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Part
I : Concept
-
Disease Control
Mechanism and Financial Assistance
-
Rebuilding and
Resettling Sub-standard Farms
Part
II : Implementation
-
A Structure for Implementation
will be submitted upon acceptance of the concept outlined in Part I.
Appendix
1.
Disease Control and Financial Assistance
The devastating episode of
the Nipah Virus Encephalitis crisis exposed the un-preparedness of the
industry in disease control. It is proposed that the Government help
the industry develop a self-help and self-regulatory mechanism to deal
with such eventualities. This mechanism, the proposed NATIONAL SWINE
PRODUCERS’ COUNCIL (NSPC) will be in the form of an industry regulatory
agency, vested with full enforcement powers, similar to what POLA is for
the Oil Palm Industry.
Among
other things, NSPC will
-
assure a fair market compensation
to ensure farmers cooperate with virus inspection, surrendered animals
for culling and STOP all unauthorized movement of animals.
-
also be the vehicle to administer
the compensation and oversee the reorganization of the pig farming industry.
-
be supported by the Government,
providing a start up fund. This fund will be needed to make up for
the shortfall of the farmers for compensation and what the government has
provided for disease control, (RM200 less RM50 = RM150)
| A. For the affected areas
900,000 pigs @ RM150 |
135 million |
B. Provision for culling
of 300,000 pigs @ RM150
in the areas if tested positive |
45 million |
| Total |
180 million |
-
The final quantum to be decided
after accessing the state of the situation.
-
This start up fund will be organized
by the Government’s Central Bank through a consortium of local Malaysian
banks. The loan will be for RM180 million for 10 years for 4% interest.
-
As each affected farmers who
surrendered their animals for culling will receive a total compensation
of RM150 from NSPC, NSPC will first issue a cash assistance of RM50 per
pig as a first disbursement from the fund. The balance of RM100 will
be kept with NSPC for rebuilding purpose (total RM120 million), and within
a specified period, farmers can decide to continue with pig farming in
the new PFA or opt out for good. For those who decide to opt out,
he or she will withdraw the full amount of the RM100 per pig with interest.
Proposal
for Repayment
The pig farming industry
undertakes the responsibility of repayment through the collection of a
levy by the NSPC. NSPC will impose a levy on each porker ready for
market and chilled pork imported into the country. Based on past production
level adjusted for the reduction in supply, an annual production of 2 million
porkers, at RM10 levy will generate some RM20 million. To make up for the
shortfall of supply of pork in the country (Malaysian domestic markets
need some 3 million porkers, an additional 80,000 tons of chilled pork
may need to be imported, at a similar levy of RM10 per porker, or
0.125 per kg; an additional tariff of RM10 million is possible.
The repayment for RM180 million for 10
years at 4% is 22 million per year.
2.
Rebuilding and Resettling Sub-standard Farms
The total animals culled
in the present disease outbreak exercise may total up to 1.2million where
its existing land and infrastructure could not be reused. Land for
this rebuilding must be provided for to enable rebuilding to take place
at the appropriate time.
As much as 70 percent of
the remaining existing pig farms in the country conforms to industry operating
requirements. Only those that are in new villages, those that started
as part of the RESETTLEMENT schemes are below standards. As such,
attempts must be made now to upgrade them through resettlement.
Standing Pig Population (SPP)
raised under sub-standard conditions must be upgraded within a specified
period where insitu improvements are possible. For others, they will
be closed and new location found to resettle the farmers through contract
farming. The government supports this reorganization by helping to
grant license to PFA in new locations. The industry will acquire
the land from the respective state governments.
The status of
the remaining SPP Population (1998 figures) in unaffected areas
SPP in substandard conditions
that must upgrade:
| Location |
# of SPP |
Insitu |
New Location |
Pulau Pinang
& Province Wellesley |
275,448 |
|
200,000 |
| Perak |
400,000 |
|
|
| Selangor |
250,000 |
200,000 |
50,000 |
| Melaka |
152,330 |
102,330 |
50,000 |
| Johore |
370,821 |
|
|
| Total |
1,448,599 |
302,330 |
300,000 |
Counting the pigs culled
in Negeri Sembilan and Perak, and making provision for 300,000 pigs that
might have to be culled in the nationwide blood tests, a total of 1.2 million
herd need to be rebuilt.
Land Required
for Resettlement and Rebuilding
To resettle farms at 500
pigs per acre with 30% green buffer area:
| Rebuilding 1.2 million herd |
3,120 |
| Resettling 300,000 herd in substandard
farms |
780 |
| Total Land Area |
3,900 |
Propose that the Government
approve FOUR PFAs for the above purpose.
Cost of Rebuilding and development
of the integrated farm: RM300 million.
Organization
Propose a public holding
company, Integrated Swine Farming Bhd (ISFB) be set up and
owned by the farmers and community groups. ISFB will acquire the
land required and develop the integrated farms. These farms will
have industry standard operating facilities and managed by a team of professionals.
