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Friday, February 27, 2015

Ismail Sabri, Pasar Tani traders are neither stupid nor ignorant – TK Chua

Image result for ismail sabriImage result for pasar tani

A few days ago, Agriculture and Agri-based Industries Minister Datuk Seri Ismail Sabri Yaakob made a statement that the licences of Pasar Tani traders will not be renewed if they continue to buy from the middlemen by June.
He said traders should 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 prices to the consumers. But sadly, I think the minister has made a policy pronouncement without proper study and thinking.
How can the minister force the Pasar Tani traders to buy from producers and Fama collection centres directly?  What assurances has he got that the prices charged by the producers/Fama collection centres and the final cost incurred by the traders will be more competitive compared with buying the supplies from the middlemen?
Granted that buying direct from the producers could be cheaper, but I think the minister has totally ignored gathering, transportation, storage and financing cost. In addition, there is a need for economics of scale and minimum order quantity 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 another 50kg of rambutan or sawi.
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?
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 Fama’s 100 collection centres.
How does Fama help? With what, wishful thinking? May I know who will organise and bring the supplies to the 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 really Fama could 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 think they are ignorant and stupid. But I don’t think Pasar Tani traders are stupid, they just know which is more sensible and economical with respect to buying their supplies.
Ismail Sabri, 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 pronouncement. 
Where and who do you get your information and advice from – those Fama officials who have no idea how a kilogramme of sawi finally reaches the kitchen of the consumer?
* TK Chua reads The Malaysian Insider.

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