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A study is conducted to describe the historical overview of agricultural land use in Malaysia with the aim of identifying the challenges of agricultural land use in a dynamic economic system. Economic policies were explained with major policies instruments. The effects of these policies on patterns of agricultural land use in 1960–2005 were assessed. Findings identified three broad economic eras in Malaysia: Agricultural (1960-1974); Industrial (1975-1999) and Urbanization eras (2000-date). Macroeconomic policies that favored industrialization and urbanization had negative effects on agricultural land use by competing with agricultural sectors for production inputs such as labor and capital because the better conditions of service and higher returns per capital in the industrial sector led to the withdrawal of inputs from the agricultural sectors. Subsequent change in tastes due to increased per capita income resulted to a change in agricultural land use in favor of highly rewarding and better-demanded crops (fruits and vegetables) thus causing agricultural land use dynamics. Sustainable agricultural land use in Malaysia, given scarce resource inputs (labor and capital) trade liberalization and globalization will depend on the ability of the country to deepen her application of science and technology for automated agricultural practices, diseases and pests control and high yielding varieties and suitable land administration policies for Malaysia to compete favorably with other major low cost producers.
Key words: agricultural land use change, comparative costs advantage, change in taste, economic policies, drivers of land use changes, industrial sectors