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UNIVERSITI PUTRA MALAYSIA AN APPLICATION OF SPATIAL EQUILIBRIUM ANALYSIS TO THE PADDY POSTHARVEST SYSTEM IN TANJONG KARANG, PENINSULAR MALAYSIA Salleh bin Yahya FEP 1988 4
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UNIVERSITI PUTRA MALAYSIA
AN APPLICATION OF SPATIAL EQUILIBRIUM ANALYSIS TO THE PADDY POSTHARVEST SYSTEM IN TANJONG KARANG,
PENINSULAR MALAYSIA
Salleh bin Yahya
FEP 1988 4
It is hereby certified that we have read this thesis entitled 'An Application of Spatial Equilibrium Analysis To The Transportation and Processing of Paddy In Tanjung Karang, Peninsular Malaysia' by Salleh Yahya, and in our opinion it is satisfactory in terms of the scope, quality, and presentation as partial fulfilment of the requirements for the degree of Master of Science
�t4;; � .... . ...... ... . . . .. . , . .. .
AHMAD MAHDZAN AYOB, Ph.D. Professor/Dean of Graduate Studies
Universiti Pertanian Malaysia (Chairman Board of Examiners)
...... . .. . ..... . . . . . . AZIZ ABDUL HAMID, Ph.D.
Associate Professor Faculty of Business Management Universiti Kebangsaan Malaysia
Bangi, Selangor (External Examiner)
�stj�. Associate Professor
Faculty of Economics and Management Universiti Pertanian Malaysia
(Internal Examiner)
�o�1G '! : . .. . ... . . ........ . . ROSLAN A. GHAFFAR,Ph.D.
Head, Department of Economics Faculty of Economics and Management
Universiti Pertanian Malaysia (Supervisor)
This thesis was submitted to the Senate of Universiti
Pertanian Malaysia and was accepted as partial fulfilment of the requirements for the Degree of Master of Science.
Date: 1 5 Ot.t; 1988 � ............. , . . ,n . .. . :::z -AHMAD MAHDZAN AYOS, PH.D.
=-
Professor, Dean of Graduate Studies.
AN APPLICATION OF SPATIAL EQUILIBRIUM ANALYSI S TO THE PADDY POSTHARVEST SYSTEM IN TANJONG KARANG,
PENINSULAR MALAYSIA
by
Sal leh bin Yahya
A Thesis Submitted in Par t i al Ful filment of the require.ents f or the Degree of Master of Science in the
Faculty of Economics and Management, Univers i t i Pertanian Malaysia .
October, 1988
ACKHOVLEDGEKIITS
I wish to thank my supervisors, Dr. Ros lan A. Ghaf far and
Dr. Chew Tek Ann, for their supervision , guidance and useful
criticisms during the preparation of this thesis.
My appreciat ion is also due to Dr. Mohd Ghazali Mohayidin ,
Deputy Dean, for his advice and support. I am grateful to the
International Development Research Centre for providing me
with f inancial support and to Universiti Pertanian Malays i a ,
for grant ing m e the study leave . I n addit ion, I wish to thank
all the members of ACIAR 8344 Team , especially Dr. George
Ryland for his advice in using the nonl inear mathemat i cal
programming algorithm .
Finally , I am greatly indebted to my parents , for
providing me with an early educat ion , to my wife , Ani, and to
my son , Abdul Khalid, for their pat ience and underst anding
dur ing the course of my study .
Faculty of Economics and Management Universiti Pertanian Malaysia.
