Govt keen on maintaining SGM in breaking rice monopoly


THE single gatekeeping mechanism (SGM) remains a viable option for the management, distribution and import of rice as the government seeks to safeguard the country from food shocks and volatilities.

Agriculture and Agro-based Industry Minister Datuk Salahuddin Ayub (picture) said the existence of a single party to safeguard the rice industry would ensure speedier actions in the event of supply chain disruptions.

“If we are considering food security, the industry would be better if it is controlled by a single party which practises a standard operation.

“If anything happens, we can swiftly detect the root of the problem and prevent it from getting worse,” he told The Malaysian Reserve (TMR) in a recent interview.

There were calls from certain parties for the government to pull the shutter on the rice monopoly enjoyed by Padiberas Nasional Bhd (Bernas). They claimed the opening of the sector would allow the import of cheaper rice.

Bernas, the country’s sole rice importer, fired back, claiming that other companies may not import the commodity if price rises to avoid selling the commodity at a loss.

Rice price spiked to about US$1,000 (RM4,130) a tonne in May 2008 compared to about US$220 in early 2004, for example, sending many parts of the world on the brink of a food crisis. But rice prices in Malaysia at that time remained the same due to SGM.

Salahuddin said among the monopoly cases being discussed, the committee is prioritising the gatekeeper role for the rice industry as it involves the food security of Malaysians.

“We have to look at the big picture to study the whole supply chain, its ecosystem and social impact.

“It is easy to be the wholesale importer for rice, but it is not easy to guard the rice industry and be responsible for the country’s food security. They have to supervise the stockpile and farming application of the local farmers, not only rice import,” he said.

Salahuddin added that the government is considering two models in breaking up the monopolised industry — either issue an open tender bidding for SGM or establish a new model where multiple companies are appointed as the gatekeepers.

“We will provide several options and we are considering opening a tender when Bernas’ concession ends. It would be open to the best companies who can do as good a job as Bernas, or maybe even better than that.

“Through this model, we would maintain the SGM. However, considering the numerous interests in the role by others, we could open the responsibility to several companies,” he said.

Salahuddin added that the ministry requires six more months to single out the best options before they can be presented to the Cabinet for a final decision.

“This is not about being the national rice importer, it is about safeguarding the rice industry.

“Bernas, for many years, has succeeded in safeguarding the country’s food security, which is why we have to be very careful. We don’t want any issues to arise when we break the monopoly.

“We should not rush into this. We need more time, maybe about six months as the concession ends in January 2021,” he said.

The local rice industry has been solely managed through the SGM, which was established over 45 years ago.

Bernas, through the mechanism, was appointed as the guardian for the country’s rice management to prevent a food crisis and be the buffer in the event of it.

According to reports, Bernas incurred losses of over RM70 million during the rice crisis between 2008 and 2009 due to higher import prices, while keeping transacted prices at the lower end.

In addition to its role as the national importer, the rice company is tasked to safeguard and guarantee the livelihood of more than 300,000 farmers in the country.

At present, Bernas imports about 700,000 to 800,000 metric tonnes of rice per annum, while the stockpile stands at 150,000 metric tonnes per year.