ISFB will provide the following services to support farmers:
-
supply of piglets through its
breeder farms
-
veterinary and animal health
and care services and expertise
-
pollution inspection and maintenance
functions
-
financial and accounting services
-
education and farming training
courses
Individual pig farmers
will contract farm with ISFB through specific units (e.g. 500 pigs per
unit). The farmer will lease the premises developed by ISFB, mixes
its own feed and manages its own production. The contract farmers
will be responsible for their own efficiency and profitability.
ISFB
will be financed in the following manner:
| Funds from NSPC* |
120 million |
| New capital raised from farmers in the
sub-standard farms |
30 million |
| Total |
150 million |
* Pig farmers who wish to
rebuild their business will do so through the PFAs. The funds will
come from their compensation to be held back for the rebuilding purposes.
Summary
of the Measures Recommended in Part I:
-
Set up the National Swine Producers
Council with immediate effect with statutory powers to implement reforms
and oversee the disbursement of compensation and manage the execution of
reforms through the setting up of Integrated Swine Farming Berhad (ISFB).
-
The government lead a syndication
of commercial banks to make a loan of RM180 million for the start up fund
of NSPC.
-
Immediate imposition of levy
on porker for market.
-
Identify four (4) sites for
a total of 3900 acres for acquisition by ISFB for rebuilding and resettling.
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Once land is identified, within
24 months , resettle the sub-standard farmers and phase out ALL the sub-standard
farms.
Summary
of Funding:
Financial Assistance for
900,000 pigs culled
Financial Provision for
300,000 pigs if tested positive
Total Soft Loan for 10
years at 4%
Additional Cash Assistance
for affected farmers
Balance to hold back for
development of PFAs in ISFB
Additional capital from
farmers in substandard farms
Sub total
Additional business loan
ISFB to take
Total capital required
Repayment per year
Levy from 2 million pigs
at RM10 each
Import levy on imported
chilled pork at RM10 for 80 kg
Total |
135 million
45 million
180 million
60 million
120 million
30 million
150 million
150 million
300 million
22 million
20 million
10 million
30 million |
The
Concept of the National Swine Producers’ Council (NSPC)
To provide a mechanism for
self-organization and regulation of pig farmers. The
council will set veterinary standards, surveillance of livestock care and
health, monitor disease and recommend compensation for culling, formulate
reforms towards building a more efficient and sustainable development of
pig farming industry in Malaysia.
Why
the need for NSPC?
Protecting the Industry:
One possible root cause of
today’s spread of virus encephalitis is either irresponsible or panicky
farmers moving or selling infected animals to other farms, therefore putting
the entire pig industry in jeopardy. Their panic and the uncertainty
of their future, coupled with grave economic losses they faced further
aggravated the situation.
If all pig farmers know that
in the event of unforeseen and unfortunate animal disease epidemic, the
economic value of their herd is protected by the NSPC, they will at the
slightest signs of abnormal livestock behavior, report to the Department
of Veterinary Services, and upon detection of disease, cooperate fully
with the NSPC.
Because farmers need to pay
a levy per head of animals to NSPC, the program makes the farmers keenly
aware of the need for self-help and self-regulation. This scheme
is VITAL in getting the farmers to regulate themselves. Because of the
fragmented nature of our livestock industry and the cultural habits of
operators, the impetus and leadership must come jointly from the government
and the industry.
The implications of the present
viral encephalitis disaster with its long term implications make the NSPC
a timely and politically acceptable health and disease control management
mechanism, and does not cost the government A SINGLE CENT. With NSPC,
the government will be applauded for taking the pig farming industry forward.
Contain Outbreak:
-
Eliminate the risk of new outbreaks
arising from illegal movement of animals. In spite of the tragic loss of
human lives, infected pigs can still be moved from one place to another,
thus jeopardize healthy herds. This unlawful and dangerous practice
must be stopped.
-
Getting farmers’ cooperation.
The authorities must strictly carry out enforcement, and get farmers to
cooperate fully; otherwise there is no way to contain this outbreak.
-
Any further delay to contain
this outbreak will render the virus endemic and the whole Malaysian pig
industry could be wiped out. Moreover, other livestock may be affected.
This not only lead to tremendous direct and indirect economic losses, it
will permanently handicap the development of the Malaysian agricultural
export sector. Counting the existing pig population and the investment
the economy has put into the infrastructure for the entire industry, we
stand to wipe out close to RM3 billion worth of value.
-
This current tragedy provides
a timely occasion for the government to step up collaboration with the
private sector to implement overdue reforms. The pig farming industry lacked
a self-funded mechanism to help it weather disease outbreak crisis. This
vitally important self-help mechanism must be instituted to equip the industry
with the ability to cope with unprecedented risk, such as virus/disease
outbreaks. Once such a self-organized and self-funding arrangement is implemented,
we can look forward to building a stronger, healthier and more resilient
pig farming industry.
