July 31, 2008

An Old Warhorse, but Still Relevant

By Datuk Mohamed Shariff Abdul Aziz

I WOULD like to clarify a few points pertaining to the issues brought up by Datuk Seri Effendi Norwawi in the report "To succeed, put one person in charge" (NST, June 29), and especially his statement on the role of the Federal Agricultural Marketing Authority (Fama) in the agricultural development in Malaysia. He stated that "you can only go so far flogging an old horse like Fama".

In the agro-food production, we are dealing with some 350,000 farm families and their farms, spread over the whole length and breadth of the country. About 90 per cent of the traditional farming of agriculture food is dominated by uneconomic-sized farms operated by smallholders. More than half of individual farmers, totalling about 58 per cent, have farms of less than one hectare. About 80 per cent of all farmers in Malaysia are subsistence farmers.

Such small-scale operations usually have high costs of production, low output yield and poor quality of produce due to a low rate of technology adoption and mechanisation. Smallholders are independent farmers mostly with the cultural mindset of not wanting to pool resources, particularly where land is involved, in order to gain economies of scale in agro-based production processes.

To transform subsistence agriculture to commercial agriculture, priority must be accorded to changing the mindset of the farmers involved. The way to achieve this is "to leverage on the professional commercial arms of the government in Khazanah and Sime Darby", as suggested by Effendi, but this may not be the only approach in tackling the problem.

These farmers, being the smaller and more disorganised element of the food supply chain, often lack bargaining power and therefore get a raw deal from the traders who buy their produce. Fama's direct intervention through trading in the smallholders' produce bolsters the bargaining power of these farmers.

With the focus wholly on the smallholders' produce, Fama has successfully set up 270 farmers' markets generating over RM350 million in yearly sales benefiting some 13,000 farmer entrepreneurs. Supplies to these farmers' markets are from the farmers themselves or from contract farmers. About 36,000ha of contract farming involving 22,000 farmers have been assisted by Fama.

RM100 million worth of agro food products from the smallholders have been handled by collection centres and operation centres set up by Fama throughout the country.

About 350 fruit stalls have been set up along roadsides, generating over RM80 million in sales yearly for smallholders. As for the yearly production of seasonal fruit, Fama's intervention in mopping up excess production during peak periods has an added value of some RM50 million yearly to the smallholders, who will otherwise face depressed prices throughout the season.

Other services by Fama include export facilitation and expanding the export base of our horticultural products, market expansion for small- and medium-sized enterprises' food products, and setting up market infrastructure at the farm level.

There is a lot more to be done and there still exist imperfections in the supply-chain management of the smallholders' agro produce which have to be addressed by Fama.

It may not have yet met the highest expectations of its target group but it is definitely on the right track and on the fast track at present. Fama may be an old horse, but is a trusted old horse that delivers.



Federal Agricultural Marketing Authority

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