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MyGAP From The

Perspective of Livestock

Industry --- What, Why,

How and When?By

Cliff Kwei Shu Cheng

FLFAM

25 April 2016

What is MyGAP?

Skim Amalan Ladang Ternakan (SALT) was introduced by the

authority in 2003 to promote food safety and improve quality

of farming. This programme covered the practice of

biosecurity, labour safety, farm management and pollution

control in accordance with Good Animal & Husbandry Practice

(GAHP, MS 2027:2006) and Amalan Pertanian Baik (APB@GAP)

In recent years, SALT has been upgraded to Malaysian Good

Agricultural Practices (MyGAP) because GAP concept is widely

accepted across the world.

Why is MyGAP?

In Malaysia, poultry farms are oversight by Department of Veterinary Services (DVS) which plays an important role in improving farming practices to ensure the livestock produced in Malaysia has the quality that satisfies domestic and international demands.

Therefore, DVS does not only safeguard farms from catastrophic diseases (e.gND, IBD and AI) through introduction of vaccination, but also encourage establishment of modern farming practice --- MyGAP.

MyGAP can help farmers to achieve better performance and strengthen the competitive edge of Malaysia livestock products in global market.

MyGAP is the basic prerequisite for farms to export their livestock to overseas.

Once the farm is accredited with MyGAP, the community surrounding the farm will also be benefited.

Stakeholders’ Relationship of MyGAP Farms

MyGAP

Farms

Consumers

Local

community

Environment

Exporters

Farm hands

Livestock

Authorities

How does a MyGAP farm look like?

Closed House System

Climate Control

Higher capacity

Lower FCR, lower mortality and higher average bodyweight

Automation --- Less manpower required

Farm management

Comprehensive biosecurity programme (e.g. feed storage, water treatment and

sanitisation)

Drugs & medication monitoring (e.g. vaccination record)

Traceability (e.g. record keeping, SOP)

Audit (e.g adequacy, compliance, surveillance and review)

Features of MyGAP Farm

Less pollution

Flies control --- manure treatment

Waste water treatment before discharge

Animal welfare

Less stress

Higher carcass yield

Employees’ safety

Lower probability of disease outbreak

Better workplace conditions

Example of MyGAP Farms: Layer House – Part 1

Closed Layer House Layers in cages

Example of MyGAP Farms: Layer House – Part 2

In House overview Eggs collection

Example of MyGAP Farms: Broiler House – Part 1

Farm overview AutomationChicken in house

Example of MyGAP Farms: Broiler House – Part 2

Vehicle wheel dip Foot dip at House entranceRoom for sanitisation

Example of MyGAP Farms: Broiler House – Part 3

Waste water treatment Incinerator Organised drug store

Example of MyGAP Farms: Broiler House – Part 4

Farming Record Drugs & medication record

Benefits & Cost

Benefits Cost

• Economies of scales • Higher expenses

• Export potential • Higher investment cost

• Better farming performance • Additional workload

• Higher revenue

• Tax incentive

However, it is justified to generate higher risk-adjusted profit compares to non-

MyGAP farm

Feasibility of Investment

What is the bankers’ main concern when they are considering to finance your business?

*tax rate is 0% due to incentive granted by the government

Example: Calculation of Net Profit and

Performance Index (for illustration only)

Assuming contract price of DOC and feed is as follows:

RM1.60/DOC

RM81.00/bag (pellet) and RM83.00/bag (crumble)

RM4.05/kg harvest

Operating cost BEFORE MyGAP (per DOC basis)

Drugs & Medication

Manpower

Utility

Depreciation

Maintenance

Others

Farming performance BEFORE MyGAP

No of birds = 80,000

FCR = 1.66

Mortality = 5.8%

*Average bodyweight = 2.13kg

Average Day = 35 days

Assume RM0.80 per DOC

*Average bodyweight is adjusted after mortality

Example: Calculation of Net Profit and

Performance Index (for illustration only)

Example: Gross profit BEFORE MyGAP

Example: Calculation of Profit and

Performance Index (for illustration only)

Example: Performance BEFORE MyGAP

Example: Calculation of Net Profit and

Performance Index (for illustration only)

Assuming contract price of DOC and feed is as follows:

RM1.60/DOC

*RM80.00/bag (pellet) and *RM82.00/bag (crumble) --- using bulk can reduce cost by RM1.00/bag based on market norm

RM4.05/kg harvest

Other operating cost AFTER MyGAP (per DOC basis)

Drugs & Medication

Manpower

Utility

Depreciation

Maintenance

Others

Farming performance AFTER MyGAP

No of birds = 100,000

FCR = 1.61

Mortality = 4.2%

*Average bodyweight = 2.27kg

Average Day = 35 days

Assume RM1.10 per DOC

Example: Calculation of Profit and

Performance Index (for illustration only)

