Who’s profiting from higher food prices? Certainly not the rice farmers

Some people are making big bucks from the higher prices of food, including rice.

But not the farmers.

The Star (8 May) carried this tiny report on page 32 – it should have been front page headlines, Chun Wai! – telling of how over 2,000 rice farmers in the country’s “rice bowl” state of Kedah are now threatening to turn to oil palm cultivation because of the low price they are getting for their padi.

And who can blame them? Many of them are just hovering around the poverty line. The farmers want the padi price to be raised from the current ceiling of 65 sen/kg to RM1/kg. They complain that they have to sell their padi cheap, cheap but when they buy rice, the price is between RM2.20-2.80/kg. Where got meaning? (There’s no ceiling price for rice.)

“Farmers have to absorb the escalating costs of fertilisers, pesticides, herbicides and seeds,” said Ramli Kasa, the Aman C-III Area Farmers Organisation chairman, in The Star report.

So it’s obviously not the farmers who are making big bucks. It has to be the parties in between the farmers and the consumers, right? And the speculators…

Meanwhile, Bernas, which was privatised in 1996, made a profit before tax of RM178 million for its 2006 financial year. Are you surprised? Bernas handles rice imports and local distribution.

Top 5 Shareholders (as of 19 April 2007)

Source: Bernas website

Budaya Generasi is controlled by Syed Mokhtar Al Bukhary.

And of course the share price of Bernas has been surging over the last year even as the rice farmers suffer. There is now talk that Bernas will be taken private. With rice prices surging, it’s a good time to ensure a monopoly of profits as well, eh?

See this Business Times report:

Bernas surges on talk it will be taken private

SHARES of the country’s only licensed rice supplier, Padiberas Nasional Bhd (Bernas), closed at their highest in more than two months yesterday on renewed speculation that it will be taken private.

The stock rose 2.4 per cent to close at RM2.13.

Budaya Generasi (M) Sdn Bhd, controlled by Tan Sri Syed Mokhtar Al Bukhary, holds 31 per cent of the company.

Other major shareholders like Wang Tak Co Ltd and Lembaga Tabung Haji have been raising their stake in Bernas over the last year or so.

Fund managers said the rumour of a buyout is not new.

“The share price has been rather firm these few weeks, bolstered by the continued purchase of the company’s stock by existing shareholders,” Philip Capital Management’s Ang Kok Heng said.

Actually, we have neglected our rice farmers for far too long. At one time, we were 90 per cent self sufficient.

Then along came Mahathir. He looked down on agriculture. Instead of ensuring that we could produce enough food to meet the needs of the population, he pursued heavy industrialisation – with all its attendant failures and shortcomings – like a man possessed. Under his administration, Universiti Pertanian Malaysian was changed to Universiti Putra Malaysia.

He was not alone. Many other Malaysians also felt we could always import cheaper rice – comparative advantage, they said, using an economic term; so why bother about food security and self-sufficiency? Today, such irresponsible neglect of agriculture has come back to haunt us with rising food prices.

The newspapers tell us that we are only 70 per cent self-sufficient in rice. But a Bernama report on 19 April had this give-away line:

Malaysia, which imports between 700,000 to 800,000 tonnes annually to complement its 1.1 million local production, buys about 50 to 60 percent from Thailand and the rest from Vietnam, India and Pakistan.

Let’s do the calculation:

Local production 1.1 million tonnes divided by total rice requirements (1.1 million tonnes + 750,000 tonnes) = 59 per cent self sufficiency.

No wonder we are vulnerable to rising prices and speculation in food prices.

Is there an alternative to the pesticide-intensive corporate model of agriculture?

How about organic farming? Now, before you say, “Come on, be realistic, it will never be enough to feed the whole country!”, check out the video clip below featuring the amazing organic farming revolution in Cuba, which had the BBC presenter enthused with obvious admiration.

In Malaysia and elsewhere, young people are turning away from farming in rural areas and migrating to towns.

But in Cuba, many young people and professionals are actually turning to farming – even in their towns and back gardens – and taking obvious pride in it. They see themselves as making a useful contribution to local communities. They use natural pesticides – and the vegetable farms are close to the markets; so they cut down on transport costs too.

Let’s give a major role to organic agriculture – which has a tremendous global market potential in the face of the GM food menace and the onslaught of pesticide-laced food products.

Remember, we can’t eat semiconductor chips.

So there’s nothing to stop us from emulating the Cuban farming revolution.

Have a look at this piece I wrote for IPS to discover the likely culprits behind rising food prices.

MALAYSIA: Food Futures Behind Rising Prices
Analysis by Anil Netto

PENANG, May 6 (IPS) – With stock markets and the property sector in the United States weakening, speculative investors are turning to fuels and the food sector as a “safe haven”, driving up prices in the process, say some food security activists.

This is the logical sequence from the transformation of food from a basic human need to an economic ”commodity”, they point out. This has made it a lot easier for investors and trading houses to regard agricultural food as a legitimate target for speculation, hoarding and market manipulation, especially though the futures market. Full article.