MONOPOLY CONCERNS?
Group said to have asked for ‘exclusive right’ for grains storage
TRADEWINDS Plantation is said to have submitted a proposal to the previous government for an exclusive right to buy and stockpile grains in Malaysia. Sources said the plan, aimed at reducing foreign control in food supply chain, may not gain favour with the current government due to monopoly fears.
APRIVATE firm’s proposal for exclusive right to buy and stockpile grains has sounded alarm bells. Sources disclosed that Tradewinds Plantation Bhd had submitted a proposal to the previous government for the exclusive right.
Nevertheless, they believe the proposal, whether it was being seriously considered or not, is unlikely to gain favour with the current government, for fears it would create a monopoly.
According to the pitch deck sighted by NST Business, the proposal would have seen Tradewinds build a centralised grain terminal worth US$68 million (RM276.76 million) with a 500,000-tonne capacity. It was aimed at reducing foreign control in the country’s food supply chain.
“There’s nothing wrong with the proposal, except that it will lead to monopoly in the food sector, which may not be of national interest,” said one source.
The sources added that such a task should be handled by a government-controlled agency like in Indonesia.
A grain is a small, hard, dry seed, with or without an attached hull or fruit layer, harvested for human or animal consumption. Grains include barley, corn, millet, oats, rice, rye, sorghum and wheat.
Malaysia produces rice and corns, but not wheat.
In the proposal, Tradewinds said the terminal would reduce currency outflow worth RM1.1 billion, reduce consumer price as well as improve food security. Malaysia, which spends RM42 billion for food imports annually, currently has eight grain terminals. They include those in Penang, Perak, Johor, Sabah and Sarawak, with a combined 438,000-tonne total storage capacity. Tradewinds claimed that five major grain storage operators in the country were currently 95 per cent foreign-controlled, or 13 out of 14 mills were owned by foreign investors.
With the new centralised grain terminal, Tradewinds had proposed to form partnerships or joint ventures with countries that Malaysia imports from to secure uninterrupted supply and lower cost.
“(There would be) 90 days inventory buffer for food security and 35 per cent supply chain cost reduction,” said the company in the proposal.
It would also establish elevator facilities at strategic origination locations to source directly from farm gate, it added.
Earlier this year, UNI Malaysia Labour Centre president Datuk Seri Mohamed Shafie Mammal in several interviews said although Malaysia had enough poultry, fishery and eggs supply, it still relied on imports of various food commodities such as rice, fruits, dairy milk, beef and grains.
“In fact, Malaysia imports 100 per cent wheat and soyabean meals with almost 98 per cent of its grain corn from producing countries such as Australia, the United States, Brazil and Argentina. Hence, the country is exposed to externalities — geopolitics, global weather conditions and country relations.”
“It is important for a nation that is highly dependent on imports to fulfil its national food requirement and have adequate stockpiling on essential commodities to avoid potential crisis,” he added.