Pengguna perihatin

The Star online

Sunday April 13, 2008

By JOSEPH LOH and RASHVINJEET S.BEDI

When news of our staple, which is rice, makes headlines globally, we need to examine our own backyard to see what needs to be done to increase productivity and ensure sufficiency.

BOILED potatoes with sambal ikan bilis anyone? Malaysians might have to turn to other sources of carbohydrate like potatoes or bread to accompany their favourite sambal ikan bilis, instead of the usual fragrant nasi lemak in the near future, if the supply of rice comes under further threat.

As seen in the media in the last fortnight, there have been increasing reports of shortages, soaring prices and countries halting exports of rice, the staple food of all Malaysians, along with the rest of Asia.

Although the Government has given its reassurance that Malaysia's supply is adequate to meet the country's needs, the fear is not abated by news that the Government was considering an increase in the two-week rice stockpile managed by Padiberas Nasional Bhd (Bernas) to a three-month one. Then there was the speculation about possible price hikes for the staple food.

Experts may say that it is just unnecessary panic on the public's part but as a baju kurung boutique owner in Putrajaya called Dayang points out, the price of rice has been going up since last year.

“And as soon as the news broke about the rice problems overseas and possible price increases, some sundry stores and mini markets as well as restaurants have used that as an excuse to hike up their prices.”

Sufficient supply

Deputy Prime Minister Datuk Seri Najib Razak was quick to issue a statement that local rice prices will not be increased to reassure the public. Similarly the statement by the Agriculture and Agro-based Minister Datuk Mustapa Mohamad that Bernas' stockpile of about 92,000 tonnes for every 15 days at its warehouses nationwide was sufficient to cater for the nation's needs.

Dr Yeah Kim Leng, the chief economist at the Ratings Agency of Malaysia (RAM) opines that it is important that the Government ensures that the supply of rice nationwide is uninterrupted.

“The public must be assured (there is adequate stock) so that they don't go into panic buying or hoarding,” he says.

To mitigate the effects of the sharp escalation in prices, the government might have to fork out a higher subsidy, states Yeah, although it is relatively low currently.

“The subsidy is not that large in comparison to the fuel subsidy (which runs into almost RM25-30bil a year) and will not have a major impact on the government's fiscal balance.

According to the Information Department, the rice subsidy for local consumption increased from RM800mil in 2006 to RM900mil last year.

However, it should be noted that the subsidy only applies to the lowest grade of local rice – Super Tempatan 15 (with 15% content of broken grains), which is coincidentally price-controlled at RM1.75per kg (in Selangor).

The other types of rice are not subsidised.

Hence, the current subsidy structure – which is solely for this one grade of rice – does not benefit the majority of Malaysians.

Mydin Mohamed Holdings Bhd managing director Datuk Ameer Ali Mydin is one who believes that the subsidy is inadequate.

“It is a joke,” he states.

Ameer points out that the current ceiling price of RM1.75 per kg has existed for many years. However, he reveals that the cost price was RM1.55 two years ago and rose to RM1.65 last year.

“Now it is RM1.70, and we are selling at RM1.75, which is the controlled price. The ceiling price has not risen, but the market price has gone up,” he says.

Another point is that this particular grade of rice is of such low quality that consumers do not buy it as they tend to go for higher-quality varieties. As a result, most retailers do not have much quantity of it for sale.

“We sell about 50 types of rice, but we only have one controlled-price item, which is our in-house brand,” he clarifies.

A check on its market floor at the Mydin hypermarket outlet in Subang Jaya, Selangor, revealed that stocks had sold out and it was not available for purchase.

Aeon companies (M) Bhd PR manager Shirly Chan, says that its chain of stores stocks the item, again only as an in-house brand. She adds, “Our best-selling rice is still imported Thai rice.”

Chan confirms that on average, prices have risen gradually by as much as 20%, and by 10% in the last week alone.

An industry source says that the subsidised rice constitutes about 20-30% of the total amount of rice consumed in the country, but did not confirm if it was predominantly served on Malaysian dinner tables or used in rice-based products.

“This cheaper variety of rice is still produced, solely to cater for the lower income group. It may be difficult to find in hypermarkets, but is usually available in rural areas or even in neighbourhood sundry shops.”

The source says that it is generally sold to retailers in 50kg sacks and consumers buy the quantity they require by weight.

However, he adds it is becoming less popular.

