Fertiliser Act – Boon or Bane for Players?

JUDGING by the speedy completion of the final draft of Malaysia’snew Fertiliser Act, slated for tabling in parliament early next year,
the Government is indeed determined to introduce the Act soon.

The
rationale is to ensure proper monitoring of fertiliser content before
the end products are marketed, enabling the Government to decide on the
suitability of fertilisers that can be sold and the measures to be
taken if production and distribution do not adhere to proper guidelines.

The
Act is seen by some quarters as a noble gesture by the Government to
protect the interests of farmers and smallholders against abuse, in
terms of irregularities in the prices and quality of fertilisers
received.

However, those within the fertiliser fraternity have
raised some strong concerns. They question whether the Act would entail
new procedures and regulations that could restrict or disrupt the
current flexible mode of importing raw materials, manufacturing,
storage and distribution of fertilisers among local producers and
importers.

There is also apprehension the Act could lead to the
introduction of new tariffs, taxes and service charges in the local
fertiliser supply chain. Some fertiliser producers even claim that one
of the justifications of the Act was that the Government could gain
extra income through new registration, tariff and penalty charges to be
imposed should market players fail to meet the new requirements.

Whatever
the claims, one must take heed of the greater risks at stake should
local fertiliser players be slapped with new service charges and
additional operational costs such as registration fees for import
permit and new licence to manufacture fertiliser as well as storage and
distribution.

A new department will have to be created in the
fertiliser producers’ organisation just to handle this new task. All
these extra procedures and measures will result in fertilisers in
Malaysia becoming expensive.

As an example, the introduction of
the Fertiliser Act in Indonesia and Thailand had resulted in their
domestic fertiliser prices increasing by about 10%.

For
Malaysia, any additional operational costs incurred by fertiliser
manufacturers and importers will trickle down to the crude palm oil
(CPO) producers’ cost of production and will also increase the
Government’s existing subsidy for the commodity.

Fertilisers currently represent 60% to 70% of planters’ total production cost of RM1,100 to RM2,000 a tonne.

How
can Malaysia’s CPO be traded at a competitive level when Indonesia, the
world’s largest CPO producer, has lower cost of production? One must
also bear in mind that CPO contributes greatly to Malaysia’s coffers.

For
certain, many would support the Act should it focus on monitoring
exports, the quality of imported raw materials for domestic fertiliser
production and reducing smuggling activities. Otherwise, they hope the
Government would maintain the status quo on the current smooth
operation undertaken by fertiliser players.

Source : The Star by Hanim Adnan

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