2027 Budget : Rubber production incentive hike to help cover smallholders' costs – PKPKM

KUALA LUMPUR: The increase in the Rubber Production Incentive (IPG) to RM3.30 per kilogramme (kg) in the tabling of 2027 Budget is expected to help cover part of production costs and provide additional income support for smallholders.

The National Association of Small Farmers of Malaysia (PKPKM) president, Adzmi Hassan, said this is especially due to smallholders facing uncertainty in market prices and rising costs of agricultural inputs.

"The IPG rate hike is a positive step that reflects the Madani government's concern for the welfare of small rubber farmers, especially in the face of rising costs at the moment," he said in a statement today.

He said IPG is not just financial aid but an important instrument to ensure rubber tapping activities remain viable and smallholders have the incentive to keep their plantations in production.

In tabling 2027 Budget on Friday, Prime Minister Datuk Seri Anwar Ibrahim said IPG is currently set at RM3 per kg, and this is the third time the IPG rate has been increased since it was RM2.50 per kg in 2022.

Meanwhile, Adzmi said PKPKM hopes the government will consider providing assistance under the Smallholder Oil Palm Replanting Financing Incentive Scheme at 100 per cent and further ease the distribution of the financial instrument to smallholders.

He said this deserves attention because cutting down old trees, preparing planting areas, obtaining seedlings, buying agricultural inputs, and carrying out planting work requires significant capital, and many smallholders do not have enough capital to start all these things.

"Smallholders hope that the assistance rate can be considered up to 100 per cent and given early, not through the 'pay and claim' method because smallholders not only face high replanting costs, but also have to endure a period without income while waiting for the new palm trees to mature and yield," he said.

The association also hopes that the Plantation and Commodities Ministry, the Rural and Regional Development Ministryand related agencies can review the minimum land ownership requirement of 0.5 hectares for eligibility to receive government assistance in the agri-commodity sector.

"PKPKM views that the minimum area requirement needs to be re-evaluated so that government assistance can take into account the actual situation of smallholders, including those who own less than 0.5 hectares of land but still grow plantations actively and productively," he added.