Background
In June 2007, paddy farmers in Sekinchan again faced the recurrent problem which is the restriction of interstate movement of paddy. Restriction of interstate movement has been claimed to prevent the farmers from obtaining higher selling price (affecting the income of the paddy farmers) offered by millers from other states.

Rice is the main food source for all Malaysians. Hence, the demand for rice is high and demanded all year long. In Malaysia, paddies are usually planted in 2 cycles per year where the production from the 2 cycles will have to supply the paddy needed for the rest of the time along the year. Hence there will be a holding cost or storage charges paid by the millers in order to constantly supply the paddy.

On the other hand, paddies are planted in different times and in different areas. Enabled interstate paddy movement will then possibly reduce the holding cost where a higher price can be offered to the paddy farmers. While paddy farmers can sell their produce at a higher price, farmers will be more capable in reinvesting in new technology to produce more paddy with higher quality.

Besides that, under the ASEAN Free Trade Area (AFTA), by the year 2010, all countries will have to open up the borders for trade and this includes paddy. Paddies are currently restricted to move inter-state. Hence it is still not adjusted to the free trade system. Therefore, once the Malaysian border opens, our local farmers will face tough competition with no adaptation period to the system. Paddy farmers will then lag behind by becoming less competitive or less effective in the Free Trade system.

Under the current practice, the Director General of the Paddy and Rice Division, Ministry of Agriculture is empowered to oversee the interstate movement of paddy and no one shall move the paddy from one state to another without the permission of the Director General. There were instances where interstate movement for paddy was allowed but was again restricted in the following round of production. There is no transparency of the interstate movement which will inevitably hinder investment in the paddy industry due to lack of security.

Although currently the interstate trading of paddy has been opened up, without any clearer or more transparent plan, the restriction of interstate movement of paddy will always happen again.

Recommendation
In order for paddy farmers and stakeholders to become competitive to face trade liberalisation under AFTA simultaneously, they have to be able to adapt to the AFTA system first. Thus, interstate movement of paddy has to done transparently and also gradually. This will then encourage the stakeholder to invest and to upgrade their facilities resulting with a more sustainable development of the paddy industry. This will also help our country in preparing for the coming of AFTA.