This article first appeared in Forum, The Edge Malaysia Weekly on August 29, 2022 - September 4, 2022

A number of worrying narratives have emerged from the current food crisis. They are not new, but have been brewing for some time. The crisis has brought them to the fore for us to chew on. They bring to light the past neglect of the sector, which aggravates the food insecurity problem, fuelled by high inflation and the cost of living. Ample food would have cushioned us from devastating inflation and soaring costs. These crises are global phenomena but the low food production is our own doing.

These narratives provide convincing leads towards the path of change for the sector to face the complex future shaped by climate challenges and global volatility. The following are the narratives.

First, the food crisis was made worse by the lack of local food production, due to the legacy of our previous national policies. After the pandemic, food supply was not able to meet demand due to supply disruptions, particularly in imported input and the shortage of labour. The Russia-Ukraine war resulted in an increase in the prices of fertilisers and of grains for livestock. Due to the previous policy of enhancing the growth of industrial crops (particularly oil palm and rubber), food has taken a back seat for years.

Second, food production is sub-optimal despite our richness in natural resources and the availability of modern technology. Malaysia is rich in natural endowments such as land, water, sunshine, rivers, seas and biodiversity, unlike countries such as Israel or the Netherlands. The latter are the world’s largest exporters of food. Clearly, the failure to mobilise both its natural assets and advanced technology caused the slow growth of the sector.

Third, Malaysia imports both food outputs and inputs that it can produce. Trade provides opportunities to import food and inputs that we can’t produce locally. However, we need not import food and inputs that we can produce, particularly some of our tropical vegetables and fruits. Experiences from other countries indicate that land is not a major constraint in productivity improvement; rather, it requires the application of the right advanced technology that is able to reduce dependency on labour and does not require large areas of land. Examples can be found in the horticultural sector in Israel and the Netherlands. High dependence on imported items makes the country vulnerable and not resilient to shocks, as proven during the current crisis. In addition, this dependence leaves us open to imported inflation.

Fourth, the crisis exposes several significant deficits in the sector that are retarding growth. These include the: (i) deficit in food trade reaching a record high of RM26 billion (this is expanding annually, with imports now valued at RM38.4 billion); (ii) deficit in self-sufficiency levels, which are declining yearly, indicating that production continues to be lower than consumption; (iii) deficit in research and development (R&D), leading to a failure to produce innovations and in value addition; and (iv) lags in the application of advanced technologies.

Fifth, the crisis hurts the poor most as well as small farmers. The former suffer a big reduction in purchasing power and, for the latter, the benefits of high prices are eroded by the inflated cost of production. Reduction in purchasing power leads to nutrition insecurity and, hence, affects the quality of human capital in the future.

Sixth, business as usual will produce a similar outcome, if not worse. The probability that this idiom will be proven right is high. Continuation of the current policy and economic structure may not yield significant improvement. The future is far more complex than it is today. This has been proven by the current confluence of disruptors in the form of the pandemic-climate change-conflict calamity. The United Nations has shown foresight by signalling the need for food systems that are sustainable, resilient and equitable in the future (as concluded at the Food Summit 2021).

The antithesis of the above narratives holds the solutions to our predicament.

First, the current food crisis, inflation and cost of living hikes linked to the pandemic require a “whole nation” approach, where all actors, including the public and private sectors, institutions and non-governmental organisations (NGOs) combine their efforts to address the problem.

Second, all the narratives point to one direction: the need to put food first or a Food First Policy to be adopted.

Third, the poor, including small farmers (particularly those in the B40 and M40 categories) are never a liability but an asset to the country. They are the stock of our future human capital. Therefore, nutrition is the input of utmost importance for their growth, along with education. Hence in the short term, it is imperative that they are subsidised, provided with financial/material aid and have access to effective social safety nets.

Note that neglect of the poor, who currently make up 60% of the population, provides fertile ground for social disruption, as proven by recent events in Sri Lanka and previously, during the Arab Spring in the Middle East.

Nevertheless, the current pro-rata subsidies (such as for petrol and the price ceiling for chicken) unnecessarily favour the rich. A gross estimate indicates that the government could save RM22 billion by ensuring that the petrol subsidy is enjoyed only by the target group. The use of big data tools that facilitate monitoring, which was shown to be effective in the MySejahtera health app, can be replicated to monitor online payment of subsidies.

Fourth, under such a multi-dimensional crisis, the biggest game changer is to invest in the future human capital: that is, the farmers and young entrepreneurs with the skills/knowledge to drive food production and innovation. Digitally smart farmers and entrepreneurs are needed to increase food productivity and efficiency and develop a robust supply chain. Digitalisation is size-neutral. Hence, small farms are never a constraint. The role of R&D here is obvious and imperative.

Besides, small farms are sustainable and ecologically friendly. Apart from technology, they need to be organised on a cooperative scale so that their collective operations ensure economies of scale and fair returns for members, as proven in South Korea.

Fifth, the palm oil sector could help by channelling their palm kernel cake for livestock development. Similarly, it’s a crime to channel the oil for biofuel when the poor consumers are in need of cheap cooking oil.

Petronas, with its big profit, can provide cheaper urea to producers and, in the long term, should venture into fertiliser production for home consumption and export. The multiplier effects are positive, as proven in Mexico.

Sixth, rent seeking, leakages and corruption have to be cut down at all costs. Besides legislation, they can be reduced by enhancing competition with the involvement of micro, small and medium enterprises (MSMEs), and preventing monopoly control or the centralisation of input distribution. Data shows that monopolies restrict growth and innovation with inequitable distribution of profit along the supply chain. Agricultural agencies need to channel their resources to farmers’ development and not to enhancing numerous subsidiaries that are a costly digression of their purpose. Profitable subsidiaries are no substitute to skills training, which is much needed by the farmers. It is imperative to reduce “political and government footprints” in all projects that aim to improve the welfare of the farmers and replace that with total farmers’ empowerment with skill and technology so that they can steer the sector towards greater heights. This will naturally reduce leakages and corruption.

Prof Datin Paduka Fatimah Mohamed Arshad is a senior fellow of the Institute for Democracy and Economic Affairs (Ideas) and fellow of the Agricultural and Food Policy Laboratory, Universiti Putra Malaysia

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