“Nowadays, with the increase in the standard in living, even the lower-income groups can afford higher-grade rice. But even if demand is low, it still has to be produced and made available for the public.”

Enquiries with restaurants in and around the Klang Valley reveals that the subsidised rice is not served to their customers. Declining to be named, a spokesperson for a restaurant chain says, “Our customers pay for quality and we only use the best-quality rice.”

Another restaurant proprietor discloses that it is inconceivable for them to use the subsidised rice.

“It is of too low quality to be served. If we serve it, the customers will think that we are cheating them.”

Even affordable eateries like mamak restaurants do not use the subsidised rice.

Syed Mohammed Buhari, the owner of the Fatimah Food Corner chain of restaurants, says that he does not use low-grade rice.

“The prices of our food is low, and we use at least a medium-grade rice. The low-grade rice is not nice to eat and cannot be served.”

Original Penang Kayu Nasi Kandar owner Buruhan Mohamed says his restaurants use basmati and Super Panjang varieties only.

“We use first-grade rice, with no broken grains. The quality is good, and we have used this type of rice for a long time.”

Both Syed and Buruhan acknowledge that prices of rice have gone up, and they are paying from RM85 to RM90 for 50kgs, up from about RM80 a year before.

Ameer says the real issue is that the rice that is consumed by most consumers – which is unsubsidised – has markedly gone up in price because there are no price controls.

While he is not an advocate of price controls, he is concerned because prices have gone up by about 15% over the past two years (see graphic).

“This is happening because there is a monopoly for rice imports in Malaysia. Only Bernas can import rice, and they dictate the price.

“Additionally, it decides where the rice goes, and it primarily gives it to its subsidiaries,” he claims.

No real shortage

Ameer believes that there is no real shortage of rice in the country. Although the threat of it is there, it has not reached a critical stage yet. But with news of increasing prices, people tend to overstock and this creates an artificial shortage.

“Non-Bernas subsidiaries who have tried to keep the price low have no supply, and when there is an artificial shortage, they are not going to get it.”

Ameer offers a few solutions to resolve the possible crisis.

“Remove the monopoly on rice imports. As business people, we will compete and sell it as low as possible. Let market forces decide the price. If the monopoly is removed and others are allowed to import, it will go down by about two or three ringgit.”

He also believes that the powers-that-be should meet with non-Bernas subsidiaries to obtain a more realistic view.

“Listen to their views. They know the actual situation better,” he states.

He also advocates that the government should come up with and subsidise a generic brand of higher-quality rice.

“It can be a 5% or 10% Super Tempatan variety, so those who cannot afford the more expensive brands can buy this at an affordable price.

“Some people may be brand-conscious and buy other types, but at the moment consumers do not have an alternative,” he opines.

Yeah believes that a key challenge will be to maintain the price of the common-grade rice. He adds that since rice prices are going up, it would be profitable for farmers to venture into planting paddy.

“There should be a production increase in response to higher prices as it would be viewed as profitable. The current world shortage will continue for some time,” says Yeah, adding that the profits made by local farmers would remain in the country.

Consumers Association of Penang (CAP) President S.M. Mohamed Idris agrees that although for the moment “we will be able to import the rice that we need, in the long term, local rice production must be increased.

Federation of Malaysian Consumers Association (Fomca) secretary-general Muhammad Sha'ani Abdullah strongly believes that Malaysia should concentrate on food security.

“We cannot be dependent on exporting countries for our rice needs. They will give their citizens priority,” he says.

Sha'ani adds that the government should reintroduce the Rancangan Buku Hijau, a campaign that was initiated by the second Prime Minister, Tun Abdul Razak, encouraging the public to carry out backyard farming, hydroponics planting and organic farming.

Prime Minister Abdullah Ahmad Badawi on Thursday proposed a national policy on food security to address the issue of rising prices and shortages that have caused havoc across Asia.

“We need to have a national policy on food security. We must have a mechanism to ensure that there are enough food supplies for people,” Abdullah was quoted.

And how can consumers play their part?

“It will be difficult to ask consumers to eat less rice. However, consumers can cut down on wastage by cooking that which is needed and making use of leftovers.

“It is also a common trend for people to indulge in buffet meals and most of the time food is wasted. People should eat what they need and not be greedy. In many countries, a charge is imposed on people who waste food in hotels or restaurants,” says Idris.