Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-09T15:38:12.176Z Has data issue: false hasContentIssue false
  • English
  • Français

Public Interventions in Agricultural Markets in Malaysia: Rice and Palm Oil

Published online by Cambridge University Press:  28 November 2008

James Pletcher
James Pletcher
Affiliation:
Denison University, Granville, Ohio
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper explores the goals, nature and results of government interventions into the rice and palm oil markets of Malyasia since independence. Its purpose is to compare the relatively successful way in which the government has promoted the palm oil industry with the failure of interventions in the rice market. The historical comparison of public efforts in these two industries points up the importance of setting consistent goals, of encouraging crops which match the natural resource endowment of the country, of having a private sector which is capable of responding to production incentives, and of letting supply and demand determine prices when designing a strategy of market intervention. Above all, it is important to distinguish programs of intervention based primarily on efficiency criteria from those which seek to perform social welfare (e.g. income support) and political (e.g. food security) functions as well.

Type
Articles
Information
Modern Asian Studies , Volume 24 , Issue 2 , May 1990 , pp. 323 - 340
Copyright
Copyright © Cambridge University Press 1990

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Brown, Gilbert, ‘Agricultural Pricing Policies in Developing Countries,’ in Distortions of Agricultural Incentives, edited by Shultz, Theodore (Bloomington: Indiana University Press, 1978), pp. 84–113;Google ScholarBauer, P. T., Dissent on Development, Rev. edn (Cambridge, Mass.: Harvard University Press, 1976), pp. 70–91;Google ScholarAgarwala, Ramgopal, ‘Price Distortions and Growth in Developing Countries,’ World Bank Staff Working Paper, no. 575 (Washington, D.C.: World Bank, 1983), pp. 1–45;Google ScholarWorld Bank Development Report, 1986 (Washington, D.C.: World Bank, 1986). There is as well a significant body of literature relating to the African case where the effects of interventionist policies have been arguably the most catastrophic.Google Scholar See Lofchie, Michael, ‘Political and Economic Origins of African Hunger,’ Journal of Modern African Studies, 13 (1975), pp. 551–67;CrossRefGoogle ScholarWilde, John de, Agriculture, Marketing and Pricing in Sub-Saharan Africa (Los Angeles: African Studies Association, 1984);Google ScholarBates, Robert, Markets and States in Tropical Africa (Berkeley: University of California Press, 1981);Google Scholar World Bank, Accelerated Development in Sub-Saharan Africa (Washington, D.C.: World Bank, 1981).Google Scholar

There is as well a significant body of literature relating to the African case where the effects of interventionist policies have been arguably the most catastrophic. See Michael Lofchie, ‘Political and Economic Origins of African Hunger,’ Journal of Modern African Studies, 13 (1975), pp. 551-67; John de Wilde, Agriculture, Marketing and Pricing in Sub-Saharan Africa (Los Angeles: African Studies Association, 1984); Robert Bates, Markets and States in Tropical Africa (Berkeley: University of California Press, 1981); World Bank, Accelerated Development in Sub-Saharan Africa (Washington, D.C.: World Bank, 1981).

2 Brown, , ‘Agricultural Pricing Policies,’ pp. 84–113;Google ScholarBauer, , Dissent, pp. 70–91; World Bank Development Report, 1986.Google Scholar

3 Tolley, George, Thomas, Vinod, Wong, Chung Ming, Agricultural Price Policies and Developing Countries (Baltimore: Johns Hopkins for the World Bank, 1982), pp. 232–3.Google Scholar

4 Padi is rice which has not yet been milled. Once padi is milled into rice it is ready to be cooked.

5 Selvadurai, S., Agriculture in Peninsular Malaysia, Ministry of Agriculture Bulletin, no. 148 (Kuala Lumpur: Government Printing Department, 1978), p. 49.Google Scholar

6 Ibid., p. 48.

7 The incidence of poverty among padi producers in 1984 was 57.7% as compared to 24.7% in the rural sector overall, 8.2% in the urban sector, and 18.4% in all of Malaysia. Malaysia. Fifth Malaysia Plan, 1986–90, Table 3–1, p. 86.Google Scholar

8 Rudner, Martin, ‘Agricultural Policy and Peasant Social Transformation in Late Colonial Malaya,’ in Issues in Malaysian Development, edited by Jackson, James and Rudner, Martin (Singapore: Heinemann Educational Books, 1979), pp. 12–13.Google Scholar

