The Aftereffect of AFTA on Malaysian Agriculture

The agriculture sector is the sector that might be adversely affected due to the implementation of AFTA. AFTA will also lead to agricultural country facing better competition from other countries manufacturers that have excess production costs. American food imports has increased annually from the consequences of increasing the quantity and standard of living. In 1996, imports of food (including dog feed) and agricultural inputs was RM10. 5 billion weighed against RM4. 6 billion in 1990. In 1997 (January to October) the transfer is RM9. 1 billion. Malaysia experienced a trade deficit in food (including pet food) and agricultural inputs. This means that there is an outflow of surplus state funds to fund imports. In 1996 exports amounted to RM4. 2 billion, and in 1997 (January-October 1997) was RM4. 5 billion. This means that the trade deficit in food and agricultural inputs in 1996 were RM6. 3 billion and RM4. 6 billion in 1997.

Although, agriculture Malaysia at the moment still dominates the market, there are concerns that performance won't last after the AFTA implementation. Malaysia agricultural products can only compete at this juncture because the aid of subsidies and fees imposed on the safe agricultural neighbours. So too, some agricultural products from Thailand and Indonesia still cheaper than products in the country. Furthermore, the result of vegetables such as from Cameron Highlands will growing prices due to rising prices of fertilizers and pesticides.

Thailand agricultural products are for sale to sale at half price until two or three times cheaper than our country. For example tomatoes from Thailand were sold at wholesale at a cost of RM14-RM20 for 20 kilograms while tomatoes in Cameron Highlands can achieving up to RM40 for the same quantity of tomatoes. Meanwhile, Indonesian products such as cabbage can be purchased cheaper than increase the result of cabbage Cameron Highlands. Indeed, Indonesia is the grade of vegetables grown in the highlands of Sumatra is not so good. However, if no fees are high, prices will be very cheap to buy the buyer gets a big advantage. Although compelled to eliminate the damaged portion of vegetables, this is certainly not a problem.

Effects of AFTA can be clearly seen on the grain/paddy sector. Before the end of 2004, the government has raised fees grain from 0% to 40%. The purpose of the transfer tariff is to safeguard the domestic price of brought in rice to be higher than the price tag on local rice. AFTA law takes a maximum of 40% imposed in 2005 and you will be reduced to 20% by 2010. According to the local grain industry, the rate of 20% of grain imports this year 2010 will not be able to protect the neighborhood rice industry. Because of this farmers are ruined to unnecessary paddy resource and low prices. Our farmers also struggling to compete in the open market minus the subsidies provided by the federal government, as the creation cost in neighbouring countries is much lower.

Market supply of fish, especially for the west coast of Peninsular Malaysia such as Perak, Selangor, Negeri Sembilan and enough time is increasingly dominated by catches of southern Thailand. After the implementation AFTA, the fish are anticipated to dominate the marketplace throughout the country. It is because fish found by anglers Malaysia is higher anticipated to growing diesel prices, rising hot spares, and travelling of fish to market high. Perhaps the most affected establishments are the auto, even though Malaysia postpone the starting of the home market to overseas products until 2005.

AFTA also affects more than 300, 000 groups of rice planters, more than 80, 000 fishermen young families, more than 400, 000 smallholder individuals, more than 250, 000 silicone and oil hand smallholder families. This is because industrial vegetation such as hand oil, plastic and cocoa will be dominated by the estate and corporate. International agricultural companies large and small farmers would be rivalling with the cause of small farmers more and more marginalized. This is anticipated to AFTA is in favour of big traders but not the farmers and small internet marketers. At the same time, priority is directed at corporations to build up the agricultural sector. Thus, large organizations dominated the complete procedure for agricultural production such as development and shares of seeds, handling, packaging, transportation and marketing. Farmers do not have the authority to find out and only worker of large agricultural companies. Farmers also do not have the power in the production of agriculture product. Not only that, small farmers likewise have only two options if indeed they cannot contend which are available the land or work as labourers.

Furthermore, implementation of AFTA in addition has damaged the agricultural labourers. This is because the beginning in the trade competitiveness of the company causing the transfer of labour-intensive to technology-intensive companies to reduce creation costs. Thus, unskilled workers were adversely affected because the big entrepreneurs looking for sites to use in low-cost labour. The copy also resulted in the occupations of local workers and the diminishing ability of employee consultation will also are more vulnerable.

As a final result, the execution of AFTA will affect the farmers adversely. A reduction in the import work will make international rice cheaper which will crowd out domestic rice development. This crowding impact may potentially bring about the unemployment of some 150, 000 grain farming households adding additional burden on the government.

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