Activities

The wide scope of activities of the FA can be divided into two fields:

(a) The FA supplies services to its members. With the help of training and cooperative methods, supply, marketing, extension and credit services are rendered to members and sometimes to other farmers as well.

(b) The FA is an agency to execute government policy. By implementing schemes or by providing audiences to the staff of different departments, the FA constitutes the local institutional structure which is necessary to implement any policy.

Among the services supplied by the FA to its members, marketing plays an important role. Coconut marketing is done in conjunction with the State FA. The Area FA buys the produce from the farmers and its lorry conveys it to Kuala Lumpur where the state FA advises the driver to which shop to bring the freight. In the case of eggs, the procedure is similar. Oil palm kernels are bought and shipped to the factory. The price paid to farmers is sometimes higher than the buying price of the factory so as to compete with traders and keep customers.

As regards pineapples, the FA is only responsible for the transport of the fruits to the factory in its lorries but is not involved in other marketing activities. Other products, like rubber and coffee, passion fruit and vegetables are not dealt with by the FA, partly because there is no need, partly because the limited funds of the FA do not allow it to enter into new activities. As regards coffee, the General Manager also expressed his feeling that there was a lack of competence.

The extent of marketing activities varies greatly and is mainly determined by three factors

(a) The capital available to the FA determines the degree to which the FA can work on merchandise instead of consignment basis. As most peasants need cash down, the possible volume of business is much higher in the first case.

(b) Marketing at least for several crops is linked with credit because middlemen often only accept business for both activities together. The marketing business of FAs depends, therefore, on the credit activities and vice versa. If the FAs cannot grant credit, the peasants have to go to the middlemen for marketing and for credit.

(c) The possibilities for marketing vary with the different crops and improve the greater the variety of the crops is. In areas where rice is a monoculture, these possibilities are almost non existent because of the monopoly system, except that the FA is the local agent of the National Paddy Board. Even then, the prospects are meager because of the fixed price.

The supply of inputs is centered on fertilizers und chemicals which the FA usually obtains from the State FA. In order to avoid overstocking, the Unit Chiefs submit the requirements of their members and these amounts are distributed directly to the unit storeroom. In the store room of the FA, the stock is usually limited to the amount which is necessary to bridge over delays in delivery. Everybody, even non-members, may purchase inputs as the income of the FA from the profit margin increases with the amount of sale.

Supply business usually works quite well and the business profit from this activity is one of the most important income producers for the FA.

In supply as well as in marketing business, the share of the FA in the total turnover of its organic area is quite limited. Some products are not dealt with at all and, as far as others are concerned, the FA hardly exceeds 5- 10%. The reasons for this are manifold; Many farmers, even among members, have long standing business relations with certain private traders and they do not want to break them off as they have a feeling of moral obligation. Others are indebted to traders and, therefore, obliged to sell to their creditor or they need cash down at the time of marketing, whereas the FA sometimes works an consignment basis only. On the side of the FA, the limited capital restricts the scope of activities, especially an merchandise basis, and, because of the limited staff, the business volume cannot be extended. In spite of the limited share in the total turnover, the involvement of the FA in supply and marketing has had an impressive impact in these fields. Its existence offered an alternative to middlemen and forced these and forced these to adjust their prices.The involvement of the FA in supply and marketing has had an impressive impact in these fields.

This holds true for most Area FAs.

This effect on price stabilization was very much appreciated by the members and raised the desire to step into business with provisions. The FA currently owns two retail shops but it is planned to hand them over to private persons. It proved more difficult to organize profitable retail with dozens of household articles which are usually purchased in small quantities than to distribute fertilizers, etc.

Many Area FAs started provision shops, some in almost every unit and sometimes there are as many as 25 per FA, It proved difficult, however, to organize retail with paid personnel. Some FAs stopped this business altogether, some limited it to 8-10 of the most important consumption goods and others rented the shops to private persons but included in the contract a special clause to control the prices.

The credit business of the FA is relatively limited. The association is involved in the grant of three different types of credit; Out of their own funds, the FAs grant credit to their members for productive purposes. The procedure is relatively simple. The farmer fills in a small application form an which he lists the goods required, the acreage they are needed for and the time at which they are required (not the amount of money!). This application has to be countersigned by the Unit Chief and is then examined by Chief of the credit section. He mainly assesses whether the amounts required are necessary for the acreage under cultivation. Besides, he checks the farmer's credit• history. 'If he is satisfied, the application is approved and the goods required are given in kind to the farmer. In 1972, the FA granted credit amounting to 6000$ to 25 members.