9 Scott, James, Weapons of the Weak (New Haven: Yale University Press, 1985). pp. 52–3.Google Scholar

10 Ibid., p. 64.

11 Ibid., p. 68.

12 Ibid., p. 69.

13 Ibid., pp. 70–1.

14 Ibid., pp. 74–5.

15 Selvadurai, S., Padi Farming in West Malaysia (Kuala Lumpur: Ministry of Agriculture and Fisheries, 1972), p. 119.Google Scholar

16 Malaysia. National Agricultural Policy: Oil Palm Industry. May 1984 (draft), Tables 8, 10, 14; pp. 28, 31, 40.Google Scholar

17 Selvadurai, , Agriculture in Peninsular Malaysia, p. 89.Google Scholar

18 Meyanathan, Sahathavan, ‘The Shift from Rubber to Oil Palm Cultivation: Reasons and Policy Implications,’ Paper presented to Sixth Malaysian Economic Convention, May 1980, p. 1.Google Scholar

19 Selvadurai, , Agriculture in Peninsular Malaysia, p. 91.Google Scholar

20 Khera, Harcharan Singh, The Oil Palm Industry of Malaysia (Kuala Lumpur: University of Malaya, 1976), pp. 47–81;Google ScholarMoll, H. A. J., The Economics of Oil Palm (Wageningen, The Netherland: Centre for Agricultural Publishing and Documentation, 1987), pp. 147–53. For a review of studies on profitability, see Sahathavan, ‘Shift from Rubber to Oil Palm,’ pp. 2–4.Google Scholar

21 Malaysia. Federal Land Development Authority (Felda), Annual Report, 1983, p. 16;Google ScholarFifth Malaysia Plan, p. 90.Google Scholar

22 Moll, , Economics of Oil Palm, pp. 137–8.Google Scholar

23 M$ 10 million is the approximate cost of a mill with a capacity of 30 to 36 tonnes of ffb.'s per hour; the average mill capacity in Malaysia at the end of 1985 was just over 30 tonnes of ffb.'s per hour. Ibid., p. 149; Palm Oil Registration and Licensing Authority (PORLA), Annual Report, 1985, p. 11.

24 Barlow, Colin, ‘Oil Palm as a Smallholder Crop,’ Palm Oil Research Institute of Malaysia (PORIM), Occasional Paper no. 21 (August 1986), Table 1, p. 2.Google Scholar

25 Felda Annual Report, 1983, p. 8.Google Scholar

26 For example, the Malaysian government has spearheaded the counter-attack against the American Soybean Association's campaign to have products containing palm oil labeled a health risk in the United States.

27 Vokes, Richard, ‘State Marketing in a Private Enterprise Economy: The Padi and Rice Market of West Malaysia, 1966–75’ (Ph.D. Thesis, University of Hull, 1978), pp. 192–3.Google Scholar

28 Fifth Malaysia Plan, Table 10–5, p. 329.Google Scholar

29 Hoey, Tan Siew, Malaysia's Rice Policy: A Critical Analysis (Kuala Lumpur: Institute of Strategic and International Studies, 1987), Appendix 2, p. 68.Google Scholar

30 Malaysia. Lembaga Padi dan Beras Negara (LPN).

31 Based on data from LPN and Malaysia. Ministry of Agriculture. Padi Statistics, various issues.

32 Malaysia. Federal Budget. Estimates of Revenue and Expenditures, various years.

33 Chew, T. A. and Ghaffar, R. A., ‘Some Economic Aspects of Drying of Paddy by Farmers in Selangor, Malaysia,’ in Preserving Grain Quality by Aeration and In-store Drying, edited by Champ, B. R. and Highly, E. (Canberra: Australian Centre for International Agricultural Research, 1986), pp. 146–51.Google Scholar

34 Shahabudin, Syed Abdul Jabbar, ‘Role and Performance of KLCE in Palm Oil Marketing,’ Proceedings of the International Seminar on Market Development for Palm Oil Products, 23–27 January 1984 (PORIM, 1984), pp. 118–21.Google Scholar

35 Khera, , Oil Palm Industry, pp. 142, 142n.Google Scholar

36 Felda Annual Report, 1983, p. 16;Google ScholarFifth Malaysia Plan, p. 90.Google Scholar

37 Nordin, Jamil, ‘The Export Performance of Malaysian Processed Palm Oil,’ Proceedings of the International Seminar on Market Development for Palm Oil Products, 23–27 January 1984 (PORIM, 1984), pp. 190–1.Google Scholar

38 Business Times (Malaysia), 27 01 1988, p. 20.Google Scholar

39 Malaysia. Ministry of Finance.