Example: Gross profit AFTER MyGAP

Example: Calculation of Net Profit and

Performance Index (for illustration only)

Example: Performance AFTER MyGAP

Comparison BEFORE And AFTER MyGAP

BEFORE MyGAP AFTER MyGAP

FCR 1.66 1.61

Mortality 5.8% 4.2%

Ave. Bodyweight 2.13 kg 2.27 kg

Ave. days 35 days 35 days

Capacity 80,000 birds 100,000 birds

Manpower per DOC As benchmark Relatively decrease

Utility cost per DOC As benchmark Relatively decrease

Taxation per DOC 26% as per tax laws 0% (tax incentive)

Drugs & medication per DOC As benchmark Undeterminable

Depreciation per DOC As benchmark Relatively increase

Utility per DOC As benchmark Relatively increase

Export potentials None Yes

Comparison BEFORE And AFTER MyGAP

BEFORE MyGAP AFTER MyGAP

FCR 1.66 1.61

Mortality 5.8% 4.2%

Ave. Bodyweight 2.13 kg 2.27 kg

Ave. days 35 days 35 days

Capacity 80,000 birds 100,000 birds

Revenue RM 690,120.00 RM 919,350.00

Cost of goods sold RM 588,502.59 RM 747,675.76

Gross Profit RM 101,617.41 RM 171,674.24

Operating expenses RM 64,000.00 RM 110,000.00

Net profit RM 37,617.41 RM 61,674.24

Performance Index 345.34 385.92

Market Expansion & Export Potential

Past, Present and Expected Future Food

Consumption of Meat.

Source: World Agrilcuture: Toward 2015/2030, Economic and Social

Development Department, FAO Corporate Document Repository, retrieve:

20th April 2016, http://www.fao.org/docrep/005/y4252e/y4252e05b.htm

Trans-Pacific-Partnership-Agreement (TPPA) –

Part 1

Food safety and supply/demand is one of the most important topics in TPPA

Trans-Pacific-Partnership-Agreement (TPPA) –

Part 2

Relevant legislations and rules must be implemented in countries under TPPA,

which will have great impact on poultry industry:

Labour welfare

Animal welfare

Food safety

Drugs & medication control

Disease control & monitoring

Free trade

Anti-unfair-competition

etc.

MyGAP prepares farmers to compete with

global competitors and improves industry’s

self-sustainability over time!

ASEAN Economic Community (AEC) –

Part 1

Source: 2015 ASEAN Integration, Cuervo Property Advisory, retrieve: 20th April 2016, https://cuervopropertyadvisory.wordpress.com/2013/03/22/2015-

asean-integration-how-it-can-help-the-philippine-real-estate-industry/

ASEAN Economic Community (AEC) –

Part 2

Intensive competition in poultry industry is expected upon economic

integration in ASEAN region.

Particularly, Thailand has competitive advantage over other member

countries. Her performance in poultry industry is highly recognised around the

world due to its adoption of international farming practices and poultry

products with world class quality.

Learning and studying our member’s “production function” is one of the

effective ways to improve our productivity and stay in competitive position,

this is why MyGAP comes in.

What Make Farmers Reluctant to

Convert into MyGAP Farm?

Financial constraints

Banks consider poultry farming a risky business due to price

volatility, unpredictable climate change and disease problems --

--- barriers to borrow investment fund

Possible solutions

Specifically designed financial instrument e.g debt repayment backed by

sales

Government serves as a guarantor --- reduce credit risk

Others

What Make Farmers Reluctant to

Convert into MyGAP Farm?

Legal constraints

Different policies and rules between Federal and State

government, for example:

Land title conversion (ubabsyarat)

Deep well water usage

Setting in foreign labour policies (e.g renewal permit and skilled

worker retention)

Others

What Make Farmers Reluctant to

Convert into MyGAP Farm?

Technical constraints

Insufficient professionals (e.g. veterinarian)

Lack of innovation

No institute in Malaysia is studying domestic poultry

production and possible innovation that

accommodates local climate

Complicated medication procedures

Insufficient knowledge to apply drugs & medication

Insufficient education

No relevant education is provided public and private

schools (e.g. poultry specialised programme)

What Make Farmers Reluctant to

Convert into MyGAP Farm?

Market constraints

No developed commodities market to hedge farming risk

In Malaysia, only forward contract is used which exposes

more credit risk and business risk than futures contact.

Swaps and Futures markets should be encouraged to stabilise

market demand/supply and business risk transferring.

How do I apply MyGAP?

Kindly refer to the MyGAP guideline (Garis Panduan MyGAP)

Contact details:

Urus Setia

Bahagian Diagnostik dan Kepastian Kualiti

Ibu Pejabat Perkhidmatan Veterinar

Tingkat 2, Blok Podium 1A,

Lot 4G1, Wisma Tni, Presint 4

Pusat Pentadbiran Kerajaan Persekutuan

62630 Putrajaya

THANK YOU