Public Policy Responses to the Food Security Challenges in East Asia: The Case of Malaysia

Transcription

1 Public Policy Responses to the Food Security Challenges in East Asia: The Case of Malaysia Fatimah Mohamed Arshad Institute of Agricultural and Food Policy Studies Institut Kajian Dasar Pertanian dan Makanan (IKDPM) Universiti Putra Malaysia Talking points presented at the First EAP Regional Agribusiness Trade and Investment Conference on Agroentrerprise without Borders Holiday Inn Atrium, Singapore, 3-31 July 29 1

2 Food sector in Malaysia: Malaysia s comparative advantage lies in export crops such as palm oil, rubber and cocoa. Malaysia has been a net importer of food for more than four decades. Item Public development expenditure on agriculture a Agriculture contribution to b GDP Growth rate of GDP c na Agriculture na Construction na Manufacturing na Service na Agriculture share of d employment Agriculture share of total e exports Rubber Palm oil Share of food from total exports Share of food imports of total imports , 1,5 1, Malaysia: Export, Import and BoT of Food, , Import Export The food deficit of Malaysia grew from USD97 mn (199) to USD736 mn (26). Food security is a major concern and 28 crises warranted a closer relook at food security issue Balance of Trade Deficits 2-1, Source: Dept. of Statistics, Malaysia

3 Malaysia s food trade, deficits more than surpluses: Malaysia achieves surpluses only in fish products, live animals (poultry) and birds eggs, coffee, tea and cocos products, lately on food manufactures. Deficits on strategic food, rice, grains, fruits and vegetables, feedstuffs.. BoT Birds' Eggs BoT Fish, crustaceans, molluscs and aquatic invertebrates, and preparations

4 Deficits in food neccessities: Malaysia imports dairy products, vegetables, sugar and sugar preparations and feedstuffs for animals; and the deficits are growing. BoT Dairy Products BoT Vegetables BoT Sugar, Sugar Preparations and Honey BoT Feedingstuffs for Animals

5 Deficits are growing: Malaysia depends on imports for meat and meat preparations, cereals and cereal preparations (particularly rice, wheat and corn), fruits.. There appears hope in food manufactures. BoT Miscellaneous Products and Preparations BoT Meat and Meat Preparations BoT Cereals and Cereals Preparations -3 BoT Fruits ,

6 Malaysia s Balance of Food Trade Plan of USD.5 bn (21): Not achievable in the near future. Export in 21 is estimated RM21.7bn, import 37.41bn, hence deficit of RM15.7bn Contribution to Surplus (%) 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Live Animals Coffee, tea, cocoa, spices, and manufactures 35% Fruits. Fish crustaceans, molluscs and aquatic invertebrates, and preparations, 23.1 Birds eggs, % 9% 8% 7% 6% 5% 4% 3% 2% Buahbuahan,.8 Sugars, sugar preparations and honey, Buahbuahan, Vegetables, 9.5 Cereals and cereal preparations, 46. Dairy products, 17.2 Contribution to Deficit (%) , , , 15.9 Feeding stuff for animals, 8.6 Coffee, tea, cocoa, spices, and manufactures, % % Meat and meat preparations,

7 The country Food Balance of Trade Plan to achieve USD.5 bn surplus in 21 is off target: But the imports are increasing at a higher rates due to fundamentals: rising food prices, higher population, incomes, changes in life styles and dietary preferences. With income increases, so is demand for high quality food eg. livestock products, milk, fresh produce and processed food, food and beverages. 6, 5, Forecast Food Export Target 4, Food Import Target 3, 2, 1, Import Export Food Balance of Trade Plan, USD.3 bn 21-1, Balance of Trade -2, Year 7

8 The 28 crisis, more bane than boon: High price of petroleum and crude palm oil, is a boon to the country as they are Malaysia s export items (in particular palm oil, Malaysia is world largest exporter). However, increase in petrol and food prices, was more than the poor or agricultural producers could contain. Increase in petrol prices, lead to increase in cost of inputs (fertiliser, chemicals, pesticides) all of which are imported. Cost of transportation and shipping have all increased. The poor consumers real income and welfare declined to an alarming level. The crisis challenged the country s food security stance, social and political stability. 1,4 1,2 1, M1 1982M1 1984M1 1986M1 1988M1 199M1 1992M1 1994M1 1996M1 1998M1 2M1 22M1 24M1 26M1 28M1 USD per tonne Crude Oil (petroleum); Dated Brent, US$ per tonne Palm oil, Malaysia Palm Oil Futures (first contract forward) 4-5 percent FFA, US$ per metric tonne Maize (corn), U.S. No.2 Yellow, FOB Gulf of Mexico, U.S. price, US$ per metric tonne Rice; 5 percent broken, nominal price quote, fob Bangkok Wheat; U.S. number 1 HRW, fob Gulf of Mexico 8 Source: IMF,29

9 The CPIs: The crisis was well-contained through various instruments from total interventionist measures (for paddy and rice sector) to subsidies (crude oil and diesel) and price control (for necessities such as bread, flour, sugar, poultry meat, milk etc). The price crunch subsided by mid 29, so was the world food market CPI 25= Jan- 5 May- 5 Sep- 5 Jan- 6 May- 6 Sep- 6 Jan- 7 May- 7 Sep- 7 Jan- 8 May- 8 Sep- 8 Jan- 9 May- 9 Food and non-alcoholic beverages Housing, water, electricity, gas and other fuels Communication Alcoholic beverages and tobacco Transport Restaurant and hotels 9 Source: DoS,29

10 Food Security: After the food crisis, National Food Security is implemented to cover paddy/rice, livestock, fisheries, fruits and vegetables Self Sufficiency Levels for Selected Food, 199 dan 27 (%) 14 % Rice Fruits Vegetables Beef Mutton Pork Poultry Eggs Dairy products Fisheries products 1 Source: Malaysia (various years & MoA (28)

11 Food security in Malaysia is translated into selfsufficiency policy in particular paddy/rice. Food security concern is historically embedded in Malaysia food policy since 193s. Three-pronged strategy for paddy/rice (till todate) High price to paddy producers (in most cases above the border price) Self sufficiency in rice production (% of SSL changes in response to the world market) Stable and high quality rice price to consumers (high indirect taxes to the poor vs the rich) They contradict each other, very costly (financial and economic senses), but they provide stability, socially and politically. Some market liberalisation was introduced to prepare for globalisation..but at a very slow rate. Started with the corporatisation of the National Paddy and Rice Authority to BERNAS (Paddy Beras Nasional Berhad) in 1992 floatation of the retail price of the high quality rice in 1992 The supply response is there, but not enough to let the industry to be on its own just yet. The crisis led to deeper interventionist measures. 11

12 28 crisis led to a more conscious effort to improve food security. This time around to include commodities regarded as strategic Guaranteed Minimum Price of paddy increased from RM65/tonne to RM75/tonne Price control of Super Tempatan 15% for the poor at RM1.86 per kg for all regions in Malaysia Cash subsidies to millers (including BERNAS) (RM8/tonne) to produce low grade rice Buffer stock of rice increased from 92, tonnes to 552, New Food Security Plan 29 Bigger investment in paddy/rice, fish, livestock and vegetables Increase productivity of paddy from 3.47 t/ha to 4.48t/ha (21) through better farming management practices, input subsidies and incentives Diesel subsidies to fishermen New paddy areas in Sabah and Sarawak Investment in infrastructures, R & D and human resource development. Thank you 12