AGRICULTURE-MALAYSIA: Big Top-Down Farm Revival Powered By Business

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Anil Netto

PENANG, Jul 30 2007 (IPS) - The Malaysian government is unveiling an economic master-plan that it hopes will "revolutionise" farming and transform the economies of four northern states.

Planners say the blueprint will raise farmers&#39 incomes but activists are concerned that it will instead make them more dependent on a small group of large corporations, which could take control of the entire food production chain from seed to retailing.

Prime Minister Abdullah Badawi is expected to launch the Northern Corridor Economic Region (NCER) master-plan on Monday while on a two-day tour of the states of Kedah, Perlis, Penang, and Perak. He will unveil a host of projects, which could add up to some 50 billion ringgit (15 billion US dollars) until 2025.

The NCER is the second of five regional development plans to be launched. The corridor&#39s blueprint, designed by plantation conglomerate Sime Darby, focuses on agriculture, the electronics and electrical sectors, manufacturing and tourism.

A major thrust of the plan is to "modernise" agriculture through commercial farming methods in the NCER and turn the northern &#39&#39rice bowl&#39&#39 region into the country&#39s main food production centre.

Abdullah is launching a new seed research and development centre in Perlis to be built by Sime Darby, a government-linked company. The firm is expected to collaborate with Chinese experts and come up with hightech seedlings for export and local sales.

Sime Darby is currently merging with two other local plantation giants into a new mega plantation group, Synergy Drive, which would be the world&#39s largest listed palm oil firm. Sime Darby also has a 30 percent stake in British retail group Tesco, which has a string of hypermarkets in Malaysia.

Once the master-plan is launched, Sime Darby will step back – supposedly to avoid a conflict of interest – and allow a Northern Corridor Investment Authority, chaired by the prime minister, to implement the blueprint.

In its survey of the &#39rice bowl&#39 region, the firm&#39s top executives reportedly discovered serious problems: families living below the bare subsistence level and farmers earning sub-poverty line incomes; small plots of agricultural land of less than 1 ha each with only a single annual crop cycle; and an alarming school drop-out rate.

Its solution: target these drop-outs early for skills training, and identify and train a small core group of 30 farmers, who would be the forerunners of contract farmers.

Sime Darby CEO, Ahmad Zubir Murshid, told the Edge business weekly that his firm would introduce mechanised agro-business methods on a 700-acre model farm to this core group of pioneer farmers, who would be paid monthly salaries higher than the average farmer&#39s income.

The contract farmers, once trained, would work on land allocated to them by the government or on plots merged through cooperatives.

Sime Darby would sell seed and supply recommended fertilisers to the contract farmers and later buy their produce for processing in plants that it would jointly own with the state and other entrepreneurs. The plantation giant would then market the processed food, which would be branded, through its distribution channels, especially through Tesco.

The patented &#39&#39mother seed&#39&#39 would be sourced from a &#39&#39renowned&#39&#39 foreign institution, which would work in a joint venture with Sime Darby.

&#39&#39The seed has potential in terms of revenue for us,&#39&#39 said Ahmad Zubir. &#39&#39What we are looking at are the 10 most popular seed crops in the market now…I&#39m looking at this from the business point of view – where we produce the seed and sell the seed (to farmers).&#39&#39

These popular crops include tomatoes, chilli, watermelons, potatoes and corn. Ahmad Zubir also anticipates that farmers could increase their incomes significantly by planting corn in between paddy seasons.

Civil society activists have expressed disquiet. "It&#39s going to be a disaster,"&#39 said opposition political activist Jeyakumar Devaraj. If the government really wanted to develop farming, it should adopt a bottom-up, people-based approach using cooperatives and using inputs based on the farmers&#39 knowledge, he said.

They are instead working towards a situation where food production from seed to retailing will be controlled by a few corporations, whose primary aim is to maximise profits, he told IPS.

Charles Santiago, coordinator of the Kuala Lumpur-based Monitoring Globalisation think tank, pointed to the rising cost of pesticides and fertilisers, which could land farmers further into debt.

Even if companies are set up, it is not clear if the farmers would be given equity and profit-sharing, he said. "What they are really doing (is) using a government-linked company and foreign multinational corporations with expertise in seeds, fertilisers and pesticides, and the entire project is underwritten by the government," he told IPS. "This is a classic case of government subsidy for private capital."

For Sarojeni Rengam, executive director of the Pesticide Action Network&#39s (PAN) Asia Pacific office in Penang, the main concern is contract farming. "It moves the farmers from decision-making roles to passive receivers of inputs and technology," she told IPS.

She added that all the risks would be borne by the contract farmers, who would have to absorb losses if there is crop failure.

She was also concerned about the use of corn. &#39&#39There is a strong likelihood they might use genetically engineered seeds such as Bt corn or a herbicide tolerant corn – because they are talking about high technology.&#39&#39

Devaraj pointed to a larger trend. &#39&#39The whole approach to the management of the nation&#39s resources has been based on the misconception that the free market and the private sector can supply the goods and services more efficiently in all sectors of the economy.&#39&#39

He stressed that this belief had been disproved by the excessive expenditure on privatised health care in the United States and failed water privatisation in Manila. &#39&#39Yet our planners are putting their full trust in the private sector and the free market approach.&#39&#39