i i
Salleh Yahya October , 1988
TABLE OF COITDTS
Page
ACKNOWLEDGEMENTS . . . • • . . . . . . . . . . . . • • • • • • • . . . . . . . . . . . • . . . . . . ii
LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. v
LIST OF FIGURES . . . • . . . . . . . • • • . . . • . . . . . • . . . . . . . . . . . . . . . . . . . viii
ABSTRAK . . . • • • . • . . . . • . . . . • . . . . . . . . •••. . •. ••. •. •••. . . . . . . . . . ix
ABSTRACT . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . • • • . . . . • . . xii
CHAPTER 1 INTRODUCTION . . . . . • • . . . . . . . . • • . . . . . . . . . . • . . . . . 1
Paddy and Rice Industry in Malaysia . . . . . . . . . . .. . ... . . . . 1 The Paddy Postharvest System . . . . . . . . . . . . . . . . . ... . . . . . . . 10 Statement of Problem . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 18 Objectives of the Study. . . . . . . . . . . . . . . . . . . . . . .... . . . . . . 20 Import ance of the Study . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . 21 Thesis Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 23
CHAPTER 2 REVIEW OF LITERATURE . • . . . . . . . . . . . . . . • • . . . . . . . 24
Linear Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Nonlinear Model . . . . . . . . . . . . . . . . . . . . .. . . . . . . .. . . . .. . ... . 31 Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . .. 33
CHAPTER 3 MODEL SPECIFICATION, EVALUATION AND BAS IC EMPIRICAL RESULTS . . . . . . . . . . . ...... . . . . . . .. . . . 35
Theoretical Framework . . . . . . . . . .. . . . . . . . . .. . . . .. . . . . . . . . 35 Linear Programming . . . ......... . . . . . . . . . . . . . . ... . . . . 35 Sensitivity Analysis . .. . . . . .. . . . . . . . . . . . . . . .... . . . . 36 Net Present Value and Int ernal Rate of Ret urn.. . . . . 37
Model Specification . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 38 Main Features of the Paddy Postharvest system in
Bar at Lau t , Tanj ong Karang . . .. . . ...... . .. . . . . . . . . . . . . . 48 Definition o f Variables . . . . . ....... . . . . . . . . . . . . . . . ..... 51 Dat a Collection. . . . . . . . .. . .. . . . . . . . . . . . ... . . .. . . . .. . . . . 57 Basic Model Result s . . . ..... . . . . . . . . . . . . ..... . .. . . . . . . . . 59
iii
Page
Evaluat ion of the Kodel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1 Theore tical Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1 Calibrat ion tes t.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
CHAPTER 4
LPN Income and Cos t Data . . . . . . . . . . . . .. . . . . . . . . . 6 4 Kodel Results Compared with LPN fi gures . . . . . . . . 66
IKPROVEKENTS OF THE AC IAR KODEL . . . . . . . . . . . . . . 7 3
Nonl inear Kodel Speci f ication . . ... . . . . . ... . ... . .. . . . . .. 75 Solut ions of Nonlinear Kodel. . . . . . . . . . . . .. . . . . . .. . . . . . . 76
CHAPTER 5 FINAL RESULTS.. . . . . . . ... . . . . . . . . . . . ... . . . .... 80
Test ing Other Handl ing Sys t ems . . ... . ... . . . . . . . . . . ... . . . 80 Sensi t ivity Analyse s . . ... . . . . .. . . . . .. . . . . . . .. . . . . ..... . 85 Pol icy Implications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
CHAPTER 7 SUKKARY, CONCLUSIONS AND RECOMMENDATIONS. . . . . 94
Summary. • • . . • • • . • . • • • • • . . • • • • • • . . • • • • • . • • • • • • • • . . . • • • • . 94 Problem Set t ing . ...... . . . . . .. . . . . . .. . . . . . . . . . . . . . . . 94 Methodology. • • • • • • • • . • • • • • • • • • • . . . • . . • . . • . • • . • . • . • . 95 Empirical Result s . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 96
Conclus ions and Recommendat ions . .... . . . . . . . . . ... . . ... . . 98
BIBLIOGRAPHY . . . . . • • . . . . . . • • . . • . • • . • . . • • • • • . • • . . • . . . • . . • • • . 100
APPENDIX. . . . . • . . • • . . . . • . . • . . . . . . . . . . . . . . . • • . . . . . . . • • • • • • • • 105
iv
Table
1
2
3
4
5
6
LIST or TABLES
Self-Suf f i c iency Rate for Rice Peninsular Malays ia (1962-1985) . . . • . • • • • • . . . . . . . . . . • . . . . . .
Expenditure of Irrigation and Drainage Proj ect (1956-1985) . • • • • • . • • . • • • . . • • • . • • . • • • . .
Government Expenditure in Input and Product Subs idies (1981-1984) • • . . • . • . • • • • • . • • • • • . • . • . . .