In most FAs, the credit activities are more intensive and amount, in some cases, to more than 50,000$ out of own funds. These credits are granted to more than one third of the members. In most cases, the credit granted to one member is limited to 300$ or to five times the share capital of the member, except in cases where there is a collateral.

Interest is 10% per season. Often, no additional interest must be paid for overdue loans. The recovery rate decreases as time goes by. When nothing serious happens to a member in a case of non- repayment, others start to become negligent too. FAs do not consider it worthwhile to take legal action as many credits amount only to 50 or 70$ and it is considered more important not to frustrate members than try to recover a small sum. However, FAs have made the experience that this not only destroys the credit moral but caused losses in their working capital. Even with a recovery rate of 90% over ten seasons, overdue loans amount easily to 10,000$ and one FA had not less than 35,000$ of overdue loans. This had led to a reduction in credit business and, in one case, on the General Manager's suggestion, the Board of Directors decided that no more credit would be granted to members out of the own funds, but only by the Agricultural Bank (which is secured by a collateral). This of course, means the end of credit service to members. Recovery always proves to be better when marketing is done by the FAs because they reclaim out of the profits and pay only the rest to peasant.

In the rice growing area, to reduce the risks, it is customary for FAs to grant no credit for land preparation and transplanting but they accept applications for credit only about one month after transplanting, when the harvest, and therefore ability to repay, is reasonably assured. Those who need credit for the whole production process (including land preparation and transplanting) are referred to the Agricultural Bank. As this bank requires a collateral, the process takes long and interest is slightly higher. Thus, the policy of the FA is discriminating against the poor. Those who can afford to pay the first part of the production process out of their own means obtain credit from the FA. Those who cannot do so are referred to the bank because the risk they represent is too great.

Farmers can also obtain credit from the Agricultural Bank. The FA is no agent of the Bank and, therefore, its participation is limited to examining the applications and forwarding them to the Bank Office. The procedure takes long, requires 2-3 months and involves a collateral or similar guarantees. The amount of credit can be higher than that from the FA. In 1972, only three members applied for credit from the Agricultural Bank.

A number of FAs are agents of the Agricultural Bank and thus earn income from the commission they receive for their services, but this involves greater risks because the agents have to guarantee the credit of their clients. As a collateral is required when applying for credit from the Agricultural Bank, the risk is limited, however, while the Bank benefits from the FA's detailed knowledge of conditions and requirements of members. Bank credits mediated by FAs reach up to 30,000$ per season and FA. According to the general experience, more credits are applied for than taken. As the procedure takes two months, peasants apply for credit at an early date just in case they need it. For instance, if their fields are affected by insects and have to be sprayed, they need credit for insecticides and, to have it at their disposal, they apply well before they know whether they will need it. If their fields are not affected, they do not need the credit. It is not possible to apply only when credit is needed because, in case, of an attack of parasites, the credit is required at short notice. This procedure involves much unnecessary work for the staff.

Another possible source of credit is the Planters' Loan Board and the FA assists in the same way as for the Agricultural Bank by examining the applications and intermediating between farmer and board. In 1972, 17 farmers obtained credit amounting, in most cases, to more than 1,000$ for each farmer.

The limited number of credit cases 45 from these sources altogether is not typical. This is due mainly to the type of the agriculture. The peasants from this area of tree crop farming are somewhat better off than their fellows in other regions. Besides, this type of farming does not require regular crop loans for the cultivation every season as, for instance, in areas where rice is cultivated. Finally, much credit is provided by middlemen. Farmers address themselves to them for credit as well. Especially in the case of vegetables and other crops not marketed by the FA, the farmer has no alternative than to apply to the middlemen for credit. Sometimes, farmers have to Lake credit from the middlemen because they are already indebted and, therefore, are bound to a certain middleman.

For certain larger projects, credits are provided by the State FA or the State FA negotiates with private banks. For instance, sprayers for insecticides for members are paid with a credit from the Chartered Bank granted after negotiation by the State FA.
The savings business of the FA is just at the initial stage and savings, so far, consist mainly of non claimed dividends. Recently, however, about 4,600$ have been deposited by 42 members. The total amount of savings is about 10,000$.

