Supply chain of our rice; what the ETP missed out

ARCHIVES 2010

By admin-s On Oct 21, 2010

So why Malaysians are paying for their rice twice? Do we have to do that? What Bernas can do that the MOF can’t do?

By Lee Wee Tak

The 2011 election budget has attracted the proper criticism as reverting to the past spending spree on expensive construction projects in already overcrowded and over taxed part of Malaysia without wide spread, tangible and real benefit to Malaysians.

PKR’s Latheefa on World Food Day served a rightful notice telling the government the need to priortize food security.

I have always wondered aloud why purchase power parity and quality of living in Malaysia is inferior to developed nations. Sure, corruption plays a part but what about the structure of our supply chain? Should BN administration not look at this when they do that Economic TRANSFORMATION thingy?

If the supply chain is too long, there are more middle men and the end consumers have to pay more.

My Japanese friend told me that the sushi here is nowhere as good as the Japanese ones because of the inferior rice here; and from personal experience, I do find the rice in Hong Kong is of superior quality.

Since almost all Malaysians have rice as their staple diet, I decided to look into its supply chain, which takes me to Padiberas Nasional Berhad (“Bernas”)

Source: Padiberas Nasional Berhad, Annual Accounts and Reports 2009.

It certainly has a big role to play in the food security of Malaysians whereby it is in charge of subsidies, stockpile, retailing, procurement, manufacturing and everything else relating to rice, bar cooking it.

According to its Chairman’s speech in the 2009 annual accounts and reports, Dato’ Wira Syed Abdul Jabbar Bin Syed Hassan stated,

“At the outset, I must say that we have discharged our responsibilities well to the extent that at the height of the crisis, BERNAS practically had to forego its profit objective for national interest; in fact we posted a record loss in 2008. After the dust has settled, what is clear is this – we had done our job well.”

hmmm….Dato Wira admitted that BERNAS, a company where Minister of Finance holds 1 Special Share with veto power and a monopoly of staple diet of Malaysians, are in for PROFIT.

Oh yes the sacrifice of 2008 was celebrated, but take a look at his next statement a few paragraphs later.

I am also pleased to report that profit, revenue and volume of rice sold recorded in 2009 were the highest since BERNAS’ privatisation.

Talk about coming back with a vengeance. Is this privatisation necessary? Why Malaysians have to pay additional middleman profits? Can’t the well remunerated Barisan Nasional Federal Government with more than 50 years track record operate rice system without this middleman at Malaysians’ expense?

Bernas’ reported that revenue (read: amount paid to additional middleman) increased from RM2.2 bil in 2005 to RM2.5 bil and RM3.3 bil in 2008 and 2009 respectively; while the profits for 2005 till 2009 are as follows:

2005 + RM131mil

2006 + RM135 mil

2007 + RM107 mil

2008 – RM57 mil

2009 + RM180 mil

So Bernas “claw back” its “losses” of 2008 immediately. The profits above is actually additional cost to Malaysians, probably a hidden form of taxation.

The RM3.3 bil works out to be RM120.74 per person over total population of 27 million so if papa works to support a family of 5, that’s RM603 per year for him. Additional RM50 on your food bill a month, please, thank you very much.

The amount looks bearable (for some) until you read note 31 to the accounts “Paddy Price Subsidy Account” which states that pursuant to the Corporatization Agreement of 1996, the government shall pay rice subsidies into banking institutions and Bernas is suppose to disburse the subsidies.

The audited accounts specifically mentioned that the above account is not part of Bernas assets and liabilities, hence an off balance sheet finance.

In 2009, RM600 million subsidies were disbursed from opening balance of RM75mil plus 2009 subsidy funding of RM599 million.

So why Malaysians are paying for their rice twice? Do we have to do that? What Bernas can do that the MOF can’t do?