Artcile 2

                                         'Big impact on ordinary citizen'

According form the article given “price of rice on the rice link: http://thestar.com.my/news/story.asp?file=/2008/4/13/focus/20936865&sec=focus, the price of rice is increasing gradually every year. The shortage and halting exports of rice have been increasing in the media. There is a shortage in rice in Malaysia and also among the other Asian countries. Shortage in rice happens when, the consumers are willing to buy the rice more than what the produces sell every year. Besides that, shortage in rice happens when the price of the rice is lower than the equilibrium price. As what the chief economist say “there should be a production increase in response to higher prices as it would be viewed as profitable. The current world shortage will continue for some time.” DR YEAH KIM LENG. Furthermore, according to the chief economist there are many ways that we can overcome this problem. To overcome this problem, government will have got to subsidise in a higher rate in order to avoid excessive shortage in our country. Whereas, the subsidy is not huge compare to the amount that they subsidise for the petrol and the natural gases. Therefore, when the government subsidise the price of the rice there will not be tendency for the price of the rice to increase nor to decrease and there will also be a tendency for the market price to be equilibrium.

This article refers to the topic Market Equilibrium. The topic Market Equilibrium is divided into several subtopic, the subtopics are shortage, surplus, equilibrium and disequilibrium, price ceiling and price floor. Shortage (excess of quantity demanded) happens when the coke are bought in a large quantity by the consumers than what the coke producers are willing to sell. Surplus (excess of quantity supplied) is the opposite of shortage where the coke producers are willing to sell more than what the consumers are willing to buy. Whereas, equilibrium happens when quantity supply equals to quantity demanded. Price ceilings are set by the government for every product in the market in order for the consumers to be able to buy their daily needs. Lastly, price floor is also been imposed by the government in order for the price not too low.

                           

Based on the graph above, can see examples on the difference and effect of subsidise on rice.Without subsidy the farmers produce just 40 million tons a year .But when the subsidy of rm 20m tons  is given , the subsidy shift  there will be in the  shift supply curve to the rightward. Other than that, the equilibrium quantity also will increase from 40m to 60 m and this will lead to fall in price of rm30 m a ton .The farmers will get a higher amount of subsidy from the government per ton which is good. Besides that, if the government doesn’t subsidise the higher quality of rice, the lower income people can’t afford to buy the higher quality rice as its expensive but if they buy the lower quality rice, the rice are broken rice where it doesn’t satisfy them this leads them to shift to the substitute which is the imported rice such as, Taj mahal,ponni and so on.

On the other than,Datuk Ameer Ali Mydin the managing director for Mydin Holdings Bhd, also believes that subsidy should be given. Datuk Ameer explains that the price ceiling hasn’t gone up although the market price has increased. Price ceiling was implemented in order for the price of the rice not to be charged higher than the maximum price stated by the government. The price ceiling is also implemented in order for consumers to purchase their daily needs. Furthermore, as what they have researched, they said that when they checked the market floor of the hypermarket they got to know that the all the stocks were sold out and they not available for purchase. Apart from what Datuk Ameer Ali Mydin has shared, Aeon companies (M) Bhd PR Manager Shirley Chan said that the price of the rice has been increasing gradually about 10% - 20% within a week. I have surveyed and also interviewed ta restaurant to observe and get to know about the quality of rice provided to the customers in their restaurant. The restaurant owner said that, he will only provide the high-quality rice to satisfy their customers because of the high-quality rice (not subsidise by the government), the restaurant owner got to charge more in order to gain profit; therefore, the owner concluded that all the types of rice should be subsidise in order to satisfy the daily needs of the nation.

 Besides that, Ameer (anonymous) also said that there isn’t a real shortage of rice in our country. But if the price of the rice keeps increasing, consumers will start to stock the rice before the price increases which will create an artificial shortage; therefore eliminated shortage allows the price to increase gradually. Ameer (anonymous) also came up with an idea how to solve the problem; he said that the monopoly on rice imports should be removed which results to a decrease where the price of the rice will fall about two to three ringgit. Ameer (anonymous) also said that, they should allow the market forces to decide the price. Apart from this, he also agreed that government should impose a higher rate of subsidy for the imported rice in order for the price of the rice to decrease and it will also encourage the consumers to produce their production more in a lower price.

 In conclusion, I think the government should focus more on the daily intake products. Since there is an increase in price for rice, they should investigate more and also solve this issue as fast as possible in order for the price of the rice not to increase gradually. Besides just knowing about the problem faced, they should also subsidise the price of the high-quality rice in order to overcome all the problems faced by the consumer. This is because; the quality of rice plays a very important role. If there is no quality in rice, even the middle or lower level class people will go for expensive rice which is not effordable.So in this case we cannot blame them why are they not going for the subsidise rice from the government. Thus, no matter whether there are from middle class or poor, a consumer will always behave like a consumer which gives more priority to the quality of the product. Since rice is the one of the main purchasing for every citizen in Malaysia, the government should concentrate on both the price and the quality of the rice equally. Apart from that, the government should survey more about the public’s opinion over the increase of price on rice. Government should also be aware about the middle class people who earns very less which is just enough for their accommodation, and I don’t think that they can afford to buy 10kg of rice for RM 35. Government should also realise that, as the price of rice increases, the price of food in the shop will also increase at least for 20%.hence, I hope that government would be aware of this and would take action over this as soon as possible.