NSPC
to address TWO Critical Issues:
1. Effective disease containment
rests on Stringent Control of Animal Movement:
We need to effectively
stop all movement of animals, and coerce farmers who have brought in animals
from affected areas to declare and surrender their herd for testing.
If found virus-positive, they must surrender their animals for culling
immediately.
If animals are found
infected, we need the full cooperation of farmers to cull the animals.
Farmers preoccupied with their own economic losses and loss of livelihood
will not be able to think of the industry and/or national interest first.
They may work around the enforcement officers to move their animals out.
Human weakness makes government directives “paper directives” which are
impossible to enforce.
2. Effective Control of Animals
Movement rests on Adequate Financial Assistance:
Even at a time like this,
farmers are still thinking about bringing up market prices and selling
their animals. As such, all kinds of malpractice could go on at various
levels.
The only way to meet these
challenges at all levels is at the source i.e. to financially assist the
farmers adequately. If farmers know that there is hope for the revival
of their industry with the support of the government, they will cooperate.
Otherwise, they will minimize their losses while they rush for the exit,
with no regard for the health of the community and the interest of the
nation.
NSPC:
How it works
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NSPC will be an eight (8) member
tripartite council. Consists of two member high level representation
from the agriculture ministry’s department of veterinary services, the
Pig Farmers Association Malaysia and the Associated Chinese Chamber of
Commerce and Industry (ACCCIM), and managed by an independent and non-interested
consultant or audit firm.
-
Among others, it will have FULL
POWER to order the culling of animals based on inspection and discovery
of diseases on farms, either reported by the farmers or by veterinary officers.
The Council will jointly develop the Operating Rules and Governance Procedures.
-
NSPC will also set standards
for farmers’ compensation based on the number and fair market cost of animals
at the time of testing and culling. All animals should be compensated
based on their current economic value; for example in the pig industry,
sows, piglets and porkers each carry different prices.
-
NSPC is the ultimate governing
Council on the conduct of the players in the industry. Its recommendations
will be enforced through DVS and other appropriate machinery including
recommendations for legislative changes.
Funding
of NSPC:
-
For each porker ready for market,
a levy is payable to NSPC. This outbreak will have adjusted porker
supply downwards, and in one year Malaysia will only produce approximately
2 million pigs before capacity can be rebuilt. A levy of RM10 per
head equals to RM20 million of collection. A similar levy is proposed for
the import of chilled pork, if necessary.
-
To meet the urgency of the problem
at hand, the government directs a consortium of local banks to make a soft
loan of RM 180 million to the NSPC with a repayment period of 10 years.
Once the government announces the setting up of the NSPC and its compensation
and operation guidelines, pig farmers knowing they will be fairly assisted
financially will cooperate. Only then can we control the disease,
and the health of livestock restored. With the market price for livestock
recovering with the return of consumer confidence, can the industry be
saved.
POSITIVE
IMPACT on Malaysian Economy
As this money is sourced
from our domestic banking system, it will do no harm to our domestic economy
as we are merely transferring money from the government account (asset)
to the private sector account (liability to repay).
The money still remains in
the Malaysian financial system, and will buoy our domestic demand, helping
the recovery of the Malaysian economy. In fact, this kind of spending
is no different from the budget-deficit spending we employ to stimulate
domestic demand. At the present moment, when confidence in the Malaysian
economy is returning, we must do everything we can to avoid another jolt
that can delay our recovery.
We all know if this crisis
persists, and if there is another outbreak, the potential loss of tourism
revenue will exceed the soft loans proposed. (Malaysia’s 1998-tourism revenue
RM10 billion, one-month loss of revenue is in the region of RM833 million.)
Time is of the
essence. We need to act fast to avoid Malaysia becoming endemic with
the virus. Then there will be no livestock industry with the possibility
of risking the health of 22 million Malaysians.
Notes
on Existing PFAs
All
PFA earmarked for development:
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Away from important and strategic
infrastructures such as the KLIA or near to contaminated areas
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Away from underground or water
catchment areas
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Away from dense residential
areas
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Land must be reasonably priced
for pig farming
If investments are to
be made to build infrastructure, the risk of short tenure and water shortage
will inhibit its development. Propose that the government help identify
new PFAs and allow for the conversion of the title of existing PFA that
does not fit the above conditions.
Suggestions:
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Insitu Integrated Pig Farms
with fitting standards can be developed in Kuala Langat.
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Dumpuk Area can develop a centralized
treatment pond to bring the farms up to industry water treatment standard.
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Farms in Bangi being too close
to Malay kampungs be resettled.
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Small farms in Perak, too scattered,
are to be closed and farmers resettled into integrated pig farms
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Penang and Province Wellesley
-- existing pig farms to be reviewed, either to resettle humans or pigs
into new area.
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