Calls for agro-food industry transformation

TA Research recommended four policy considerations that Malaysia could undertake to not only address food security, but also to make the country more resilient in agriculture and food industry.

PETALING JAYA: Malaysia should give urgent policy attention and implement measures to transform the country’s agro-food industry to close the food security gap, says TA Research.

In its recent study, the brokerage said while Malaysia had made impressive progress over the years through various policy measures to address food security, much work needed to be done in order to ensure sustainable and equitable economic growth.

“The government and relevant stakeholders must adopt a strategic and proactive approach to address the challenges ahead, with the aim of achieving a robust, sustainable, and equitable food system for all Malaysians,” TA Research wrote.

“In addition to its high reliance on food imports, Malaysia is also exposed to extreme climate events amid low productivity and slow adoption of new technologies within the agro-food industry.

“If not managed well, these vulnerabilities could affect adequacy and pricing of food during period of shocks,” it added.

As such, urgent policy attention and supply side measures to transform the agro-food industry should be undertaken to close the gap, thereby ensuring sustainable and equitable economic growth for the country.

TA Research recommended four policy considerations that Malaysia could undertake to not only address food security, but also making the country more resilient in agriculture and food industry.

These include agriculture land reform; greater use of technology to improve productivity in the agricultural sector; expanding domestic production especially on fertilisers and feedstocks; and incentivising quality investments in the agro-food sector.

With an overall score of about 70% last year, Malaysia currently ranked 41st among 113 countries in terms of food security based on an international benchmarking exercise using the 2022 Global Food Security Index, as released by the Economist Impact.

The moderate score put Malaysia on the eighth rank among Asia-Pacific countries and second among South-East Asian countries.

TA Research said Malaysia’s heavy reliance on imported food made it vulnerable to fluctuations in the prices of these products globally.

In addition, the depreciation of the ringgit could also exacerbate the inflationary impact from imported food.

“Driven by food import dependency and an underdeveloped agro-food sector, Malaysia has been recording larger food trade deficits over the years.

“Its fastest increase in imports compared to exports has led to a RM26.3bil trade deficit in food products in 2022,” TA Research said.

“Post Covid-19, the country has been recording a record high annual food deficit of more than RM20bil per annum,” it added.

Since 2000, Malaysia had accumulated a total food deficit of RM310.5bil, with a cumulative RM790.5bil for imports and RM480bil for exports, TA Research pointed out, citing data from the Statistics Department.

“Several factors have contributed to Malaysia’s high dependence on imported food. One primary reason is the country’s limited arable land, making it challenging to produce enough food to meet the needs of its population.

“Additionally, the growing middle class has led to an increase in demand for higher quality food products, which often require importing from other countries,” it said.

To address this issue, the government had implemented various measures to reduce the impact of imported food on inflation.

For instance, it had implemented price controls on essential food products such as chickens and eggs to keep prices affordable.

Additionally, the government had invested in programmes to promote the growth of domestic agriculture, with the goal of reducing the country’s reliance on imported food.

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