The work of the extension section is performed in two different ways. In a group approach, at meetings of the Small Agricultural Units, the staff tries to explain the advantages of crops like oil palm, passion fruit, etc. which, according to government policy, are to be extended. Farmers are informed an such matters as pesticides, fertilizers, etc. as well. However, the number of such meetings hardly exceeds two per year. The limited staff prevents an intensification. As much time at these meetings is devoted to FA matters, the extension work is limited. Therefore, the bulk of extension activities is connected with the supply business. Whenever farmers buy fertilizers or chemicals, they are advised an the proper application of the product.
In most FAs, the bulk of extension work is related with supply business. A number of FAs try to organize courses for their members. These courses last one day to two weeks, but attendance is poor and sometimes nil. It seems that peasants are not convinced that they can learn things which are really worthwhile from the :staff. Some FAs have organized youth demonstration plots. These usually meet with a good response from the members s ons. Sometimes, FAs organize bus tours to visit other FAs and thus provide an opportunity to exchange views with members of other FAs.

The FA has a specialist in home economics and classes with demonstrations in cookery, childcare and vegetable cultivation are held regularly and are well attended, especially by the young women. The production of handicrafts (weaving, sewing, knitting) has been started, but because of the lack of market, had to be stopped after some time.

In recent times, a number of FAs have introduced home economics and this usually meets with the great interest of the young women. Shortage of trained staff is the limiting factor.

The main activities of the FA as agent to implement government policy are connected with a number of projects. Such a project is the expansion of passion fruit cultivation in which the FA participated with an additional area of 5o acres in 1971 and of 30 acres in 1972. The project is subsidized by the government which pays for raising the plants, for fertilizers, wire and labour. To that end, the FA formed small working groups of members in several units. These agreed to participate and to cultivate together a certain piece of land an which they were to grow passion fruit.

In accordance with the government policy to extend the tree crop area and replant it with improved clones, the FA participated in the cultivation of seedlings. The State FA accepted tenders to deliver these seedlings to the Department of Agriculture and the Area FAs actually produces them. In the case of oil palms, the seedlings are raised near the FA building by hired labour so as to prevent farmers from changing the improved seed for the ordinary type. Coffee seedlings are cultivated by small working groups in the small agricultural units, and the amount was about 60,000 a year in recent times.

In the government extension policy concerning oil palm, the FA is involved as local salesman for seedlings and gives the necessary advice an the techniques of cultivation. Because of the price situation, this project is very popular with farmers.

In order popularize poultry keeping for egg production, the FA organized a model poultry farms with 1,400 birds at a farmer's place, This project was supported by a credit of 5,OOO$ granted by the State FA. As soon as the project has proven its profitability, it is intended to expand it by selling shares to interested members.

Such projects are very popular. Their number varies with the possibilities offered by natural conditions and even more with the activity and imagination of the General Manager and his staff, Some general managers have rendered great services to their FAs. Most of these projects concerned the diversification of farming. In the tree crop areas, the planting of cocoa, new oil palms, passion fruit, etc. is popular. Some projects aim at the rehabilitation of old tree areas or try to introduce vegetable production. Same FAs try to introduce the cultivation of groundnuts in rice areas during the dry season or suggest goat, cattle or poultry rearing. FAs participation in these projects includes advisory service, land clearing with FA tractors, raising of plants, granting credit for the expenses and organizing the marketings.

The nature and number of such projects indicate the competence of the General Manager. Here, the outstanding General Manager has a field to prove his ability.

There are other projects which are not directly improving agriculture an members farms, but aim at providing additional work and income. Some FAs, for instance, raise seedling for the government or for contractors. The peasants are usually organized in small working groups for this purpose. If part of such seedlings are planted an their own farms, this improves the agricultural production of the members as well.

Apart from such projects, the FA assists government departments by organizing their activities and providing audiences for traveling officers at meetings in the units. The Land Office, the Veterinary Department, the Health Department, etc. find in the FA the local structure through which they can perform their activities, disseminate information, etc. Similarly, institutions like the Agricultural Bank, the Planters' Loan Board, use the FA as their official or unofficial local agent end avoid the expenses of an own office and benefit from the familiarity of the FA with the local conditions and the situation of the individual farmer.