Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on June 12, 2018

KUALA LUMPUR: Fraught with problems from the planting stage to the marketing level, the rice industry needs to be managed by a board, not a group of companies that could lead to the set up of cartels.

Industry coalition Padi Rescue coordinator Norfitri Amir Muhammad said trust and transparency could be reinstated with the revival of the National Rice and Paddy Board (LPN) that can establish a fund from the profit earned from rice imports to help farmers.

“As it stands, our study shows that monopoly holder Padiberas Nasional Bhd (Bernas) earns a profit margin of RM700 per tonne from the imported rice. Imagine what their profit must be like?

“If the LPN is revived with the participation of farmers, it will be an independent body made up by people who know the sector. Profit from imports [of rice] could go into the fund to help the sector in emergencies like disease-ridden plants and floods,” he told a media conference yesterday.

Norfitri said the problem cannot be solved with just the appointment of a group of companies handling the imports because it does not resolve the low demand for local rice.

“Farmers don’t have the bargaining power to ask for good prices. This sector is not one that should be seen as a profit-making sector. The subsidy for padi is about RM2.2 billion but who benefits?

“The contract holders for fertilisers or insecticides mark up the prices. The government must review these contracts because it [can] save money here. So we should not be looking at Bernas only but at every level, hence the need for the LPN (which was first set up in the 1970s),” he added.

Last week, Agriculture and Agro-based Industry Minister Salahuddin Ayub announced the termination of tycoon Tan Sri Syed Mokhtar Al-Bukhari’s Bernas’ rice import monopoly.

Bernas took over from the LPN in 1996 and was listed a year later on Bursa Malaysia before it was taken private. In 2011, its concession to import rice was extended for another 10 years until 2021.

However, as part of the Pakatan Harapan government’s manifesto to break Bernas’ monopoly, a working paper with ministry feedback and other stakeholders is being drafted to be submitted to the government for further action.

According to a study by the Malay Economic Action Council (MTEM), an umbrella body representing 47 Malay non-governmental organisations, local rice farmers milled 1.82 billion tonnes of rice last year, and up to 900,000 tonnes of rice were imported by Bernas, mostly from Vietnam, to meet the shortfall of 2.75 billion tonnes for consumption in Malaysia. Malaysia imports 30% of rice.

Norfitri said Malaysian farmers are able to make up to 100% of local demand but due to bad management of the industry, including weak seeds because of a lack of research and development, and high costs of fertilisers and insecticides.

Padi Rescue is an organisation of farmers under the MTEM.

Local farmer Azhar Hashim, 50, said a government subsidy of RM2,000 per hectare is high, but farmers still experience losses because of alleged discrepancies in the sector like the sale of insecticides at RM90 a bottle compared with RM40 in countries like Thailand.

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