooled, sliced as meat, fish, vegetables, fruits and grains do and sun-dried. not differ very much from one part of Other popular products made from fish Malaysia to another. The utilization of food are fishballs, salted dried fish and fermented resources can be described under various fish. Salted fish are processed by soaking the headings. degutted fish in a saturated brine solution overnight, before drying them in hot sun for Meat Processing two or three days. These activities are mostly located near fish landing sites. Malaysia has more than 32 companies Anchovies are processed by blanching which are involved in meat processing. The them in a mild brine solution and drying them major products are sausages, canned chicken in the sun. The product is sold as dried and canned pork. Cooked long-life meat anchovies, and there is a very good market dishes in pouches is processed for both demand for them in Malaysia. In some areas, domestic and export markets. In small-scale anchovies are processed by fermenting them in processing, meat is made into various a saturated solution of salt for six months. traditional food products such as meat floss, They are then boiled with tamarind, lemon dried curried or spiced meats, and meatballs. juice, palm sugar, salt, permitted preservative There are more than 50 small-scale and other ingredients to make a fish sauce. entrepreneurs actively involved in this. This product is sold in bottles of various sizes, usually in local markets. Dairy Products Vegetables The dairy product industry is largely dependent on imported dairy milk powder. At Most vegetables are grown for fresh present, Malaysia's imports of dairy products consumption. However there is some show an annual growth rate of 11.5%. Milk processing of vegetables, such as chili peppers powder is normally repacked or processed pickled in vinegar, drinks made from ginger, further into products such as sweetened and pickled amaranthus. The main problem condensed milk, ice-cream, yoghurt and in vegetable processing is the shortage of raw flavored drinks. materials. Chili peppers are also being used Malaysia is also producing some fresh in the preparation of various kinds of chili milk for local consumption. This is either sauce, used for dipping snack products such sold as fresh milk or processed into ‘dadeh’, as fish crackers and roasted fish or meat. a traditional yoghurt drink flavored with e.g. They are also eaten mixed with noodles and cocoa or rosewater. These activities are being other pasta products. carried out under the supervision of the Many small-scale entrepreneurs who Veterinary Service Department of Malaysia, process chili-based products have to depend on which has processing facilities at its milk imported dried chilis from India or China. collecting centers in various parts of the Similarly, the tomato puree which is used in country. These centers also act as marketing tomato sauce factories is imported from outlets for the fresh milk produced by small- abroad. Soybeans imported from USA, China scale dairy farmers who own a few dairy and Canada are widely used to make soy cows. 2 sauce, tofu (=beancurd), and soybean milk traditional fermented product known as ‘tapai’. drinks and other products. Soybean processing It is processed by cutting the cassava roots has become a very lucrative business. Today, transversely into lengths of 5 - 7 cm, or into total sales from the soy sauce industry alone cubes 2 - 3 cm across. The pieces are then account for more than US$ 41 million each inoculated with a traditionally prepared yeast year, and this is increasing. culture. MARDI has developed pure cultures Pumpkins are grown widely after the of Amylomyces and Saccharomyces which are tobacco crop in tobacco-growing areas of available for sale to the industry. After 3 - Kelantan. Pumpkin has become a traditional 4 days, the product is ready to be marketed. dish during certain parts of the year. It is Again, this activity is being carried out by processed by cooking it in a heavy syrup of small-scale processors who either plant their palm sugar. Pumpkin is also widely used in own cassava or buy it from traditional farmers the preparation of traditional cakes. It is who grow cassava as part of their normal recorded that more than 20 kinds of traditional agricultural activities. Thus this product is cakes are prepared from pumpkin, but these very much localized in rural areas. Tapai is have yet to be promoted commercially. They normally sold in open-air markets or in street are normally processed by family households stalls. Similarly, sweet potato is being and sold in traditional outlets such as processed into flour and snack products. restaurants, office canteens, coffee stalls and market stalls. Fruit Root Crops Many different kinds of fruits are grown in Malaysia, but except for pineapple they are Two root crops which are being mainly grown on a small scale. A few extensively processed into snack products are commercial farms have started to produce cassava and sweet potato. Sweet potato is banana, guava, papaya and starfruit on a grown in the tailings left after tin mining, larger scale, mainly for local consumption but while most cassava is grown in clay loamy also for export. soils. Pineapple is normally processed into Small-scale entrepreneurs are normally canned products such as pineapple cubes in involved in the processing of snack products syrup. Small-scale food processors mainly use from cassava. Much of it is being carried pineapple for dried products, pickles, jelly, out by groups of women under the confectionery, fruit juice and cordial drinks. Department of Agriculture, the Rubber Fruits such as jackfruit and guava are Smallholders' Development Authority, and processed by being dried, pickled, or made other government agencies which are involved into jam and fruit drinks. in the eradication of poverty in Malaysia. Malaysia has many types of indigenous Suitable varieties of cassava are the non- fruits, which are not being used to their full bitter type. Roots are dug up 6 - 9 months potential. They are grown sporadically on a after planting, and are washed, peeled, soaked small scale by farmers, and the fruits are in a brine solution and then cut into slices seasonal in nature. Encouragement is being less than 1 mm thick. The slices are then given to farmers or processors to pickle these deep fried, cooled and packed in bulk for fruits, since the pickles sell well in Malaysia.