This article first appeared in The Edge Malaysia Weekly on April 22, 2019 - April 28, 2019

EATING out has become an increasingly expensive affair. So, when two of the nation’s most popular fast-food restaurant chains, KFC and McDonald’s, raised their prices in December last year, it ruffled the feathers of netizens as fast food, which was previously considered an inexpensive treat, is no longer so.

And the numbers say it all. Department of Statistics Malaysia (DOSM) data show that the food-away-from-home index, which measures the prices of food purchased at restaurants and cafés, grew 3.4% year on year in February. This was driven by an increase in the prices of burgers, fried chicken, rice with side dishes and noodles.

In fact, the food index has surpassed the country’s inflation rate. But economists do not see this as an anomaly.

“The higher index for food compared with the Consumer Price Index (CPI) in the first two months of the year is not unusual, given that it is 20 months since 2011, when the differential was even higher.

“On average, the monthly food CPI is 1.6 percentage points higher than the headline CPI, given that the prices of food and fuel are more volatile than other items in the CPI basket,” Sunway University Business School Economics Professor Dr Yeah Kim Leng tells The Edge.

In February, the overall index for food and non-alcoholic beverages increased by 1% y-o-y, while headline inflation fell 0.4% y-o-y.

However, Yeah points out that the higher food CPI reflects low productivity in food production as well as higher food import costs.

“Rising food prices is a policy concern ... especially given that close to a third of the average household expenses goes into food and beverage consumption,” he says.

According to a Khazanah Research Institute report titled “The State of Households: Different Realities”, published last year, rising prices mean that lower-income households, or those with incomes below RM5,000, spend more on food at home, which includes groceries and food cooked at home, but with a smaller quantity consumed.

Similarly, the quantity of food purchased away from home for this group has fallen as prices increase.

Professor Sayed Azam Ali, CEO of Crops For The Future Research Centre (CFFRC), says that the poorest and most marginalised sectors of society — such as Bottom 40 households and foreign workers — are the most vulnerable to rising food prices.

“Food makes up a large part of their total expenditure and their response to high food prices is often to move to cheaper, less nutritious foods and poorer diets.

“This has consequences, not just for their health and welfare, but comes with huge costs to the economy in working days lost to illness and hospital admissions for lifestyle diseases such as obesity, cardiovascular diseases and diabetes,” he says.

Why are food prices so high?

Professor Datuk Dr M Nasir Shamsudin, an academician at Universiti Putra Malaysia’s Faculty of Agriculture, says it all boils down to supply and demand.

On the supply side, the agricultural sector is divided into commodity and food sub-sectors.

“In general, commodity crops such as palm oil have grown rapidly and contributed significantly to national development and exports. There are good management practices at palm oil plantations in the country.

“However, the performance of the food subsector — comprising food crops, livestock and fisheries — [is not up to the level of the commodity crops] and, therefore, there are many issues,” he says.

On the demand side, Malaysians are consuming more higher-quality and higher-value food, leading to the need for imports to meet this demand.

As at end-2015, the food import bill totalled RM45.39 billion, while food exports stood at RM27 billion, resulting in a deficit of RM18 billion.

“With the exception of poultry, eggs, pork and fisheries, Malaysia depends on imports for most of its food items as the country has yet to reach self-sufficiency in its main food sources, such as rice, vegetables, beef, goat’s meat and milk. Therefore, the food trade deficit has surged from RM1.1 billon in 1990 to RM16.5 billion in 2016,” says Nasir.

CFFRC’s Sayed concurs, noting that the country’s food import bill is too high.

“When food imports were cheap, it made sense to focus on producing export commodities, such as palm oil, and importing food and animal feed. However, when the local agricultural sector cannot compete, it becomes unattractive to growers and investors. One consequence is the very dramatic increase in the food import bill over the past decade or so,” he says.

