Financing agricultural production & marketing

• Main Author: Ungku Abdul Aziz, Ungku Abdul Hamid
• Format: Other
• Published: Nil 1968
• Subjects: H Social Sciences (General); HC Economic History and Conditions; S Agriculture (General)
• Online Access: http://commonrepo.um.edu.my/12401/6/Financing%20Agricultural%20Production%20and%20Marketing%20July%201968.pdf; http://commonrepo.um.edu.my/12401/

All rural sectors, agricultural production involves some financial arrangements which bring the farmers into commercial contact with the agencies. Marketing agencies play an important role in influencing the financial aspects of rural production. The modernization of the agricultural sector universally, however, do not have much impact on the agriculture sector locally. Why? Government’s main objective is always to eliminate rural poverty. Poverty is not merely referring to the low level of average income. It also includes the inequality in the income distribution among the nations, especially among the rural and the urban area. Rural poverty is mainly caused by 3 major factors, which are the man labour, the land and the capital. Majority of the agricultural producers in Malaysia is made up of small farmers. Subdivision and land fragmentation have made the problem worse as it becomes uneconomic for the farmers to process their crops. They could hardly have a surplus from the crop production. And they need consumer goods between harvest. So they will get the goods from the market operator and pay with their crops when it comes to harvest season. This has compelled the farmers to sell their productions to the market operators without the negotiation power. When they are lack of capital to purchase the intermediate capital such as fertilizers, chemical herbicides or fuel, they have to get the capital from the market operator. The high-interest rate will get the farmers into further indebtedness. This monopsony condition will soon allow the market operator to gain ownership and control over the important forms of rural capital. Trying their best to avoid conditions of perfect competition, the market operator will soon try to block off other buyers from entering into the market through political and financial control. Besides, language and ethnicity may have become another barrier to block outsiders from breaking the monopoly condition. All these data could hardly be been collected as there is no cooperation from the leaders. Through administrative and legislative measures, the government should intervene to eliminate the monopoly and monopsony systems in the rural area. Managerial talent is very much needed in the cooperative trading or public cooperation to guide the farmers. The public marketing board should have adequate facilities to process the capital, the total output, transport, mills and storage issue and to build a better relationship with the farmers. The elimination of the MM system should be seen as an imperative criterion for economic development.