MD Razi Kamis is already struggling to make ends meet with the erratic income he gets from his padi fields in the Gunung Keriang area of Kedah.

When the 44-year-old heard that the new Pakatan Harapan government was cutting fertiliser and pesticide subsidies to farmers like him, his heart sank as he could potentially lose half the income he makes each season.

“I will definitely suffer,” said the resident of Kg Gunung Hulu, a 12-minute car ride from the state capital of Alor Star.

“It’s hard enough getting any income from my fields now because the cost to plant, maintain and harvest padi is high,” said the farmer who works 6 “relung” – the local measurement for padi fields. One hectare is equivalent to 3.5 relung.

“Some seasons, you hardly make any profit from your fields,” he said, adding that he is unsure if he will still be able to plant padi if the subsidies are slashed.

“For sure, anyone working on two to three relung will just have to give it up. You’ll never be able to make up the cost if the subsidies are cut.”

Hamdan Hassan, a coordinator for Muda Agriculture Development Authority’s (Mada) padi programme in neighbouring Perlis, said 70% of farmers work on fields which are less than five relung each.

Putrajaya’s decision to reduce subsidies and to stop off-season allowances for farmers was announced in the 2019 Budget. Fertiliser subsidies for padi farmers were slashed from RM465 million in Budget 2018 to RM230 million.

This had angered even government backbenchers, such as Hassan Abdul Karim of Pasir Gudang, who questioned whether the government was abandoning the nation’s poorest.  

The reduction of subsidies is also seen as awkward as the administration’s agriculture policy is aimed at increasing food security by boosting domestic production.

Income slashed

There are an estimated 50,000 padi farmers in Kedah and Perlis, who together supply 40% of all rice consumed in the country.

The biggest cost for farmers is rent and depending on location, it can be as low as RM300 to RM1,000 per relung.

Hamdan, who farms in Perlis, rents his plots for between RM300 and RM600 per relung. Razi and his neighbours in Keriang are charged between RM800 and RM1,000 per relung.

The next big expenses include labourers to till the land, plant the seedlings, spread fertiliser and spray pesticides. A farmer also has to rent a harvester and the lorries used to transport his grains to the rice mill.

In Perlis, such expenses total an average of RM1,200 per relung. In Kedah, it can come up to RM1,500 to RM1,600 per relung, said Kasim Murad of Kg Gunung Hulu.

Each season, the government provides six bags of fertiliser per relung and a RM200 voucher to purchase pesticides from Mada, the agency tasked with overseeing padi production in Kedah and Perlis.

“If the government reduces these subsidies by half, our costs could go up by an extra RM150 per relung if we have to buy half of the fertilisers we need,” said Kassim, 50.

In contrast, the farmers in the Gunung Keriang area only made between RM300 and RM400 per relung in the last planting season earlier this year, said another farmer, Md Isa Saad.

For these farmers, the money they make from each relung could be slashed by half if the government goes through with its plan to cut subsidies.

Everyone wants a slice

Like his neighbours, Hamdan does not agree that subsidies should be cut but explains why farmers make so little despite all the government aid.

Subsidies are originally to help farmers with the cost of operations, said the 50-year-old who works 26 relung in the Kuala Perlis and Kangar areas.

The problem is that when the government announces a subsidy, every player in the padi and rice industry also raises prices.

“When the guys who own the land, who rent the tractors, see the farmers get more money, they also raise their prices to get a slice of the action.”

So in the end, the extra savings farmers make when their cost for fertiliser and pesticide are lost when the price for other services go up.

“Farmers usually only see extra savings in the first or second seasons after a subsidy is announced. After that, the prices for other things are raised so those savings disappear. We are then back at square one.”

But if the government reduces subsidies, the price of those costs still remain high, said Hamdan, adding that subsidies which were supposed to help boost incomes have now become normal and necessary for padi planting.

The farmers The Malaysian Insight spoke to, however, said what the government should do is to weed out those who are receiving and abusing these subsidies.

“There are people who declare they have six relung for instance, but in reality, they only plant on four. So the extra fertiliser they receive is sold off,” said Razi.

Fertiliser factories, such as the one in a recent Sinar Harian report, are also responsible for misappropriating the padi subsidy scheme.

“Some companies would buy from farmers, repackage the stuff and sell to oil palm estates, for instance,” said Hamdan.

“The government should plug these leakages and re-register the farmers first before cutting the subsidy.” – December 7, 2018.