Download - Paper 1_Role BERNAS GLS ARCoFS 13 final.pdf
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ROLE OF BERNAS AS GLC: SUPPORTING AND COMPLEMENTING NATIONAL
(MALAYSIA) FOOD SECURITY FOOD POLICIES
ASEAN Regional Conference on Food Security (ARCoFS’13)
8-10 October 2013
Bayview Hotel Penang Malaysia
By:
Salman Muhammad
BERNAS
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Introduction
BERNAS’ Role to Support Food Security
How It Is Done
Closing Remarks
Contents
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Introduction
BERNAS’ Role to Support Food Security
How It Is Done
Closing Remarks
Contents
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Paddy and rice industry exists in Malaysia because of three reasons
Ensure food security to the nation
Ensure farm incomes and
productivity
Ensure supply of rice at fair and
stable prices
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Food security a policy concern by…
Paddy Cultivation Act
1930
Department of Irrigation
and Drainage (DID) 1932
Rice Commission
1933
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Measures to protect the security of food taken as early as 1939…
• Restrict labor movement out of paddy sector;
• Land gazetted for paddy cannot be converted for other uses; and
• Restriction on transfer of land titles applied.
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More measures taken to ensure food security, farmers’income and price stability after WWII
Guaranteed Minimum Price
(GMP) 1949
Stockpile Scheme 1949
Fertilizer Subsidy 1952
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After independent, massive infrastructure development embarked and support institutions established…
PRMB to oversee the marketing of paddy (1967)
MADA and KADA projects were initiated (1961-1965)
MARDI and BPM to undertake R&D and to provide credit to farmers, respectively (1969)
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And the establishment of a dedicated institution to the industry in 1971, the National Paddy and Rice Board
LPN
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All these are done because we do not want to end up like this…
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But to continue being like this
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Introduction
BERNAS’ Role to Support Food Security
How It Is Done
Closing Remarks
Contents
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FAO Policy Brief, June 2006, Issue 2 states…
4 dimensions of food security:
a) Supply availability
b) Supply accessibility
c) Fit for use/purpose (utilization)
d) Price stability (hence affordable)
Derived from World Food Summit, 1996.
“Food security exists when all people, at all
times, have physical and economic access to
sufficient, safe and nutritious food that meets
their dietary needs and food preferences for
an active and healthy life.”
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Compare that to the objectives of LPN…
a)To ensure fair and stable prices for farmers;
b)To ensure fair and stable prices for consumers;
c)To provide sufficient supply to meet all
emergencies;
d)To recommend policies to promote the
development of the paddy and rice industry; and
e)To store and maintain adequate supply of paddy
and rice.
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And to BERNAS’ duties and obligations
Social Obligations •National stockpile
•Buyer of last resort at GMP
•Administer rice subsidy payment
•Bumiputera Miller Scheme
Duties •Ensure fair and stable price
•Ensure sufficient supply
•Ensure quality and standard
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Thus, although a private entity, its job is not to maximize profit, but…
To ensure that paddy’ market is guaranteed (BOLR at
GMP) for farmers; thus help defends SSL for the country
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Although spread all over the countries, BERNAS cannot provide accessibility of supply all by itself, thus…
Must maintain industry stability and market harmony to
ensure other industry players can sustain themselves
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It must provide rice at stable and affordable prices…
In accordance with what the consumers want to suit their
lifestyles
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And keep the stockpile for the nation…
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BERNAS’ role therefore…
Industry stability
Market harmony
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Introduction
BERNAS’ Role to Support Food Security
How It Is Done
Closing Remarks
Contents
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Industry stability and market harmony is maintained by employing:
Price mechanism
Gatekeeping mechanism
Stockpile operation
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Price Mechanism…
Differential pricing (import vs
local).
• Benchmark price - natural
ceiling to local.
• Price gap – natural barrier to
smuggling activities
Single pricing – to group and non
group
Price cap/float (BERNAS to
propose, Government to
decide)
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Gatekeeping mechanism…
Import restriction and control
of smuggling – to sustain
SSL
Single Gatekeeper – no
destructive, unbridled competition
which can lead to instability, or
market glut to domestic rice
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Stockpile operation…
Availability and accessibility,
especially when in need
Stock flush– when market is too
active (unstable)
Stock purchase – during glut
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Interplay of these mechanisms: simplified model…
Stockpile Operation
Price Mechanism
Gatekeeping Mechanism
Differential Pricing (Benchmark Price)
Import restriction Control of smuggling
Stock purchase
Price float
GMP
Stock flush
Price cap
Ceiling price
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Introduction
BERNAS’ Role to Support Food Security
How It Is Done
Closing Remarks
Contents
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Rice industry often appears as a picture of contradictions
NAP-3 and other
policies target
for subsidies to
be gradually
reduced, but in
reality have been
increasing
To reduce farmers’ poverty is an objective but
land conversion not allowed
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Likewise with BERNAS…
• It is more like a rice institution, not a rice shop.
• But being a private company, it needs to make money,
hence the need to be competitive
• Not to compete with others:
• But to create industry stability and market harmony
whereby all players can have sufficient margin to be in
their businesses;
• So that essential elements of food security
(availability, accessibility, utilization and stability) can
be secured through market mechanism
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Must do the
balancing act
And together with the
Government, weather
the storm
To harmony
Balancing these roles is delicate. When in conflict, institutional role takes precedent
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