Making the middlemen the bogeymen

THE Agriculture and Agro-Based Industry Ministry has been at war for over a year now. The commerce-oriented “Agriculture is Business” motto has been dropped. Instead, a number of the Ministry’s most visible initiatives today are part of its “Jihad Memerangi Orang Tengah” (Jihad Against the Middlemen) campaign.

The first shot was fired in September 2013, when the Minister, Datuk Seri Ismail Sabri Yaakob, declared that the Ministry would devote the following year to eliminating the role of the middlemen in the agriculture sector.

And so in 2014, the Ministry introduced measures that are meant to help farmers and fishermen bypass the middlemen. There were in fact three Jihad Against the Middlemen campaign launches last year.

The first was in January to target the paddy and rice sub-sector. A month later, the focus was on the fishermen, and in May, it was the turn of the fruit and vegetable farmers. And the jihad didn’t end when the new year began. Ismail Sabri continues to officiate at functions tied to the campaign, which suggests that the Ministry wants to keep on battling.

Through it all, the theme has been consistently about improving the lot of the men and women at the poorest end of the agricultural supply chain. There’s absolutely nothing wrong with that. Like anybody else, the farmers and fishermen deserve to be fairly compensated for their toil, and they should have the opportunity to enlarge their earning capacity as long as they work hard.

If indeed they’re deprived of these entitlements because the middlemen’s profits are disproprotionately large and their practices are unethical, it’s only right that the authorities step in to correct the imbalance. Also, if the middlemen’s actions result in market distortions that impact consumers and other businesses, that too may justify government intervention.

In each of his three launch speeches last year, Ismail Sabri maintained that the middlemen had been oppressing farmers and fishermen for a very long time. They did so, he said, by rigging prices, weights and measures, and the supply of inputs (such as fertilisers). According to the Minister, the middlemen’s control was also rooted in the loans they give to the farmers and fishermen.

In the end, he said, the farmers and fishermen couldn’t free themselves from the middlemen’s clutches.

It’s not unusual to characterise the middlemen as predatory and manipulative. In many other places in the world, the middlemen are equally subject to hostility, allegedly for making excessive profits and for being dishonest. However, is the war against the middlemen in Malaysian agriculture waged on solid ground?

Blaming the middlemen for the sector’s socioeconomic woes is too convenient and it ignores other structural weaknesses. If we buy into the notion that the middlemen have sprung out of the shadows and squeezed themselves needlessly into an already well-functioning supply chain, there’s a danger here of the Ministry ending up merely treating the symptoms instead of curing the malady.

In many cases, the middlemen are there because they offer value. They provide the farmers and fishermen with quick credit and payments, minus the red tape. They lay the channels through which the farm produce and the fish can be brought speedily from rural areas to urban markets. The term middlemen covers a spectrum of intermediaries and services. It’s wrong to believe that all they do is buy low and sell high.

The middlemen have a part to play, and as long as they do it more efficiently and effectively than others can, the market forces are likely to work in their favour.

But that doesn’t mean they must always be in the picture. If the fishermen and farmers are better organised, they’ll be in a position to make do without the middlemen – or at least, some of them – and thus shorten the supply chain. That’s why Malaysia has farmers’ organisations and fishermen’s associations, and laws such as the Farmers’ Organisation Act 1973 and Fishermen’s Association Act 1971.

Plus, there are many departments and statutory bodies under the Ministry that are assigned to help develop the sector and its players. This support system has been around for a long time too. If the farmers and fishermen are supposedly still at the mercy of the middlemen after all these years, does it mean these government agencies have failed to fulfil their objectives?

Maybe that’s too harsh a conclusion, but it’s clear that a sustainable programme to better the lives of farmers and fishermen has to include a review of the existing infrastructure and policies.

Demonising the middlemen and taking them on in a jihad is headline-friendly and will gain support among the stakeholders. Unfortunately, you can’t win a war if you keep attacking bogus enemies and ignore deep weaknesses within the rearguard.

Executive editor Errol Oh is quite sure many farmers and fishermen are fine with their middlemen.