International Journal of Real Estate Studies, Volume 11 Number 2 2017

LAND USE CONVERSION ON RICE PRODUCTION: POLICIES, RICE

PRODUCTIVITY AND PADDY LANDOWNERS

Wan Ibrisam Fikry Wan Ismail1 and Norshafadila Ngadiman2

1,2
Department of Real Estate, Faculty of Geoinformation and Real Estate
Universiti Teknologi Malaysia
81310 UTM Skudai Johor, Malalysia
Email:wanibrisam@utm.my1, shafadiman@gmail.com2

Abstract

The diminishing agriculture land area in Malaysia, especially in the area of paddy plantation will lead to reduction of
country's rice productivity. Paddy land located in the outskirts of the cities was seen to be the targeted area in the
conversion of land usage; from agricultural to building or industrial land. Existing policies such as the National
Agricultural Policies, Five Years Malaysia Plans, Food Security Policy and New Economic Model are clearly
formulated to protect the performance of quantity and quality of rice production in reaching the 85 % rice self-
sufficiency before Malaysia is ready to be a main producer in the future. This paper will look into the perspectives
from policies implementation and main target group of the policies (paddy land owners). Hence, the investigation into
the pattern of rice productions from 2004 to 2014 in KADA and MADA, and the survey on the paddy land owners in
MADA was conducted. The result of the study shows the effects of the reduction paddy land to the rice productivity.
It is also discovered that 96% of paddy land owners chose to remain planting paddy and sustaining the paddy land
area.

