ACCORDING to the article “Food Imports and the Exchange Rate: More Than Meets the Eye” in Bank Negara Malaysia’s latest “Quarterly Bulletin” (Third Quarter, 2019), our country remains a net food importer with imports forming at least a quarter of our total food supply (24%). This means we have yet to attain self-sufficiency in our food supply.
Our total food import in 2018 was valued at RM54bil, an increase from RM43bil in 2013. This reflects a hike of 5% in the compound annual growth rate over five years.
Meanwhile, export of food and beverages in 2018 rose at a faster pace (by 6% on average), amounting to RM35bil. The amount was RM26bil in 2013. As these figures show, the value of imports exceeded the value exported.
The article highlighted that by and large, Malaysia is self-sufficient in responding to demand from domestic consumers for many basic food items. Out of 33 most commonly consumed agricultural products (such as brinjal, cucumber, spinach and eggs), half have a self-sufficiency ratio of more than 100%, including cucumber at 118%, brinjal, spinach and eggs at 116%, long beans 111%, pineapple 106%, cuttlefish 105%, banana 103% and shrimp at 103%.
SSR for poultry and tuna stands at 98%, representing the two lowest food products imported. Crab (93%), mackerel (83%), coconut (78%), rice (70%), cabbage (42%), chilli (39%), beef (25%), mango (25%) and mutton (11%) were on the higher end of the spectrum of dependency.
It is obvious that we are heavily dependent on imports for certain food products including chilli, red meat and mango. The current reality for most Malaysians is that we tend to spend more on imported products which the local market is unable to satisfy.
Theoretically, high demand for a product would induce higher production or supply. That being said, when there is high demand for a local product, why does it take a long time for the supply to be increased?
Arguably, this could be due to inefficiencies in agricultural production, distribution networks and the overall supply chain. This includes the availability of land and over-reliance on certain locations such as Cameron Highlands, which currently supplies 10% of vegetables for the peninsular market.
Among several factors in agricultural production (raw input, labour, utilities and logistics) are the many layers involving producers, processors, wholesale distributors, retailers and consumers, all of which affect costs and the final prices.
Lack of economies of scale in the production processes and complexities in the domestic supply chain inhibit the country’s self-sufficiency in food supply. Economies of scale are attainable when more units of a good or service can be produced on a larger scale with abating input costs.
Thus, lack of economies of scale in the production process would result in manufacturers transferring the high cost of production to the final prices of the products.
As local products involve higher costs, a more practical approach would be to import food items at much cheaper prices.
On the other hand, according to a survey by the Federation of Malaysian Manufacturers and the Malaysian Institute of Economic Research earlier this year, 85% of local manufacturers were reported to have experienced a rise in production costs by up to 10% due to the sales and service tax (SST) on raw materials, components and services.
This means that for food and beverages that have high domestic production contents, fiscal measures such as SST can increase costs.
To promote self-sufficiency in food supply, perhaps the manufacturers could be given tax exemptions or charged lower tariffs on their imported raw or semi-processed materials for local food production.
Moving forward, more land must be made available for food production. This could be done through land tax reforms and land distribution schemes emulating the success of Felda.
Other measures towards self-sufficiency include:
1. Charging lower premiums for land converted for agricultural purposes by the state authorities. The Land Acquisition Act 1960 could be applied to increase agricultural production;
2. Digitalisation of agriculture to enable higher productivity, yield and quality, and allowing for suitable sites to be identified or earmarked; and
3. Implementing smart technology via AgTech (agricultural technology) that would revolutionise farming and agriculture. Use of the IOT-based (Internet-of-things) padi productivity monitoring and advisory system (E-Padi) shows there is great potential for smart farming in Malaysia.
Much more could be done to integrate and expand the use of smart technology in other areas of agriculture such as chilli, red onions and red meat (livestock). Innovations such as precision farming would involve less manual workload for farmers. For example, drones have been deployed for spraying purposes in our padi fields.
Meanwhile, IoT can be used to measure and provide real-time data for farmers in determining irrigation and fertiliser levels.
There’s also vertical farming, which should be strongly promoted in urban areas. This means that old and new buildings should be transformed into food production areas.
In Singapore, sky farming is already well under way to meet the country’s food needs and ensure its food security. This form of farming is dependent on both hydroponics and aeroponics. Hydroponics involves growing plants in a water-based, nutrient-rich solution and circumvents the use of soil (pic). It uses inorganic materials such as perlite, rockwool, clay pellets, peat moss and vermiculite.
Aeroponics is a process of growing plants in an air or mist environment. It follows the same concept as the hydroponic system, but aeroponics leaves the roots dangling in the air, and the plants are periodically watered by specially designed misting devices.
In response to the contemporary import policies, Prime Minister Tun Dr Mahathir Mohamad has said the government would revise the existing policies that have been favouring imports.
In summary, fiscal measures, land reforms, smart technology and unconventional, i.e. vertical, farming would help to alleviate Malaysia’s over-reliance on food imports.
JAMARI MOHTAR and
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