The Effect of AFTA on Malaysian Agriculture

The agribusiness sector is the sector that would be adversely affected due to the execution of AFTA. AFTA will besides take to agricultural state confronting greater competition from other states makers that have extra production costs. American nutrient imports has increased every twelvemonth from the effects of increasing the figure and criterion of life. In 1996, imports of nutrient ( including carnal provender ) and agricultural inputs was RM10.5 billion compared with RM4.6 billion in 1990. In 1997 ( January to October ) the import is RM9.1 billion. Malaysia experienced a trade shortage in nutrient ( including pet nutrient ) and agricultural inputs. This means that there is an escape of excess province financess to finance imports. In 1996 exports amounted to RM4.2 billion, and in 1997 ( January-October 1997 ) was RM4.5 billion. This means that the trade shortage in nutrient and agricultural inputs in 1996 were RM6.3 billion and RM4.6 billion in 1997.

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Although, agribusiness Malaysia at this clip still dominates the market, there are concerns that public presentation will non last after the AFTA execution. Malaysia agricultural merchandises can merely vie at this occasion because the assistance of subsidies and revenue enhancements imposed on the protected agricultural neighbors. So excessively, some agricultural merchandises from Thailand and Indonesia still cheaper than merchandises in the state. Furthermore, the end product of veggies such as from Cameron Highlands will lifting monetary values due to lifting monetary values of fertilisers and pesticides.

Thailand agricultural merchandises are available for sale at half monetary value until two or three times cheaper than our state. For illustration tomatoes from Thailand were sold at sweeping at a monetary value of RM14-RM20 for 20 kgs while tomatoes in Cameron Highlands can make up to RM40 for the same measure of tomatoes. Meanwhile, Indonesian merchandises such as chou are sold cheaper than duplicate the end product of chou Cameron Highlands. Indeed, Indonesia is the quality of veggies grown in the Highlandss of Sumatra is non so good. However, if no revenue enhancements are high, monetary values will be really inexpensive to purchase the purchaser gets a large advantage. Although forced to take the damaged part of veggies, this is decidedly non a job.

Effectss of AFTA can be clearly seen on the rice/paddy sector. Before the terminal of 2004, the authorities has raised revenue enhancements rice from 0 % to 40 % . The intent of the import duty is to protect the domestic monetary value of imported rice to be higher than the monetary value of local rice. AFTA jurisprudence requires a upper limit of 40 % imposed in 2005 and will be reduced to 20 % by 2010. Harmonizing to the local rice industry, the rate of 20 % of rice imports in 2010 will non be able to protect the local rice industry. As a consequence husbandmans are ruined to excessive paddy supply and low monetary values. Our husbandmans besides unable to vie in the unfastened market without the subsidies provided by the authorities, as the production cost in neighboring states is much lower.

Market supply of fish, particularly for the west seashore of Peninsular Malaysia such as Perak, Selangor, Negeri Sembilan and the clip is progressively dominated by gimmicks of southern Thailand. After the execution AFTA, the fish are expected to rule the market throughout the state. This is because fish caught by fishermen Malaysia is higher due to lifting Diesel monetary values, lifting hot spares, and transit of fish to market high. Possibly the most affected industries are the car, even though Malaysia postpone the gap of the domestic market to foreign merchandises until 2005.

AFTA besides affects more than 300,000 households of rice plantation owners, more than 80,000 fishermen households, more than 400,000 smallholder households, more than 250,000 gum elastic and oil thenar smallholder households. This is because industrial harvests such as palm oil, gum elastic and chocolate will be dominated by the estate and corporate. International agricultural companies big and little husbandmans would be viing with the cause of little husbandmans progressively marginalized. This is due to AFTA is in favor of large bargainers but non the husbandmans and little enterprisers. At the same clip, precedence is given to corporations to develop the agricultural sector. Thus, big corporations dominated the full procedure of agricultural production such as production and stocks of seeds, processing, packaging, transit and selling. Farmers do non hold the authorization to find and merely employee of big agricultural companies. Farmers besides do non hold the power in the production of agribusiness merchandise. Not merely that, little husbandmans besides have merely two options if they can non vie which are selling the land or work as laborers.

Furthermore, execution of AFTA has besides affected the agricultural laborers. This is because the gap in the trade fight of the company doing the transportation of labor-intensive to technology-intensive companies to cut down production costs. Therefore, unskilled workers were adversely affected because the large business communities looking for sites to run in low-priced labor. The transportation besides resulted in the employment chances of local workers and the decreasing power of employee audience will besides go more vulnerable.

As a decision, the execution of AFTA will impact the husbandmans adversely. A decrease in the import responsibility will do foreign rice cheaper and this will herd out domestic rice production. This herding consequence may potentially ensue in the unemployment of some 150,000 rice farming families seting extra load on the authorities.

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