Domestic production and the supply of basic necessities, including staples, must be encouraged, says Socio Economic Research Centre (SERC) executive director Lee Heng Guie.

“Pro-market reforms and the liberalisation of more market players must be implemented to curb abusive monopolistic power and unfair pricing and promote healthy competition and a fair market with less government and state intervention.

“Food security is an important issue for the government to deal with, ensuring that the level is adequate to meet the demand of Malaysian households and, more importantly, at stable and reasonable prices for vulnerable and low-income households,” he says.

Is there a food security crisis in Malaysia?

No, Sayed says, although there is an urgent need to address the issue before it becomes critical.

“Business as usual on staple crops will not be enough. We need to reimagine food and nutritional security as an integrated challenge that spans ministries and agencies, harnesses the private sector and attracts talent, especially young people, women and urban dwellers.

“[There is] a growing digital divide between those with and without access to new technologies. Rural agricultural communities will become ever more marginalised unless we equip them with the skills to grow climate-resilient crops that produce nutritious and desirable products. Digital technologies should prioritise rural communities,” he says.

SERC’s Lee is of the view that there should be coordination between state governments and federal agencies in increasing the availability of agricultural land with long leasing tenures to farm cash crops.

“The ministries and agencies responsible for agriculture, food production and fisheries must be critically reviewed and revamped to enhance their effectiveness in ensuring a stable and sustainable supply at reasonable prices, while helping to reduce the high food import bill,” he says.

However, not everyone believes that being self-sufficient is the best way to tackle the food security issue. Sunway University’s Yeah believes the most cost-effective option should be considered.

“As a small country, rather than being insular, we should approach the issue from a regional perspective. What this means is that we should harness the benefits of regional trade and comparative advantages among countries to address food security issues, rather than aiming for 100% self-sufficiency. The latter would be costly and inefficient in the use of scarce resources such as land, capital and labour,” he says.  

Malaysia has the highest obesity level in Asean

Another aspect of food security is undernourishment — people who are undernourished do not get enough dietary energy or calories to lead an active and healthy life. Malaysians can give themselves a pat on the back on this one as, according to the United Nations Food and Agriculture Organization (FAO), this problem has been largely solved in Malaysia. The FAO estimates that the prevalence of undernourishment in Malaysia is very low at less than 3%.

However, there is a growing problem that the country needs to focus on — obesity levels are on an upward trend. FAO data from 2016 shows that the obesity rate among Malaysian women was nearly 20% and for men about 15% while the Asean average is less than 10%.

“Many people do not consume enough micro-nutrients and obesity is an emerging problem due to overconsumption of fats and sugar and increasingly sedentary lifestyles. In fact, Malaysia has the highest obesity rate among Asean countries for both men and women.

“Obesity is associated with a range of non-communicable diseases such as cancer, diabetes and heart disease,” says FAO regional strategy and policy adviser for Asia-Pacific David Dawe.

A micro-nutrient is a substance, such as calcium or Vitamin C, that is essential in minute amounts to the health of an individual.

CFFRC’s Sayed notes that nutritional security is a big challenge in Malaysia.

“The 2018 Global Nutrition Report identifies Malaysia’s double burden of malnutrition, in other words obesity, combined with micro-nutrient deficiency.

“The combination of diets that are high in calories and deficient in micro-nutrients is known as hidden hunger and the consequences are lifelong. Data from the UN International Children’s Emergency Fund in 2016 showed that more than one in five Malaysian children under the age of five are stunted,” he says.

Therefore, Sayed believes that food security is too important an issue to be left to a single agency.

“We need to shift to policies and food systems that support the quality and diversity of food from crops that can be locally cultivated and have a high nutrient content. Malaysia has an abundant range of nutrient-rich crops that can have large-scale impacts on the health of the population and the planet and benefit the economy.

“There is a global shift towards healthy plant-based foods from currently underutilised crops. It would be a tragedy if Malaysia, with so many advantages, were left behind.”

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.