Paddy Areas and Produc t ions in Peninsular Malaysi a Main and Off Seasons (1960-1985) • . . • . .
Paddy Purchased by Private Mills and LPN Complexes in Peninsular Malaysia (1983-1986) ...
Low Quali ty of Paddy Purchased by LPN Mills (1985-1986) • • • • • • • • • • • . . • • • • • • • . • . . . • • • . • • . . . . •
Page
4
6
7
9
14
16
7 The Coef f icient of Parame ters used in the
8
9
10
11
12
13
14
Model . . • . . • . . • • • • • • • . • • • • • • • • • • • • . • • • . • • • • . • • . • 58
Summary of Income and Cos ts for LPN Mills in Tanj ong Karang in 1986 from LPN Records • . • . . • • •
Model Result s Versus LPN Records . . . . • • • • . . . • . . •
Drying Cost obtained from Nonlinear Model . . . • . •
Result s of Basi c Run. LPN Record and Nonlinear Model • • • . . • • • • • • • • • • • . • • • • • • . • . • • • • • . . . • . . . . • . .
Optimal Solut ion of Semibulk. Semibulk with Drying Facili ties and Fullbulk Handling System • . . . . . . . • . . . . . . • . • . • . . . • • • . . . . • . • • . • • • . • •
Sum of Discounted Industry Gains and IRR • . . • • . •
Result s of Sens itivity Analysis • • • • • . • . . . • . . . • .
v
67
69
78
79
83
84
89
Appendix Table
15
16
17
18
19
20
21
2 2
23
24
2 5
2 6
2 7
28
29
30
List of Procurement Centres • • . . . . • • . . . . . . . . • . . .
Areas and Total Production of Paddy in Tanjong Karang • • • . • . . . . . . • • . • . . . . . . • . • • . • • . • . • .
Sawah Sempadan: Paddy Acreage and Production per Season • . . . . . . . . . . . . . . . . . . . • . • • . . . . . . . . . • . • .
Sungai Burong: Paddy Acreage and Production per Season . . . . . . . . . • . . . . . . . . . . . . . . . . . . • • • . . . . . . • . . .
Sekincan: Paddy Acreage and Production per Season . . . . . . • . . . . • . . . . . . . . . . . . . . . . • . . . . . . • . . . . .
Sungai Leman: Paddy Acreage and Production per Season . . . . . . . . . • . . . . • . . . . . . . . . . . . . . . . • . . . . . • . . .
Pasir Panjang: Paddy Acreage and Production per Season • . . . • • . • . . . . . • . . . . . . . . . . . • . . . . . . • • . • • • . • .
Sungai Nipah: Paddy Acreage and Production per Season . • • . . . • . . . • . . . . . . . . . . . . . . . • . . . . . . . . . . . . . .
Pancang Bedena: Paddy Acreage and Production per Season • . . . . . . . . . . . • . . . • . . . . . . . . . . . . . . . . • • . •
Bagan Terap: Paddy Acreage and Production per Season . . • . • . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • .
Sawah Sempadan: Distance between Production Blocks, Procurement Centres and Mills ......... .
Sungai Burong: Distance between ProductIon
Blocks, Procurement Centres and Mills ......... .
Sekincan: Distance between Production Blocks, Procurement Centres and Mills ................. .
Sungai Leman: Distance between ProductIon Blocks, Procurement Centres and Mills ......... .
Pasir Panjang: Distance between Production Blocks, Procurement Centres and Mills ......... .
Sungai Nipah: Distance between ProductIon Blocks, Procurement Centres and Mills ......... .
vi
Page
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
Appendix Table Page
31
3 2
3 3
34
3 5
36
3 7
38
39
40
41
42
4 3
44
45
46
47
Pancang Beden a : Distance between Production Blocks, Procurement Centres and Mills . . . . . . . . . .
Bagan Terap : Distance between Production Blocks , Procurement Centres and Mills . . . . . . . . . .
Distance between Mi lls and Final Markets . . . . . . •
Price of Rice used in the Model . . . . . . . . . . . .
Capacities used in the Model . . . . . . . . . . . . . . .
