Agricultural Subsidies and Farm Input Support for Paddy Farmers

The sack of fertiliser a paddy farmer shoulders to the field that morning was not bought with his own money — it arrived free of charge, borne by the Federal Government for decades. This is the true face of Malaysia’s agricultural subsidy for paddy: not a cheque or money deposited into an account, but fertiliser, pesticides and incentives that cover a large share of the cost at the farm.

These schemes are specific to the paddy industry and entirely separate from the diesel or cooking-oil subsidies more familiar to the public. This guide explains the main input schemes, their rates, and who administers them.

Why is paddy subsidised differently from other crops?

Paddy is a strategic crop — it is the foundation of national food security. The government aims to reduce reliance on imported rice and raise the income of paddy farmers, most of whom are smallholders with thin margins.

For this reason, paddy support is arranged as a bundle of schemes: some cover the cost of inputs (fertiliser, seed, pesticides), some support the output price (paddy price subsidy), and some take the form of cash incentives for specific operations such as ploughing. It is this combination that is reported to reach roughly RM4,300 per hectare per season under Budget 2026.

Which scheme covers a paddy farmer’s fertiliser cost?

At its core is the Federal Government Paddy Fertiliser Scheme (SBPKP), which according to official Farmers’ Organisation Authority (LPP) documents was introduced by the Government in 1979. The scheme supplies each paddy farmer with:

• NPK compound fertiliser — 240 kg per hectare (12 bags)
• Urea fertiliser — 80 kg per hectare (4 bags)

This assistance is allocated up to a maximum area of 25 acres (10 hectares) per paddy farmer. The fertiliser is distributed in physical form according to the paddy fertilisation schedule, not as money. Compound fertiliser is usually applied in stages according to the schedule set by the area agency, depending on the formulation supplied.

Alongside it, the Paddy Production Incentive Scheme (SIPP/IPP) — listed by KPKM under the Paddy Industry Development Division — took effect from March 2007 under the Ninth Malaysia Plan. According to LPP’s official implementation manual, the scheme consists of two components: ploughing-labour assistance of RM100.00 per hectare per season and agricultural input assistance of up to RM140.00 per hectare per season in the form of fertiliser, pesticides, crop enhancers and soil ameliorants — including liming to rehabilitate acidic soil. Separately, in its Budget 2026 communications KPKM presented a pesticide (pest control) incentive raised from RM200 to RM300 per hectare per season as a distinct paddy-farmer incentive line — on par with the ploughing and harvesting incentives — even though historically pesticides are a component of the SIPP input basket.

The main paddy input and incentive schemes

The table below summarises the paddy-specific schemes and the rates that can be verified from official sources and news reports:

Scheme	Type of assistance	Main rate (source)
SBPKP — Federal Government Paddy Fertiliser Scheme (since 1979)	Physical fertiliser	Compound 240 kg/ha (12 bags) + urea 80 kg/ha (4 bags), max 25 acres/10 ha (LPP; Selangor State Assembly, 2019)
SIPP — Paddy Production Incentive Scheme (effective March 2007)	Ploughing labour + agricultural input assistance	Ploughing labour RM100/ha + input max RM140/ha — fertiliser, pesticides, crop enhancers, soil ameliorants (LPP Manual)
Pest control (pesticide) incentive	Input incentive	RM300/ha per season (up from RM200; Budget 2026 incentive line, KPKM)
SSHP — Paddy Price Subsidy Scheme	Output price subsidy	RM500/metric tonne (up from RM360) (MOF, Budget 2024)
Ploughing incentive (IPKP)	Cash incentive for ploughing cost	RM300/ha per season, current season — RM200/ha advance + RM100/ha balance (KPKM, 2026)
Harvesting incentive (new)	Harvesting diesel cost assistance	RM50/ha per season (Budget 2026, FMT)

Note — ploughing rate increases: The paddy ploughing incentive has been raised in stages. Its original rate was RM100/ha (starting March 2007); Budget 2026 (tabled October 2025) raised it to RM160/ha — confirmed in KPKM’s official post-Budget 2026 Q&A. For the 2026 Planting Season, that rate was subsequently raised further to RM300/ha. The current-season rate (as of August 2026) is therefore RM300/ha, paid in two phases — RM200/ha advance and RM100/ha balance.

