KUALA LUMPUR (March 29): The government will not set a floor price for rubber as this requires a large source of income to fund the mechanism, said the Plantation Industries and Commodities minister Datuk Seri Douglas Uggah Embas.
"Apart from that, setting a floor price will also encourage speculation," Douglas Uggah said in a written reply to Pendang MP Datuk Wira Othman Abdul yesterday.
Othman had asked the minister to state as to why the government had not set a floor price for Malaysian rubber, as well as the immediate steps taken to help rubber planters who are currently facing low latex prices.
However, Uggah said the government is concerned about the falling rubber price and its impact towards the 300,000 small rubber planters in the country. He said the ministry has implemented certain measures to mitigate the impact.
The ministry has implemented the rubber production incentive (IPG) since January 2015.
He said that with an allocation of RM200 million to the IPG, the price level activation for SMR20 has increased to RM5.50/kg, from RM5.10 and for cuplump, has increased to RM2.20/kg from RM2.00/kg.
This has allowed the small planters who own an average size of two hectares with a production of cuplumps up to 3,000kg/hectare/year, to enjoy a monthly income of RM1,100, compared to RM1,000 based on the old rate.
As at March 9, a total of RM11.1 million was allocated for 81,163 small planters in the country, under the IPG mechanism. This measure will enable the small planters to continue their tapping activities, while prices remain low.
As at 12pm today, SMR20 was quoted as RM5.18/kg.
In addition, the government has allocated RM6.4 million as cash flow to cooperatives involving in rubber trading activities who would offer higher prices, as compared to licenced rubber buyers.
Through this measure, the buyers could be reduced and would be able to increase the purchase price of rubber at the farmgate, he added.
"Based on the feedback, there are 28 cooperatives involving in the trading of rubber and offer an average of 10 sen to 20 sen higher price, compared to other licenced rubber buyers," Uggah noted.
Apart from these mechanisms, he said the government has a few other plans to assist the small planters, including to encourage them to produce latex that has a higher farmgate price, compared to cuplumps.
Based on the current price, the price of latex is RM3.95/kg, compared with cuplump which is priced at RM3.74/kg, he said. As at noon today, bulk latex was quoted at RM4.38/kg.
For this, the government will allocate RM10 million for the purpose of building the infrastructure to collect latex.
Also, the government will encourage small planters to involve in other agricultural activities by integrating rubber and pepper [plantations], or other plantations.
A review will also be carried out on the pricing mechanism, to ensure small planters enjoy reasonable price.