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Nor Lelawati Jamaludin1 Afizan Amer2 Helmy Fadlisham Bin Abu Hasan3
1
Faculty of Business Management, UiTM Shah Alam
2
Faculty of Business Management, UiTM Shah Alam,
3
UiTM Kampus Bandaraya Melaka,
Email: 2afizanamer@salam.uitm.edu.my,
3
helmyfadlisham@bdrmelaka.uitm.edu.my
ABSTRACT
The Rice cultivation in Malaysia was closely associated with the rural
population and traditional farmers. But in the last 30 years, rice was transformed
to a commercial crop. The once subsistence farming is now highly regulated and
subsidized. Thus, the market is only lingered in the area of survivability and there
is no room of improvement is yet to be done. The government action to practice
protectionism is undeniably a good step taken to protect the rice industry which
consists of the local farmers, manufacturers, wholesalers and consumers.
However, due to the protectionism practice the government had incurred a high
sum of money which is costly for the economy. This is because even there is a
large sum of money invested in the industry it is still inadequate to produce a par
level of rice production to cater the local consumption line. Thus, the government
need to a fork out a sum of money to import rice to cater the local consumption
and also need to spend a sum of money to implement the protectionism practice
which is essential for the industry yet costly and non-performing one. The main
question is how to increase the production of the rice in Malaysia?
MEDIA SUMMARY
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This paper is published in its original version
volume of rice produce per hectare, the size of labor working in producing the
rice which is determine from the population of the rice producing country in the
world and the demand of the rice which is determined by the consumption volume
of the country that consume and produce rice.
INTRODUCTION
BACKGROUND OF STUDY
The 'support price' is fixed at RM550 (US$144) per ton. The farmer also
collects a price subsidy of RM248.10 (US$ 65) per ton. The farmer thus receives
RM798.10 (US$ 210) per ton of paddy. Payment is given after the rice is sampled
for impurities. iv A farmer can choose to sell its produce to either the private
miller or to 'BERNAS'. BERNAS buys the paddy at a fixed rate of RM550 per
ton.
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Thus, the market is only lingered in the area of survivability and there is
no room of improvement is yet to be done. The government action to practice
protectionism is undeniably a good step taken to protect the rice industry which
consists of the local farmers, manufacturers, wholesalers and consumers.
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This paper is published in its original version
However, due to the protectionism practice the government had incurred a high
sum of money which is costly for the economy. This is because even there is a
large sum of money invested in the industry it is still inadequate to produce a par
level of rice production to cater the local consumption line. Thus, the government
need to a fork out a sum of money to import rice to cater the local consumption
and also need to spend a sum of money to implement the protectionism practice
which is essential for the industry yet costly and non-performing one. The main
question is how to increase the production of the rice in Malaysia?
LITERATURE REVIEW
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industry in Malaysia for reasons stated above. The industry is very dear to the
heart of the government. Public policy with regard to the industry was aimed at
ensuring a minimum self-sufficiency of 65 per cent; to increase the production of
higher quality, specialty and fragrant rice; and to maintain strategic quantity of
rice stockpile. These objectives justify direct government intervention in the
industry and the heavy investment committed.
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It is significant that in the case of the private mills only one, which was
Malay owned, reported receiving any assistance from the various agencies set up
to help small businesses. Indeed, one of the Malay owners even indicated that it
was difficult to get assistance from such bodies. However, only three of the
owners, all Malay, indicated that lack of capital had been a problem at the time of
setting up the mill. Six of the owners indicated that milling operations were
currently less profitable than before, due to the growth in the numbers of SRMs
and the resultant competition for paddy supplies. The other major problem
experienced in running their mills, reported by four of the owners, was the
difficulty of obtaining laborers. This would appear to be a somewhat unexpected
problem. However, it is now widely accepted that unskilled labor is generally in
short supply in this region of Malaysia. This is primarily due to out migration to
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PROBLEM STATEMENT
This study investigates the factors that affecting the production volume of
the Malaysia rice industry. The factors that considered as affecting Malaysian
rice industry are land size, technology, and labor volume. As a preliminary study,
the need to identify the main factor affecting the rice production is important to
the researcher to know the accurate field to develop and pump in the investment
fund. If the area is falsely identified then the development and investment fund is
injected, the consequences could be more severe as it would incurred much higher
cost and time to restructure and shift to the right area. Besides the researcher, this
study is also important to the development unit, fund player in and outside PNB
and as well as the farmers, wholesalers, and the government which is a major role
player in the rice industry.
ASSUMPTION
There are a few assumptions used in this study, the first assumption is the
land size estimated in this study is assumed as the total area of land available in
one country. The second assumption is the technology used is calculated based on
the yield of the rice per hectare, which means the higher the yield (tones/hectare),
the higher the score of the technology (better), the output per hectare is used as a
score for technology. The third assumption is the labor available for paddy is
calculated based on the total current population because it is assumed that all of
the population in one country is a prospect labor. Whilst, the last assumption is
the demand for the commodity (rice) is calculated based on the consumption of
the rice commodity in one country, this is because the demand for the rice is
assumed equal to the consumption level for the countries involved in this study.
RESEARCH HYPOTHESES
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It will be remarkable to see if the findings can be confirmed upon the use
of the given factors of production such as land size, technology, labor, and
demand of the commodity itself, then, the following hypotheses are proposed:
Land Size
Technologies used
Labor available
METHODS
All the data and information was collected via Bloomberg L.P which is
information news and media company serving around the world. Besides the
Bloomberg L.P the information also gathered via the World Wide Web (www.)
search official and related site such as the IRRI, FAO and WTO.
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The sample population is the country that is a major rice producers and
major rice consumers in the IRRI consensus for the past 10 years. This consist of
62 countries which involve these countries statistical data related to the
independent variables which is the land size, technological usage, labor available,
and the demand for the commodities.
