The Malaysian government does not have a special fund dedicated to help raise the rubber prices in the country, according to the country’s Ministry of Plantation Industries and Commodities (MPIC) and its minister Datuk Seri Mah Siew Keong.
However, the government is still concerned about the impact of falling prices on the incomes of smallholders.
In response to a question from Datuk Seri Abdul Hadi Awang, president of the Pan-Malaysian Islamic Party (PAS-Marang) at the Dewan Rakyat, which is the lower house of the Parliament of Malaysia,Mah said that the Rubber Production Incentive (IPG) scheme has already been implemented by the government since 2015.
The IPG scheme is aimed at reducing the burden on smallholders affected by falling rubber prices and ensure sufficient supply of raw materials to the downstream rubber industry.
According to Mah, starting in 2016, the IPG will be activated when the price of SMR20 Free on Board (FOB) is at RM5.50 per kg or when the price of cup lumps hits RM2.20 per kg. The incentive that will be provided is the difference between market prices and the Price level Activation (PHP).
“This measure will enable smallholders with cup lump productivity of 3,000 kilogrammes/hectare/year and two hectares of land to enjoy a monthly income of RM1,100,” he explained.
As of September 2016, Mah said that 349,248 smallholders nationwide have made claims under the incentive involving a payment of RM50.98 million, said Mah.
The Malaysian government has also allocated RM200 million to fund the IPG, Mah said.
Since November 2014, the government has also implemented a price fixing mechanism at farm-gate level through a fixed business margin i.e. the price between SMR 20 FOB and the price received by the smallholders, he said.
“This mechanism involves the participation of 64 cooperatives in rubber transactions, and the objective is reduce the role of middlemen,” he said.
To this end, the government has allocated RM6.4 million as revolving capital for cooperatives, he said, adding 18 cooperatives are now involved in rubber transactions, offering an average of RM0.10 to RM0.20 higher prices per kg compared to licensed rubber buyers.