Keywords: Agriculture, Paddy Land, Land Use Conversion, Policy, Rice Production

1.0 INTRODUCTION
Today, Malaysia is able to produce rice
approximately 71.6% (Statistics Booklet of Plant
(Food Crops of Sub-Sector) in Malaysia, 2015).
Apparently, there was no change in the rice
productivity for the past 16 years; where
Malaysia produced 71% rice after the Second
National Agricultural Policy (NAP) or 7th
Malaysia Plan implemented in year 2000 (Eight
Malaysia Plan). Even though the Third NAP
(1998-2010) was outlined with the main purpose
to enhance the labour or farmers’ income through
increases in food production, the percentage of
rice production only went up to 72% by 2010
(Tenth Malaysia Plan). Malaysia is one of the
high cost rice producer. In 2014, the price for
Malaysia rice production is RM617.98 per tonne
(1USD = RM3.21 in 2014), compare with the
foreign costs such as Thailand (RM368.79), US
(RM540.05) and Australia (RM365.83) per
tonne. Najim et al. (2007) stated that this must be
the reason why the National Agricultural Policies
(1956-2010) and the New Economic Model
(NEM) (2010-2020) does not aim for full
sufficiency in rice production and still depend on
imported rice.
The population in Malaysia is 30,331,000 in
2015 and projected to continue growing linearly
and is expected to reach approximately 43 million
by the end of 2050 as shown in Figure 1
(UNDESA, 2015). The population in Malaysia is
now growing with 2.7% per annum. Therefore,
the estimated additional 45,000 tons of rice is
required for each year as stated by Chang (1983)
to maintain the current consumption; which is
about 180,000 tonnes of rice per month. The
increasing demand for food supply are due to two
factors; world population growth and rising
domestic incomes, especially those who live in
developing countries (Azizan, 2015; Najim, et
al., 2007). Through NEM (2010-2020), Malaysia
 Land Use Conversion on Rice Production: Policies, Rice Productivity and Paddy Landowners
is now targeting to increase self-efficiency up to
85% to fulfil the demand.
Figure 1: Malaysia Projected Population, 2005-2100
Source: Adapted from Azizan (2015) and UNDESA
(2015).
The phenomenon of land use conversion for
agricultural land has shown the gradual increase
in potential areas for paddy production. As stated
by Yasar (2011), usually, the reason of
agricultural land conversion is the difficulties
faced by the state authorities in determining the
direction of development; which has been zoned
previously in land use planning. Agricultural land
especially paddy land in Malaysia also affected
by this phenomenon. The impact of
industrialization on paddy land can be seen
through the plantation area deterioration from
335,340 hectares in 1978 to 243,020 hectares in
1983 (Arshad et al., 1997). A study by Ismail
(2006) found that the total area of agricultural
land in Alor Setar, Kedah has declined rapidly
from 6,684.02 hectares in 1992 to 2,356.83
hectares in 2005. The incident of paddy land loss
is occurred since the 19th century. Yusof (1993)
said this is happened when the Malays have
migrated from sustaining paddy land and farms to
get engaged in rubber estates, which commonly
owned by non-Malays to increase their income.
Therefore, this paper is focusing on trend of
rice production by reviewing the policies related
to agricultural (paddy land) to determine the
importance level of paddy land existence in
Malaysia, or gazetted paddy lands (such as
KADA and MADA) and the tendency of paddy
International Journal of Real Estate Studies, Volume 11, Number 2, 2017
landowners to remain planting paddy and
sustaining the paddy land area.
2.0 POLICY
In 1984, the first National Agricultural Policy
(NAP) was emphasized on maximizing the
agricultural income by optimized productivity.
However, the self-sufficiency level in paddy
sector reduced to 65% from 90% (1976-1980)
(Table 1), as a response to the internal and
external development. Concentration on food
security encouraged Malaysia to focus on rice
production during first and second Malaysia Plan,
through the New Economic Plan and the First
Outline Perspective Plans (1960-1975). Malaysia
succeed to achieve 95% of self-sufficiency in rice
production in 1975 (Arshad, 1997), but after the
globalization and trade liberalization agreement,
Malaysian paddy market forced to compete by
other low cost producers. This resulted the rice
import from other countries since it was cheaper
than the locally produced rice. No new changes
introduced in First NAP (1984-1995) except
improving farmers’ subsidies from RM2 per
basket to RM10 per basket. Furthermore, the
shares from agricultural sector and export shares
onto gross domestic product (GDP) also reduced
to give priority on manufacturing sector.
Second NAP (1992-2000) was drafted to
balance agricultural and manufacturing sector,
improving agricultural integration with others,
especially manufacturing sector, developing food
industry to the comprehensive and higher level,
and sustainable agriculture sector. Rice self-
sufficiency is maintained at the 65% with the
argument, to save costs with cheaper imported
rice. Therefore, the government is focused to
operate on selected gazetted paddy fields. The
NAP also introduced the private agencies
involvement to reduce government intervention
in paddy market. This NAP was reviewed in 1997
and came with new emphasis, to maximize the
income through optimal use of resources.
Other than that, there were a number of rice
policies such as fertilizer and price subsidies. It
was instituted to ensure food security during
Third NAP (2001-2010). The mobilization of
necessary investments locally and
Page 34
 Land Use Conversion on Rice Production: Policies, Rice Productivity and Paddy Landowners

internationally, making difficulties to the political In order to improve efficiency in the

