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Saturday, February 28, 2015

If Ismail Sabri thinks pasar tani traders are stupid - he is even more STUPID!

If Ismail Sabri thinks pasar tani traders are stupid - he is even more STUPID!
A few days ago, Agriculture and Agro-based Industry Minister Ismail Sabri Yaakob stated that the licences of pasar tani traders would not be renewed if they continued to buy from middlemen. The deadline is May 31. He said traders must instead buy directly from producers or FAMA collection centres throughout the country. I think this directive deserves our attention and cannot be allowed to stand unchallenged.
I am all for cost efficiency and lower consumer prices. But I think the minister has made a policy pronouncement without proper study and thinking. It is my considered opinion that his directive will cause more problems than solve them. Threatening not to renew the traders’ licences will only make the supply situation worse if he is not careful.
How can the minister force the traders to buy from producers and FAMA collection centres directly? What assurances has he got that the prices charged by the producers or the FAMA centres and the final costs incurred will be more competitive than if they buy from middlemen?
Granted that buying direct from the producers could be cheaper, but I think the minister has totally ignored gathering, transportation, storage and financing costs. In addition, there is a need for economics of scale and minimum-quantity orders in most business dealings.
Would the producers want to deal with 50 buyers who come at different times to their farms or orchards? Can you imagine a trader travelling 20km to buy 50kg of mangoes and then another 30km to buy 50kg of rambutan? Can you imagine the time required for the traders to gather all the supplies they want to sell at the market?
And what about the occasional financing provided by the middlemen? Can the traders buy on credit from the producers or FAMA collection centres?
Ismail Sabri
It is so easy for the minister to say that FAMA “will help” the traders to get all their supplies from the farmers and fishermen. It is so easy for him to say that the traders can also get their supplies from the FAMA’s 100 collection centres. How does FAMA help? With what? Wishful thinking? May I know who will organise and bring the supplies to FAMA’s 100 collection centres? Why would the farmers and fishermen want to bring their supplies to the collection centres when they can sell them at their farms or jetties without hassle?
How long has FAMA been in existence? If it is true that FAMA can play its role effectively, I think the middlemen would have folded a long time ago. The fact that they have continued to survive and thrive shows that middlemen are playing an economic role that is not easily replaceable.
If pasar tani traders could source their supplies at lower cost from farmers and fishermen, they would have done so a long time ago, unless the minister thinks they are ignorant and stupid. But I don’t think pasar tani traders are stupid; they know where it is sensible and economical to buy their supplies from.
Minister Ismail Sabri Yaakob, may I urge you not to be condescending and arrogant. Please learn a little more on the intricacies of supply chain management before you make policy pronouncements. Where and who do you get your information and advice from? Those officials who have no idea how a kilo of sawi finally reaches the kitchen of the consumer? - FMT

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