The third factor is the decline in the agricultural sector, and hence resulting in the sector lagging behind in productivity increase as compared to other sectors, despite attempts to revitalise it. The growing differences in the rate of growth of output, productivity and technological use between agriculture and other major sectors of the economy persists despite some improvements in linkages between the agriculture and the manufacturing sectors and thus poses new and difficult challenges. It has in fact brought into sharper focus and greater urgency the need for human resource development, employment of new/improved technologies and intensification of R&D, factor productivity increases and factor use changes, and most importantly the need for the sector to remain competitive, dynamic and market-driven. In this respect, one major issue faced by the agricultural sector in Malaysia is the sluggish rate of growth in productivity and hence incomes in the unorganized smallholding subsector which has attained a dominant position in terms of areas. As a matter of fact, the problem of poverty is still looming large among small farm households across all farming activities despite significant development efforts by the various government agencies in terms of investment in infrastructural development, input subsidies, output price supports and R&D. Problems of labour shortage, ageing farm labour and the declining competitiveness of the smallholder units of production has resulted in large area of cultivated land being left idle, giving Malaysia the dubious distinction of being perhaps the only developing country where good land is left idle. It has been estimated that a total of 890,000 hectares of agricultural land in Peninsular Malaysia (which is about 22 per cent of the total cultivated land) has been left uncultivated. In addition, substantial gap still persists between possible and actual productivities which reflects the problem of technology transfer which mainly enumerates from small uneconomic farms.
It must also be borne in mind that a potentially powerful factor-demand force behind the distribution of income is the degree to which technological progress tends to economize on some factors of production while favouring the use of others. In a predominantly market-oriented economy, the rapid productivity advance in modern sector will pull resources from those sectors with low