decisions on resource allocation, land planning processing and the marketing of rice, the National
and land reform. Paddy and Rice Board (established in 1971) was
made a corporate body renamed as BERNAS in
Table 1: Self Sufficiency of Rice in Malaysia 1994. Hence, the policy instruments used are
price controls – floor and roof price, BERNAS’s
Malaya Plan / Years Self – Self-
Malaysia Plan Sufficiency Sufficiency
involvement in rice manufacturing, monopolizes
/ National Level (%) Achievement the import sector by BERNAS, licensing the
Agricultural (%) paddy and rice traders, managing farmers’
Policy (NAP) subsidies, and transfer payments in the form of
First Malayan 1956- - 54.0 price subsidy to farmers. BERNAS also urges the
Plan 1960
Second 1961- - 60.0
government to raise the price of rice in the market
Malayan Plan 1965 so that farmers will have the incentive to plant
First Malaysia 1966- - 80.0 quality rice that contributes to the better prices. In
Plan 1970 the end of 2010, Malaysia achieved 72% in self-
Second 1971- - 87.0 sufficiency passing the target of 65% of self-
Malaysia Plan 1975
Third 1976- 90 92.0
sufficiency. Therefore, the New Economic Model
Malaysia Plan 1980 (NEM) was drafted in 2010 put a higher self-
First National 1984- 65 75.9 sufficiency, 85% to achieve by year 2020. The
Agricultural 1991 Table 1 show the self sufficiency of rice in
Policy Malaysia from the year 1956 to 2010.
Fourth 1981- 65 76.5
Malaysia Plan 1985
Fifth Malaysia 1986- 65 75.0
Plan 1990 3.0 METHODOLOGY
Sixth Malaysia 1991- 65 76.3
Plan 1995 This study used both primary and secondary data.
Second 1992- 65 65.0
National 2010
The investigations were conducted at Kemubu
Agricultural Agricultural Development Authority (KADA),
Policy Kelantan and Muda Agricultural Development
Seventh 1996- 65 71.0 Authority (MADA), Kedah for secondary data.
Malaysia Plan 2000 The data collection process was done through
Third National 1998- 65 71.0
Agricultural 2010
collecting the rice production in KADA (2015)
Policy and MADA (2014) to review the trends of rice
Eight 2001- 65 71.0 production for these eleven years. An interview
Malaysia Plan 2005 was conducted to 120 paddy land owners
Ninth 2006- 65 72.0 regarding the paddy land preservation from
Malaysia Plan 2010
Food Security 2008- 80 72.0
revoke to other land use.
Policy 2010
New Economic 2010- 85 Table 2: Agricultural Land Use in MADA (2009) and
Model 2020 KADA (2012)
Source: Malaysia (various years) and Arshad (2010).
Plantation Width (ha)
MADA KADA
Therefore, the policy changes were one of Paddy 96,558 29,450
the actions that lead to the success of rice sector. Rubber 6,676 12,185
For example, the World Bank and the Malaysian Coconut 907 570
government together invested on Federal Land Mixed Plantation 10,021 14,130
Consolidation and Rehabilitation Authority Others 11,993 26,565
(FELCRA) Seberang Perak project, where the Total 126,155 82,900
government made the policy changes in land Source: Development and Planning Department
(KADA and MADA).
planning, land reform and resource allocation.

International Journal of Real Estate Studies, Volume 11, Number 2, 2017 Page 35
 Land Use Conversion on Rice Production: Policies, Rice Productivity and Paddy Landowners

The scope of this paper is focused on the rice others reason. Meanwhile, Kelantan
productions in KADA and MADA authority. government focused on the development in
This is because the paddy land use has been Kota Bharu as the centre of growth that locates
reported as the largest land use for agriculture many functions and activities. The Kota Bharu
land in both areas as shown in Table 2. City is functioning as centre of administration for
state and district, service and commercials and
tourist’s attraction. Moreover, the topography of
4.0 RESULTS Kota Bharu as in North Kelantan is more fertile
and flat which bring the interests to the residents
4.1 Trends of Rice Production in MADA to migrate into Kota Bharu.
and KADA

Meanwhile, the rice production in KADA Paddy Land Converted in MADA (1992-
shows more stability compared to MADA. 60 2005)
Starting in 2004, the rice production

Width (ha)
maintained at rate of 3 tonnes per hectare with 40
3.567 tonnes per hectare, 3.602 tonnes per
hectare, 3.374 tonnes per hectare, 3.608 tonnes 20
per hectare, 3.853 tonnes per hectare and 3.586
tonnes per hectare before reaching the highest 0
production with 4.076 tonnes per hectare in
2011. The productivity continues to maintain at
Building Housing Mix Development
the 3.812 tonnes per hectare in 2012, 3.774
tonnes per hectare in 2013 and 4.207 tonnes per (i)
hectare in 2014.
The Purpose of Paddy Land Converted

7.000 Others
5%
6.000
Institution
17%
5.000
Mix Housing
Development 48%
4.000
30%
3.000

2.000

1.000 (ii)
0.000 Figure 3(i) and 3(ii): The width of paddy land
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
KADA 3.567 3.602 3.374 3.608 3.402 3.853 3.586 4.076 3.812 3.774 4.207 converted from 1992 until 2005 and Percentages of
MADA 4.265 4.308 3.017 4.403 4.462 5.073 4.593 4.871 4.390 5.266 6.465 purpose of paddy land converted in MADA from
1980 until 2005.
Source: Wan Ibrisam Fikry (2014 ).
Figure 2: The Average of Rice Productions in
MADA and KADA from 2004 until 2014
Paddy land acquisition for development
purposes also contribute to the attenuation of
paddy land area. Based on the study, it is found
In Kedah, as shown in Figure 3, 48% of
as one of the weaknesses in Kelantan Structure
paddy lands have been converted to the housing
Plan. The land use conversion activities in
purpose as Kedah focused in providing
those ten years directly impact the rice
adequate housing. Another purpose of paddy
production. In MADA, Kedah loss
land conversion in Kedah are 30% for mix
approximately 3,680 tonnes a year for 460
development, 17% for institution and 5% for