The Opt imal Flows of Paddy in Season 1 , Result f rom Basic Run . . . • • . . . . • . . . . . . . . . . . . . . . .
The Opt imal Flows of Paddy in Season 2 , Resul ts f rom Basic Run . • . . . . . . . . . . . . . . . • . . . . . . .
Inact ive Procurement Centres , Results f rom Basi c Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . .
The Amount of Paddy Transported in Basic
121
122
123
124
125
126
127
1 28
Run , Season 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 9
The Cost Components of the Optimal Solut ion i n Basic Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . .
The Actual Paddy Purchased in Tanjong Karang (1986) , from LPN Records . . . . . . . . . . . . . . . . . . . . . . . .
The Ac tual Amount of Paddy Transpor ted to LPN Mi l l s in 1986, from LPN Records . . . . . . . . . . . . . . . .
Drying , Mi l ling and Handl ing Cost of LPN Mills in Tanj ong Karang in 1 986, f rom LPN Records . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . • .
Income of the Mills in Tanjong Karang 1986, from LPN Records . . . . . . . . . . . . . . . . . ... . . . . . . . . . . .
The Transportat ion of Paddy in Tanj ong Karang and Result s f rom the Model in Season 1 . . . . . . . . .
The Transportat ion of Paddy in Tanjong Karang and Results from the Model in Season 2 . . . . . . . . .
Modi f ication Cos t s of Mills and Road Sys tem ..
vii
130
1 3 1
132
133
134
135
136
137
LIST or FIGURES
Figure Page
1 Paddy Growing Areas in Peninsular Mal aysia . . . . . . 2
2 Postharvest Sys t em of Paddy in Peninsular Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3 Map of Paddy Areas in Tanjong Karang . . . . . . . . . . . . 49
4 Paddy and Rice Transportation Sys tem in Tanjong Kar ang . . . . • . . . • . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . so
5 Paddy Ar ea in Tanjong Kar ang . . . . . . . . . . . . . . . . . . . . 5 3
viii
Abstrak tesis yang dikemukakan kepada Senat Universi t i Pertanian Malaysi a sebagai memenuhi sebahagian daripada
syarat-syarat untuk mendapatkan Ij azah Mas ter Sains .
PDGGUlAlR "SPATIlL IQUILIBRIUK lIlLYSIS" lCEPADA SISTEK LBPAS-TUAI PADI DI TlIJOIG llRlIG,
SEKDlIJUlG KALlYSIA
by
Salleh bin Yahya
October , 1988
Ketua Penyelia Roslan A. Ghaffar , Ph . D
Penyelia Chew Tek Ann , Ph . D
Fakult i Ekonomi dan Pengurusan
Pengendalian sistem lepas-tuai padi yang kurang sesuai dan
kelewatan didalam pemerosesan padi telah menyebabkan pembaziran
di dalam industri ini . Pembaziran adalah di antara 10 hingga 37
peratus, yang berlaku semasa penuaian , membant ing , pengeringan ,
penyimpanan dan pengilangan . Selain itu industri ini mengalami
masaalah penurunan kualiti padi , pengeluaran beras bermutu
rendah dan kos penggangkutan yang tinggi. Di dalam sistem lepas
-tuai padi diangkut dengan menggunakan guni , selain dari kos
pengendalian yang tinggi cara ini j uga telah menyebabkan
kelewatan di dalam pemerosesan padi yang ahkirnya menyebabkan
ix
perubahan warna dan pertumbohan kulat yang menurunkan nilai
padi dan beras .
"Spatial
menganalisa
equil ibrium mode l" telah d igunakan untuk
s i stem lepas- tuai padi di Tanj ong Karang , ser t a
mengenalpas t i
berasaskan
memaks imakan
cara-cara untuk memperbaikinya . Model ini
kepada program linear dengan obj ektif untuk
pulangan bersih tahunan . Tertakluk kepada dua
puluh sembilan persamaan batasan , yang me liputi batasan
pengedaran padi dan beras , keupayaan , kelewat an, pengendalian ,
harga, penawaran dan permint aan . S ituas i ekonomi j angka-pendek
telah d igunakan untuk mendapatkan keputusan yang opt ima dengan
cara pengubahsuaian di dalam sistem pengendal ian yang ada .
