No plan for scrap rub­ber floor price

Such mea­sure will need high al­lo­ca­tion should nat­u­ral rub­ber ex­pe­ri­ence sharp down­trend

The Star Malaysia - StarBiz - - News -

KUALA LUMPUR: The gov­ern­ment has no plans to im­ple­ment a floor price for scrap rub­ber as it would in­volve a high al­lo­ca­tion, said the Pri­mary In­dus­tries Min­istry.

The min­istry said that based on 2017 pro­duc­tion, if the scrap rub­ber floor price was set at RM4 per kg, it would cost the gov­ern­ment an ad­di­tional al­lo­ca­tion of RM2.5bil a year.

The MPI said this in a state­ment in re­sponse to a re­port on Nov 3 quot­ing the Tereng­ganu State Agri­cul­ture, Agro-based In­dus­try and Ru­ral De­vel­op­ment Com­mit­tee chair­man Dr Az­man Ibrahim as say­ing that the RM50mil al­lo­ca­tion for the Rub­ber Pro­duc­tion In­cen­tive (IPG) scheme would not bring much ben­e­fit to small­hold­ers and pro­posed a rub­ber floor price of RM4 per kg.

The min­istry said the gov­ern­ment was not able to con­sider the pro­posal for floor pric­ing as it would re­quire a lot of fi­nanc­ing to sup­port the mea­sure in the event nat­u­ral rub­ber prices ex­pe­ri­enced a sharp down­trend.

“Floor pric­ing will lead to spec­u­la­tive ac­tiv­i­ties among rub­ber sell­ers by low­er­ing prices with the hope that the gov­ern­ment will cover the dif­fer­ence be­tween the mar­ket and floor prices.

“At the same time, the mea­sure will cre­ate space for rub­ber smug­gling from abroad as the lo­cal price will be higher than in­ter­na­tional price,” the min­istry said in a state­ment.

It said the IPG was cre­ated to re­duce the bur­den on small­hold­ers and to en­cour­age them to con­tinue tap­ping de­spite low mar­ket prices.

“A to­tal of 450,568 Rub­ber Trans­ac­tion Au­thor­ity Per­mit (PAT-G) card­hold­ers have been el­i­gi­ble to ap­ply for IPG since 2015.

“As at Aug 31, 2018, 783,877 claims had been ap­proved for IPG dis­tri­bu­tion in­volv­ing an al­lo­ca­tion of RM90.94mil,” the min­istry said.

It said the IPG scheme was sim­i­lar to the floor price con­cept be­cause the scheme would be ac­ti­vated when the av­er­age monthly price of Stan­dard Malaysia Rub­ber (SMR) 20 for the pre­vi­ous month fell below RM5.50 per kg or the farm-gate price for scrap rub­ber was lower than RM2.20 per kg.

“The price dif­fer­ence for small­hold­ers will be borne by the gov­ern­ment. This will en­able small­hold­ers with an av­er­age of two hectares and cup lump pro­duc­tiv­ity of 3,000 kg per hectare per year to en­joy monthly in­come of RM1,100,” it said.

Mean­while, the min­istry said the gov­ern­ment was also con­cerned for the rub­ber small­hold­ers’ wel­fare as they were very de­pen­dent on scrap pro­duc­tion.

“In view of the higher price of la­tex com­pared with scrap and is also the main re­quire­ment for in­dus­tries, the gov­ern­ment will fo­cus on im­prov­ing the fa­cil­i­ties for la­tex pro­duc­tion through­out the coun­try.

“The gov­ern­ment will em­power rub­ber col­lec­tion cen­tres to fa­cil­i­tate the process of la­tex col­lec­tion,” it said.

The min­istry hoped this would in­crease la­tex pro­duc­tion, re­duce the coun­try’s de­pen­dence on la­tex im­ports and at the same time, help to in­crease the in­come of small­hold­ers by mov­ing from scrap to la­tex pro­duc­tion.— Ber­nama

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.