MTEM senior fellow Ahmad Yazid Othman believes reestablishing LPN can address the shortage of local rice and control rice distribution, as well as save Malay rice millers from going out of business.
LPN was established in 1971 to manage rice and padi supplies as well as monitor the structure of fair and stable pricing for local farmers.
However, it was dissolved after a privatisation exercise in 1996, leading to the formation of the Padiberas Nasional Bhd (Bernas) – the nation’s sole rice importer.
“Bring back LPN to manage and supervise the supply of rice and padi more effectively,” Yazid said at a joint press conference here with the Malay Rice Millers’ Association (PPBMM).
“Currently, rice is controlled by private entities, not government-linked companies or the government. This causes it to be monopolised by certain parties.”
Yazid said LPN helped establish 300 Malay mills but these mills started going out of business after LPN was privatised – leading to the emergence of rice cartels.
He also urged the Malaysia Competition Commission (MyCC) to fine rice cartels, noting how it had fined five companies a total of RM415 million last month for forming a “chicken feed cartel” to fix prices.
PPBMM chairman Mohamad Termizi Yop, meanwhile, claimed that the monopoly on padi purchases by “giant” rice millers had caused many Bumiputera mills to close down as they were unable to secure enough purchases to cover operating costs.
He appealed to the government to establish a maximum padi purchase quota of 20,000 metric tons for each mill in each season and to review transfers between states.
Earlier today, MyCC said it would meet with the padi and rice regulatory division under the agriculture and food security ministry.
While it did not specify the reason for the meeting, it said that it had written to the division last October to “understand and discuss” the problems surrounding the padi and rice industry so as to provide input on concerns relating to competition.
On Jan 4, the agriculture and food security ministry denied the existence of any cartel that controlled the prices of rice, padi and padi seedlings.
Previously, the Coalition of Rice Millers Malaysia claimed that rice cartels controlled over 60% of the country’s rice production, causing problems in the supply of padi seedlings and rice.
Its chairman Marzukhi Othman had claimed that four to five major companies were involved in controlling padi mills and that they wielded considerable influence in setting the prices of padi, rice and padi seeds.