Keputusan asas dari model, dibandingkan dengan data
yang didapat i dari s i stem pengedaran sebenar padi di Tanj ong
Karang . Hasi l dar i per bandingan ini , didapa t i bahawa keputusan
dar i model adalah l ebih kur ang sama dengan data yang di dapat i ,
ini memberi keyakinan di dalam menggunakan model ini untuk
analisa selanj utnya . Model set erusnya diperbaiki dengan
menggunakan persamaan yang bukan linear . Wal aupun has i l dari
penggunaan persamaan bukan linear memberi keputusan yang
tepat, tetapi oleh kerana kelemahan di dalam per i s i an
yang ada , maka penggunaan persamaan bukan l inear t idak
d iteruskan di dalam analisa selanj utnya .
x
lebih
MINOS
dapat
Seterusnya model diubahsuaikan untuk men ilai prestasi
sistem-s istem pengendal ian lepas -tuai padi yang dicadangkan
serta menganalisa kepekaan keputusan t erhadap perubahan
koefisien pembolehubah-pembolehubah yang terten tu . Has i l dar i
anal isa menunjukkan bahawa s i s tem pengendali an s ecara separuh
pukal dengan kemudahan pengeringan di pusat bel i an adalah
s is t em yang s esuai diperkenalkan di Tanjong Karang . Kos
pembe lian padi, harga beras dan kadar pengil angan dari padi
ke beras merupakan pembolehubah-pembolehubah yang pent ing
di dalam industri ini .
xi
Abstract of the thesis presented to the senat e of Universi t i Pertanian Malaysia in partial fulfilment
of the requirements for the degree of Master of Science .
AN APPLICATION OF SPATIAL EQUILIBRIUM ANALYSIS TO THE PADDY POSTHARVEST SYSTEM IN TANJONG KARANG ,
PENINSULAR MALAYSIA
by
Salleh bin Yahya
October , 1988
Chief Supervisor Roslan A. Ghaf f ar , Ph . D .
Supervisor Chew Tek Ann , Ph . D .
Faculty Economics and Management
Paddy pos tharvest losses in Malaysia range between 10
percent to 37 percent . These losses occur during manual
handling in harvest ing of paddy , threshing , drying , storing and
milling . The maj or cause of these losses is attributed to
improper handling methods and inadequate handling f acilities .
In addition , the industry also f aces problems of deterioration
in paddy quality , low quality rice and high transportation
cost . In the present postharves t system , paddy is handled in
gunny bags . Besides being cost ly , this type of handling method
also causes delays in processing the paddy resulting in
xii
dlscoloration of paddy and rlce , development of moulds and
fungus causing loss of value .
A spat lal equ1librium model was used t o analyse the
eX1s t1ng paddy pos tharves t sys tem 1n Tanjong Karang as wel l a s
to determ1ne measures to 1mprove the 1ndus try . The model 1S
bas1cally a l lnear programm1ng model w1th the obJect lve
funct lon o f maxlml z lng net 1ndus try revenue . The model
constralnts conslst of twenty nlne set of equatlons relat lng t o
paddy and rlce f l ows , capacl ty, queulng, handl1ng , prlclng,
supply and demand . The short-run econom1C s1tuat1on 1S
s lmula ted 1n the model to f lnd the opt lmal solut ion . Resul t s
obt a1ned from the model show the opt1ma l f lows o f paddy and
rlce from product lon areas to procurement centres, mliis and
f lnal markets, together wlth the cos t s lnvolved 1n each o f the
act1v l t1es .
The baslc model results were f1rst callbrated agalnst
actual gra1n f lows 1n TanJong Karang area . It was f ound that
the theoret1cal resul t s were close to the actual graln f lows to
Jus t1fy conf1dence 1n uSlng the model f or further analysls . The
model was ref1ned by emploYlng a nonllnear drYlng funct lon. The
resul t s of the nonl1near model were more accurate compared to
resul t s from the l lnear model . However, due to the Ilm1tatlons
of the eXls t lng MINOS package, the use of nonllnear funct lon
cannot be extended to other actlv1t les.
