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Rice farmers slam diesel price hike, 'unhelpful' subsidy programmes

A padi farmers' empowerment group questions the agriculture ministry's claim of having approved 30,000 applications for subsidy payouts.

3 minute read
Rice farmers face an uncertain future following the government's decision to switch to targeted subsidy programmes in the wake of the diesel price hike this week.
Rice farmers face an uncertain future following the government's decision to switch to targeted subsidy programmes in the wake of the diesel price hike this week.

The country's rice industry is said to be facing a dim future in the wake of the sharp rise in diesel prices following the government's move to end blanket subsidies on June 10, affecting more than 260,000 rice farmers, mostly in Peninsular Malaysia where the fuel hike has been implemented.

This comes even as Agriculture and Food Security Minister Mohamad Sabu said that farmers would not be affected by the subsidy removal for diesel.

His ministry also claimed that more than 30,000 farmers and commodity smallholders had had their applications approved under Budi Madani, the government's compensation programme for eligible recipients to make up for the subsidy withdrawal.

But a Kedah-based padi farmers' advocacy group is questioning the claim.

Pertubuhan Persaudaraan Pesawah Malaysia (Pesawah) said checks had found no farmer receiving such aid.

It also questioned the conditions for padi farmers to receive the subsidy.

"For individual assistance, a vehicle must be registered with the Road Transport Department (JPJ). No tractors are registered with JPJ.

"Secondly, a rice farmer needs to be registered with the Inland Revenue Board (LHDN). No farmers are registered with LHDN," Pesawah spokesman Abdul Rashid Yob told MalaysiaNow.

He also cited the condition set under the Budi Agro Komuniti programme, where applicants need to have an annual income of between RM50,000 and RM300,000.

"So if a farmer's income is less than that, does he qualify?"

Rashid said the government's latest move to remove blanket subsidies for diesel had killed the motivation of farmers who were already struggling with issues such as rice cartels and the quality of padi seeds.

He said even with subsidies, the sector still faced higher production costs which he said would interfere in the achievement of a self-sufficient level (SSL) for rice.

Malaysia's rice production has an SSL of around 70%. The rest of the country's rice is imported. 

"The application process for subsidies is still unclear, and rice farmers are confused about the conditions imposed as well as the mechanism," Rashid told MalaysiaNow.

According to him, the compensation rate is also insufficient.

He gave the example of the ploughing incentive, saying the recent increase was of little help as farmers were facing a 50% to 70% increase in production costs due to logistics and spare parts. 

Farmers are given a ploughing incentive of RM160 for each hectare of padi.

But Rashid said at least RM450 would be needed for the same production amount.

Given the surge in diesel prices, at least RM5,000 to RM5,700 would be needed to cultivate one hectare of padi compared to RM4,000 to RM4,500 previously, he added.

The Budi Agro Komuniti, Budi Madani and fleet card programmes were introduced by the government in tandem with the increase in diesel price as a means of compensating those who are eligible.

Many padi farmers and stakeholders in the rice sector however told MalaysiaNow that they were facing losses. 

Harvesting machine operator Shahrul Mat from Seberang Perak said he was forced to increase the charge for using the machine from RM50 to RM80 per tonne of padi.

"Initially, we wanted to increase by RM30, but following our meeting with padi field owners, they are only willing to pay an additional RM20 to RM25," he said.

Shahrul added that harvesting machine owners were not eligible for diesel subsidies.

Previously, he said, the average daily use of diesel for the machines was RM2,500 for 700 litres. 

Now, the cost has increased to over RM3,000.

Shahrul said owners like him had to come up with the initial capital.

"We will be paid the following month. For me, I am standing by with capital of more than RM50,000 for the operation of the machines," he said.

Tractor operator Norazli Ayub from Tanjung Karang, Selangor, said smallholders would likely be more affected than rice farmers following the diesel price hike.

He said he could impose a high fee as rice farmers receive plouging incentives to pay for services such as his.

"Oil palm and rubber smallholders, however, may be affected because no incentives have been given so far," he said.

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