KPKM also lists other schemes under the Paddy Industry Development Division, including SBRPB (Hill/Upland Paddy Fertiliser and Pesticide Scheme) for upland paddy and IBPS (Certified Paddy Seed Incentive) to encourage the use of quality seed.

How large is the government’s fiscal commitment?

The allocation figure rises every year. MOF announced RM2.6 billion for paddy-farmer and fisherman subsidies and incentives in Budget 2024. BERNAMA reported that the allocation to paddy farmers was raised by about 5.5 percent for Budget 2025.

By Budget 2026, that figure rose to RM2.62 billion — described as the highest paddy-farmer subsidy in the nation’s history. Free Malaysia Today reported that average per-farmer assistance rose to roughly RM4,300 per hectare per season compared with RM3,790 previously, covering among others the RM300/ha pesticide incentive, the new RM50/ha harvesting incentive for diesel cost, and the ploughing incentive now set at RM300/ha for the current season (raised from the original Budget 2026 rate of RM160/ha).

How is the paddy price also supported?

Beyond inputs, the government also covers the price side. In Budget 2024, MOF announced that the paddy price subsidy was raised from RM360 to RM500 per metric tonne, while the guaranteed minimum price (floor price) of paddy was raised from RM1,200 to RM1,300 per metric tonne. This gives paddy farmers a more certain return when their crop is sold, regardless of market price fluctuations.

How does the assistance reach the paddy farmer?

The flow involves several layers:

1. Registration — the paddy farmer registers and is verified as an active paddy operator through an agricultural agency.
2. Input distribution — fertiliser and pesticides are supplied physically according to the registered paddy area through suppliers and farmers’ organisations.
3. Cash incentives — payments such as the ploughing incentive are disbursed by season. KPKM makes an advance payment of the RM200/ha ploughing incentive (one-off) before or during the start of ploughing work to ease the farmer’s early working capital, with the RM100/ha balance paid after the ploughing is completed and verified by the agency. For the 2026 Planting Season, this advance payment began to be disbursed in stages on 19 May 2026, involving roughly 240,000 SBPKP-registered paddy farmers in Peninsular Malaysia with an allocation of about RM48 million.

Overall administration is under KPKM, with field implementation by the Farmers’ Organisation Authority (LPP) and granary-area authorities such as MADA and KADA.

What to keep in mind

The rates and structure of these schemes are reviewed at each annual budget. The ploughing incentive, for example, has been raised in stages — RM100/ha (original, March 2007) → RM160/ha (Budget 2026) → RM300/ha (2026 Planting Season) — so paddy farmers should refer to official KPKM and area-agency announcements for the current-season rate. Likewise, although the core SIPP structure (ploughing labour RM100/ha + input max RM140/ha) is confirmed from LPP’s primary manual, the exact per-hectare rate of a particular season’s components — such as the number of bags of additional NPK fertiliser or the quantity of lime — changes by season and area agency (LPP, MADA, KADA, Sarawak Department of Agriculture).

As a public policy, the paddy subsidy scheme is also not without debate. Issues such as leakage of assistance, distribution efficiency, and farmers’ continued dependence on subsidies are often raised in policy discussions on the national rice sector. This document focuses on the structure and rates of the schemes, not an assessment of their effectiveness or distributional impact.

For next steps, check the latest planting-season announcements on the KPKM website and with your local farmers’ organisation, confirm your paddy registration status, and compare current-season rates with the figures stated here — this document is an AI-assisted draft and not a substitute for official agency information.