EVER since the cooking oil subsidy scheme (COSS) was implemented, the topic has been a hotly-debated issue at all estate owners’ association meetings. Estate owners think that the scheme is unfairly imposed on all oil palm growers who own more than 40.46ha.

The Malaysian Estate Owners’ Association (Meoa) has called for an end to COSS.

This cess was introduced last year following reported shortages of cooking oil in Malaysia sparked by a surge in crude palm oil (CPO) prices in the world market.

Refineries had to buy CPO (to be refined into cooking oil) at higher prices. The refineries had no choice but to pass the price increase to distributors and retailers.

As cooking oil is a price-controlled item, retailers opted not to sell at a higher price, hence the empty supermarket shelves.

Following this, a policy was introduced in June requiring oil palm estates to contribute RM2 for every tonne of fresh fruit produced as long as the CPO price remained above RM1,500 per tonne, up to a maximum price of RM3,000 per tonne.

Individual small-holders are exempted from this cess scheme.

Towards the end of the year, CPO prices exceeded RM3,000 per tonne. The scheme was revised upward, whereby the cess was fixed at two per cent.

For example, an estate producing 200,000 tonnes of fresh fruit per year at an average CPO price of RM2,460 would contribute RM3.8 million to the scheme.

For the nine months from its inception in June to February, RM972 million was collected.

At an average collection rate of more than RM100 million a month, total collection to date is estimated at more than RM1 billion.

The scheme, which is scheduled to end next month, is under review by the Plantation Industries and Commodities Ministry.

At the current cooking oil price, Malaysians continue to enjoy subsidised cooking oil, regardless of income level.

In one month, my wife does not use more than two 5.5-litre bottles of cooking oil, which works out to RM26. Most families can afford this.

However, one question remains: where does the RM100 million cess collected in a month go to?

The answer is to food outlets, restaurants, hotels, fast food chains, industries and pisang goreng stalls.

The business people are the real beneficiaries of COSS. The scheme is inequitable.

I am a member of Meoa and I know that Meoa members are not completely against the subsidy, but object to the scheme mentioned earlier.

The government needs to think of a better and more equitable way of continuing such a scheme.

The government, government-linked companies with big plantation land and estates owned by many state governments must be made to be the leading contributors.

DATUK SHAHABUDIN SHAFIE, Kuala Lumpur

Source: NST – April 28, 2008