REGRESSION ANALYSIS
Regression model:
Y 0 1 X 1 2 X 2 3 X 3 4 X 4
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Explained:
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 63947.874 1.933E6 .033 .974
Land_Size -1.137 .360 -.110 -3.161 .003
Technology .119 473.149 .000 .000 1.000
Labor_Availabl
.095 .012 .686 8.095 .000
e
Commodity_D
513.001 119.545 .346 4.291 .000
D
Descriptive Statistics
a. Dependent Variable: Rice_Production
Std.
N Minimum Maximum Mean Deviation
Rice_Production 62 18000
Table 2.E8
4.2: Regression 1.02E7 3.060E7
Output table
Land_Size 62 27750 2.E7 1.47E6 2962835.570
Technology 62 550.00 10600.00 3.7590E3 2026.21242
Labor_Available 62 475996 1.E9 8.58E7 2.218E8
Commodity_DD 62 34 128434 7185.81 20644.419
showed that, the constant value (B0=63947.847) does not carry any particular
meaning as the scope does not include x1=x2=0
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The B1 value indicates that a difference of one unit in the land size results in
decrease of approximately 1.137 tones of rice production provided technology,
labor availability and commodity demand is still constant.
The B1 value indicates that a difference of one unit in the technology results in
increase of approximately 0.119 tones of rice production provided land size, labor
availability and commodity demand is still constant.
The B1 value indicates that a difference of one unit in the labor available results
in increase of approximately 0.095 tones of rice production provided technology,
land size and commodity demand is still constant.
The B1 value indicates that a difference of one unit in the demand for rice results
in increase of approximately 513.001 tones of rice production provided
technology, labor availability and land size is still constant.
CORRELATION ANALYSIS
Correlations
Rice_Production Land_Size Technology Labor_Available Commodity_DD
Rice_Production Pearson
1 .313* .148 .957** .943**
Correlation
Sig. (2-
.013 .250 .000 .000
tailed)
N 62 62 62 62 62
Land_Size Pearson
.313* 1 .278* .444** .343**
Correlation
Sig. (2-
.013 .029 .000 .006
tailed)
N 62 62 62 62 62
Technology Pearson
.148 .278* 1 .192 .137
Correlation
Sig. (2-
.250 .029 .135 .290
tailed)
N 62 62 62 62 62
Labor_Available Pearson
.957** .444** .192 1 .925**
Correlation
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Sig. (2-
.000 .000 .135 .000
tailed)
N 62 62 62 62 62
Commodity_DD Pearson
.943** .343** .137 .925** 1
Correlation
Sig. (2-
.000 .006 .290 .000
tailed)
N 62 62 62 62 62
*. Correlation is significant at the 0.05 level
(2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
Table 4.3: Correlations table
Meanwhile, the correlation between the land size and technology used
with the rice production volume has a low significant (p= 0.013 and 0.250)
respectively, and there is low positive relationship (r= 0.313 and 0.148) between
the rice production and land size and technology respectively.
MODEL SUMMARY
Model Summary
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .974a .949 .945 7152932.666
a. Predictors: (Constant), Commodity_DD, Technology,
Land_Size, Labor_Available
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Table 4.3 showed that, the model explains 94.9% of the variation in Rice
Production volume is explained by the regression model using land size,
technology used, labor available and demand for the commodity as a predictors.
That means, other variables not included in the model are also related to the Rice
Production volume.
The objective of the study is to find out whether there is any relationship
between the rice production output with the factors that is considered as affecting
the production level or volume such as the land size, technology, labor available,
and the demand for the commodity itself. After the study has been conducted, it is
founded that the land size and technology is not an important factor that affecting
any unit of differences in the rice production volume. However, these two factors
still have a positive relationship or interpreted as contribution to the rice
production level. As for the other two factors which are labor availability and the
demand for the commodity, after the study it is founded that the two factors has a
significant relationship with the rice production volume or output. Which mean
that, these factors has a high percentage ratio contributing to the rice production
output. In addition these two factors labor available and demand for the
commodity (rice) also has a strong positive relationship with the rice production
volume.
Thus, it can be concluded that the important factor of rice such as labor
availability and the demand for the commodity need to be distressed to improve
the production of rice where it can help the government to reduce expenses on
subsidies and reduce the import of rice to open up more room of survival for local
rice growers. The other factor of production in this study also can be taken into
account such as the technology and land size where the land size for paddy
cultivation can be expanded and the technology that is effectively implemented by
other country to maximize the rice production can be adopted. Besides, by
identifying the factors important to rice production PNB are able to pump in
investment in the right area and gain a profitable return in later stage
After the study has been conducted and the findings is already procured, it
is recommended an investment is to be made by the PNB into improving the value
of the labor involved in rice production such as providing them with a
professional training and also provides funding for research and development in
human resource area of the rice production line. However, an investment in the
technology and expanding the land size available for rice production also is
needed to enhance the production of rice and the rice industry as a whole.
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REFERENCES
i
www.consumersinternational.org
ii
De Datta S K. (1981). Principles and practices of rice production. New York:
John Wiley & Sons, 618.
iii
www.researchandmarkets.com/reports
iv
www.researchandmarkets.com/reports
v
www.consumersinternational.org
vi
Dingkuhn M, Penning de Vries FWT, De Datta SK, van Laar HH.1991.
Concepts for a new plant type for direct seeded flooded tropical rice. In: Direct
seeded flooded rice in the tropics. Manila, Philippines : International Rice
Research Institute, 1738
vii
Gao L, Jin Z, Huang Y, Zhang L. 1992. Rice clock model a computer model to
simulate rice development. Agriculture and Forest Meteorology 60: 116.
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