JULY 3 — According to the All-Rice Index of FAO, prices of rice export have been on the rise for the fifth successive month in May 2022, as a result of the shortage of petroleum, fertilisers, wheat and feeds caused by the Ukraine-Russian war. When the war prolongs the prices are expected to increase.
Countries which depend on import rice to supplement their local production are almost certainly to face shortage of supply and price hike.
Are we ready for the shortage of supply and price hike? The government must take preventive measures now before the nation is hit by the shortage of supply and price hike of rice.
Increase stockpile to 20 per cent of national requirement
The annual requirement of rice for Malaysians is 2.5 million metric tonnes. The country's rice production is around 70 per cent while the remaining 30 per cent relies on import to meet the demand. When the war prolongs, we will have to face not just the increase of prices of rice but also the shortage of supply in the market.
According to the Minister of Agriculture and Food Industry, the stockpile of rice in the country is about 200,000 mt. In other words, the stockpile of rice is only enough to meet a month of the national requirement.
Compared to Singapore which has a stockpile for 3 months, Malaysia’s rice stockpile is far too low. But the building up of stockpile of rice in Malaysia depends solely on Bernas which has the monopoly of rice import and controls nearly 50 per cent of all rice produced in the country.
Bernas is a profit oriented public listed company and it is not in the interest of the company to increase the stockpile as cash will be locked in the stock.
In view of the critical situation, the government must move in to enforce a minimum percentage of stockpile, which should not be less than 20 per cent of the national requirement or 2 months’ supply.
End monopoly of rice import
Another important measure to reduce the pressure of supply and prices of rice is to increase the sources of supply. The government must suspend the monopoly of Bernas in the importation of rice during this critical period if it cannot end the concession given to Bernas immediately.
Rice traders should be allowed to import rice and source their own supply from different countries freely. With competition and more sources of supply, the quantum of increase for prices of import rice will no longer be decided by Bernas alone and our consumers will be less impacted by the price hike in the world market.
Liberalising rice import will also help to boost up our stockpile.
The Singapore’s Rice Stockpile Scheme requires all licensed importers to maintain a quantity equivalent to their two months import in the government warehouse as stockpile. We could do the same once rice import is liberalised.
The government must regain ownership of Bernas to boost local production of rice
To ensure adequate supply and stable prices of rice, the long-term strategy lies in increasing local production. We’re losing much of our paddy land to floods as well as to housing and industrial development as growing paddy is not profitable.
When Bernas was corporatised in 1966, the major shareholders were paddy cultivation related government agencies. It aimed to ensure a good balance of import rice and local produce in order to protect the interest of paddy growers.
Its profit was to plough back for the development of paddy cultivation with the ultimate aim to achieve self-sufficiency in rice.
Today Bernas is a totally private company. The irony is Bernas which makes its huge profit by having a monopoly in rice import is tasked to help promote local rice production.
The fact is the lesser the local rice, the more Bernas can import and the bigger their profit. Therefore, we cannot expect Bernas with its present ownership to help promote local rice production.
Today the prices of rice both import and local produce are virtually decided by Bernas, a profit oriented private company.
If the government is serious about self-sufficiency in rice and controlling price hike in rice, it must regain its control on import rice, take back from Bernas the management of subsidy to farmers and the procurement of rice from farmers.
*Datin Tan Yee Kew is Member of Parliament for Wangsa Maju
**This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.