Business

Tuesday October 27, 2009

Big allocation to boost rice production

Commodities Talk - By Hanim Adnan


THE huge allocation and subsidies for padi cultivation under Budget 2010 signal Malaysia’s serious commitment towards restoring its self-sufficiency level (SSL) for the commodity, which is heading towards a severe supply shortage worldwide.

Asian rice stocks are said to be near danger level. On the other hand, the world’s grain stocks have shrunk by half since 1999, from a reserve big enough to feed the entire world for 116 days then, to a predicted low of only 57 days by year-end.

Malaysia hit the panic button on its rice supply security last year after it encountered severe price escalation in imported rice as well as shortage in its supply due to the imposition of export curbs by major rice suppliers in Thailand, India, Vietnam and China as a measure to contain their domestic food price inflation in 2007.

Malaysians annually consume about 2.2 million tonnes of rice, of which some 657,900 tonnes still need to be imported.

In May 2008, the Government set up several measures to contain rice prices and ensure sufficient supply. These included maintaining the 15% Super Tempatan rice as a controlled item with the price ranging from RM1.65 to RM1.80 per kg according to zones, fixing ceiling price for the 5% and 10% Super Special Tempatan at RM2.80 per kg and RM2.70 per kg respectively effective June 1, 2008 and raising the guaranteed minimum price of padi from RM650 a tonne to RM750.

Apart from the subsidies for padi price of over RM400mil and fertiliser of RM300mil, incentives are also given to increase padi yield, production and rice subsidy.

Under Budget 2010, further allocations were given, like RM137mil for upgrading and improving drainage and irrigation infrastructure in padi fields and RM70mil to implement the Paya Peda Dam project in Terengganu. Apart from the subsidies for padi price of over RM400mil and fertiliser of about RM300mil, incentives are also given to increase padi yield, production and rice subsidy at almost RM220mil.

In fact, one good thing that has come out from the high price and supply shortage situation is Malaysia’s decision to reactivate its existing rice bowl areas in the northern peninsula as well as establishing new rice bowl areas in Sabah and Sarawak.

Interestingly, it is envisaged that the new rice bowl areas in Kota Belud, Sabah, and Situmbin-Bijat, Sarawak (said to be larger than the size of Singapore), when in full production within two to three years, could propel Malaysia to join the league of global net rice exporters.

By then, it would mean a total of 115,000 tonnes of surplus rice from the new rice bowl areas could be exported from Malaysia annually.

But, for now, the greater task at hand is that Malaysia still needs to prove that it will be able to meet the target based on the mid-term review of the Ninth Malaysia Plan to raise the rice SSL to 86% in 2010 from 73% currently.

New padi planting areas will cover a total of 70,000ha, which will translate into 420,000 tonnes of rice production per season based on the current national output of six tonnes per ha.

For Malaysia to reach a 100% rice SSL, it will need to boost the national production by 350,000 tonnes a year. The projected rice production in Malaysia stands at 1.92 million tonnes in 2009 compared with the consumption figure of 2.23 million tonnes.

l Hanim Adnan is assistant news editor at The Star. She wonders whether Malaysia can emulate Bali which has successfully exploited its picturesque terraced padi fields as a major tourist attraction.

  • E-mail this story
  • Print this story