Xl l1
Changes were then inf licted in the model to evaluate new
handling systems and the sens i t iv i ty of the resul t s to these
changes . The results indicat e that the semibulk handling system
with drying f acili t ies at procurement centres is a viable and
appl icable syst em that can be introduced in Tanjong Karang .
Purchasing cos t s of paddy, rice pr ices and rice r ecovery rates
are the mos t s ensit ive vari ables in the industry .
xiv
CBlPTER 1
IITRODUCTION
Paddy and Rice Industry in Kalaysia
At present, paddy is cultivated on approximately 422
million hectares of land throughout Peninsular Malaysia ( see
Figure 1 ) . Of this total area , approximately 300 million
hectares have been provided with i rrigat ion and drainage
facili t ies . The major irrigation areas are found in
Kedah/Perlis , Pulau Pinang , Perak , Selangor , Trengganu and
Kelantan .
Paddy industry has played and continues to play an
import ant role in the socioeconomics of the country . Malaysians
consume rice f or their maj or source ( 50 to 60 percent ) of
calories (Zulki f li, 1 9 8 5 ) . Rice also accounts f or a major part
of the total household expenditure on f ood items in Peninsular
Malaysia, with the percentage of 24 . 1 percent (Household
Expenditure Survey, 1 973) . From a household income survey
reported in 1984 approximately 116, 600 households were known t o
b e involved in paddy cUlt ivation .
1
2
N
+
,.!. ". ' . ;. PAHANG . . �:. ', .... -. .. I. ';1
'. "
• PADDY GROWING AREAS
Source: Minis try of Agriculture
Figure 1 Paddy Growing Areas in Peninsular Malaysia
3
1 The incidence of poverty among paddy cultivators is 57
percent , making it the group with the highest incidence of
poverty in the agriculture sector (Fifth Malaysia Plan ) .
Despite the employment of approximately 20 percent of the total
labour force and 57 percent of the available agricul ture land
for f ood crops for rice cult ivat ion (Economic Report , 1 9 84 ) ,
Malaysia lS s t i l l unable to achieve self -suf f i ciency in rice
( Table 1 ) . The government has to import rice from other
countries such as Thailand , Burma , Aus tral i a , Pakistan and the
Uni t ed States of America t o satisfy consumption requirements .
In 1980 , the amount of rice imported was 167 , 000 tonnes . The
amount increased to 426 , 000 tonnes in 198 5 , which is equivalent 2
to M$255 million (Paddy Statistic , 1980-19 8 5) . It i s estimated
that current ly imported rice satisfy about 30 to 40 percent of
the country's consumpt ion needs .
The Mal aysian government has made a lot of ef fort s t o
upgrade the paddy and rice industry . Effor t s i n this direction
include irrigation and infrastructure development , input and
out put subsidies , research and extension , f armer training , f arm
mechanisa tion, credi t , as well as providing process ing and
marketing facilit ies . Since 1957 till 1 98 5 , the government has
granted total input and output subsidies of not less than
HS2 , OOO million to the paddy and rice sector (Alwi , 1986 ) .
1
2
Households ( averaging 5 . 5 members ) with income of less than $ 137 . 5 per month are considered poverty ( Problem and Rural Poverty in Malaysia , 198 3 ) .
One US$ = 2 . 4 H$ in February 1987
Table 1
Self-Suff iciency Rate for Rice , Peninsular Malaysia , 1962-1985
4
===============================================================
Year
1962 1963 1964 1965 1966 1967 1968 1969 1 9 70 1 9 7 1 1 9 7 2 1973 1974 1 9 7 5 1976 1977 1978 1979 1980 1981 1982 1983 1984 198 5
Self -Suff iciency Rate ( % )
6 7 6 2 60 72 7 6 7 0 7 7 7 4 7 8 87 91 88 8 5 9 5 9 1 8 7 7 4 92 98 90 81 86 7 7 7 5
===============================================================
( Source : Malaysian Ministry of Agriculture Paddy stat i s t ic various issues )
Note Self-suf f i ciency t arget in 1985 is between 80 to 85 percent
5
The government's major investment is in infrastructural
development, focussing on the provision of drainage and
irrigation f aci l i t ies as can be seen in Table 2 . The amount
s pent f rom 1 9 5 6 to 1 960 on irrigation and drainage is MS3 2 . 0
million and this had been increased t o M$1424 . 6 million f rom
1 9 8 1 to 1 9 8 5 .