International Journal of Real Estate Studies, Volume 11, Number 2, 2017 Page 36
 Land Use Conversion on Rice Production: Policies, Rice Productivity and Paddy Landowners

hectares of paddy land conversion (Ismail, Other than that, some of the farmers owned
2015). This situation could apply to KADA matching grant subsidy which help them to
area which loss 353.37 hectares per year, occupy the machinery and planting equipment.
hence, it would impact on the loss of rice Mini Estate Paddy Programme is also offered to
production with a total of 2,827 tonnes a year. the farmers who want to cultivate their own land
If the trend of paddy land reduction continued, with provided loan and subsidy.
an improvement to avoid food supply problem
in future are needed. It includes the
implementing extra efforts such as sowing
quality seeds, a good water irrigation and high
technology for agricultural purpose. 100
80
60
9.5094 40
10 Don't Want To Preserve
9 20
8 6.6773 Preserve
7 6.0353 0
Width (ha)

6 5.7619
2013
5 3.7758
4 2014 Figure 5: The percentage of tendency of paddy land
3 2.2112 1.4373
1.1717 1.4087 1.8137 2015 owners to preserve their land.
2 0.6024
1.0184
1 0 0.156 0
0
Kota Bachok Pasir Pasir Tumpat
Bharu Puteh Mas There was a respondent who chose to
Districts / Area change onto housing sector while the other four
chose to sell or make an investment on their
paddy land. One of the factors why they refused
Figure 4: The Width of Paddy Land Use to preserve their land is because of the high return
Conversion by Kelantan Land Office from 2013
in real estate investment. This would helping
until 2015.
them to make a deal with the developer and
change their family lifestyle in future.
4.2 The Tendency of Paddy Land Owners
5.0 CONCLUSION
About 96% of respondents tend to preserve their
paddy land meanwhile the other 4% choose to
Malaysia targets to achieve 10 tonnes per hectare
change their paddy land to other land use in future
of rice production per year yet the average of rice
(Figure 5). Ismail (2015) found that 115
productions in Malaysia paddy fields only able to
respondents who chose to preserve their paddy
produce 6 tonnes per hectare so far. However
land in significant to the household income.
there was a yearly increase and in the last three
Landowners who have income below than
years the rice produced is fairly consistent and
RM1,000 per month do not intend to change their
improved. MADA and KADA as the biggest
paddy land to other land use.
paddy fields in Malaysia contribute 40% and 20%
Majority of the paddy land are passed
of rice production. Replacement of original
through generations and landowners get their
paddy land is concerning authority on rice
main income from paddy planting. Moreover,
productivity and food security to the nation.
57% of the farmers are from the elderly who love
As the nations of the world witness the
to continue their lifestyle comfortably and know
globally diversion on food crops into biofuel,
how importance of rice production is to domestic
diversion of resource inputs into non-agricultural
food security. Additionally, 95% farmers
uses, it is obvious that Malaysia is following
received fertilizer subsidy from the authority and
other transiting nations in continuing to witness
government through fertilizer paddy scheme.

International Journal of Real Estate Studies, Volume 11, Number 2, 2017 Page 37
 Land Use Conversion on Rice Production: Policies, Rice Productivity and Paddy Landowners

higher food price index. Therefore, for future Food and Agriculture Organization (FAO)
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ACKNOWLEDGEMENT Ismail, W. I. F. W. (2006). Kajian Ciri-ciri Tukar
Syarat Tanah daripada Pertanian Kepada
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International Journal of Real Estate Studies, Volume 11, Number 2, 2017 Page 39