The paddy price subsidy scheme is an extension of the price
support scheme , whi ch was s t arted in 1949 . Under this scheme ,
f armers were given a coupon valued at M$33 . 05 per tonne of
paddy sold . Thi s was in February 1 9 80 . In 1981 the value of
subsidy was revised to M$16 5 . 00 per tonne .
In addition there is input ( fertili zer ) subsidy s cheme .
This f er t i l izer subsidy scheme was s t arted in 1979 with the
obj ective of encouraging farmers to use f er t i lizer as well as
to reduce their production cos t s . Under this scheme , f armers
with less than 2 . 4 hectares of paddy f ield were given free
fertilizer of 4 kilograms Ammophos, 40 kilograms Urea and 80
kilograms Mixture for each 0 . 47 hectare they plant .
To support these two schemes, the government spent
approximately $696 mil l ion for the period 1981 to 1984 ( Table
3 ) • Research on various aspects of rice especially developing
were also carried out by MARDI (Malays ian
Research and Development Ins t itute) . S ince 1972
new variety
Agriculture
about 1 5 improved paddy varieties were released
the varieties are hybrid Ma1inj a , Amongst
to f armers .
Mahsuri , Ria ,
Bahagia , Murni , Masria , Setanj ung , Sekinchang and Kadari a .
6
Table 2
Expenditure of Irrigation and Drainage Proj ects (K$ Kil lion)
===============================================================
Period
1 9 5 6 - 1960
1961 - 1965
1 966 - 1 970
1971 - 1 9 7 5
1 9 7 6 - 1 980
1981 - 1 9 8 5
Actual Expenditure
3 2 . 0
96 . 7
2 7 3 .7
2 1 7 . 8
5 54 . 8
1424 . 6
==================================================�============
Source : First and Second Five Years Plan . : First to Fifth Kalaysian Plan.
7
Table 3
Government Expenditure in Input and Product Subsidies (MS )
===============================================================
Year
1981
1982
1983
1984
Grand Total
Input Subsidy ( Fertilizer )
1 30 , 000 , 000
8 7 , 4 50, 000
7 9 , 90 3 , 016
7 3 , 45 7 , 760
Product Subsidy (Price )
105 , 43 8 , 3 5 4
8 3 , 3 94 , 47 1
60 , 3 3 2 , 394
7 3 , 45 8 , 000
Total
2 3 5 , 43 8 , 3 5 4
1 7 3 , 844 , 4 7 1
140 , 23 5 , 610
146 , 91 5 , 760
696 , 434, 1 9 5
===============================================================
( Source : Ministry of Agricul ture)
8
These are short-t erm varieties with potent ial yield between 3
to 5 tonnes per hectare ( Chen Yok Hwa , et al . , 1 980) . To
complete the incent ives, the government in add i t ion , has also
set up credit and market ing faci l i t ie s , with the format ion of
Bank Pert anian and Lembaga Padi dan Beras Negara (LPN)
respect ively .
The goverment incent ives have had a pos i t i ve effect on the
product ion of paddy in Malaysi a . In 19 60 approximately 303 , 00
hect ares of land was plant ed wi th paddy, producing 7 5 6 , 000
tonnes of paddy . By 1981 , the total plant ed area had risen to
5 6 1 , 000 hectares . Thi s increase was mainly due to the r i s e in 3
off-season crops as a result of the double-cropping system .
The percent age of double-cropping increased from 2 percent of
the to tal paddy area i n 1960 to 37 percent of the tot al paddy
area in 1981 ( Table 4 ). However , s ince 1 9 8 2 the tot al planted
areas had declined . Var ious reasons have been ci t ed for this
declined . The decline has been attribut ed among other things ,
to late plant ing of off-season crops , pest and diseases, poor
water management , and the domestic policy of concentrat ing
production in the more cost-efficient areas (Economic Report,
1986/87).
3 Paddy planted in the main season i s generally harvested during the months of February to Apri l which is the dry season . For the off-season crop , harvesting is normally done during the months of July to October , which is the wet season.
