A food fight against climate and costs

Climate events and global conflicts have impacted the supply of staples like rice and wheat, while currency fluctuations have raised the cost of imported food.

June 7, 2024

Mushrooms harvested under the Food Systems, Land Use and Restoration (FOLUR) impact program in the state of Sabah, Malaysia.

Ka Han Lee, UNDP Malaysia

This blog is produced under UNDP Malaysia Accelerator Lab, authored by Ege Berfin Bor (Intern); co-authored by Dr. David Tan (Head of Exploration) and Subash Jai Devaraj (Research and Writing Associate)

Rice, rain, and resilience

In 2022, Malaysia’s food inflation reached 5.8%, even as its food import bill reached RM 75.6 billion (1,2). Climate events and global conflicts have impacted the supply of staples like rice and wheat, while currency fluctuations have raised the cost of imported food. When India, which supplies over a third of Malaysia’s rice imports, banned exports of non-basmati rice in July 2023, there were immediate concerns about rice shortages. Malaysia’s stockpile meant that there were no disruptions (3), but renewed concerns about food security has put the spotlight on food self-sufficiency.

Yet, Malaysia has also experienced unprecedented heavy rainfall and severe flooding in recent times. In December 2022, agriculture and agro-food sectors experienced damages and losses amounting to RM111.95 million due to monsoon weather (4). As climate change intensifies, can we be certain that crops grown in Malaysia will be less susceptible to disruption than food imports? And if not, is Malaysia's 21.8% child stunting rate a sign of its future (5)?

Food security has put the spotlight on food self-sufficiency.

Pexels Mart Production

New paradigms of food security

Climate risk and resilience

While increasing food self-sufficiency reduces exposure to global shocks and price fluctuations, this strategy carries its own risks, especially in the face of climate change threats to Malaysia’s food production. Rising sea levels threaten saltwater intrusion, especially in the low-lying paddy fields in Kedah and Perlis (6). Meanwhile, temperature changes and shifts in rainfall patterns are projected to reduce the average rice yield per hectare between 10-33% by 2030, compared with the 2014 baseline (7). Furthermore, increasing reliance on local production could increase the vulnerability of food supply to local extreme weather events.

Perhaps a better framework for food security is ensuring resilience to shocks. As Malaysia develops its National Adaptation Plan (8), climate risks and the effectiveness of mitigation measures—such as investments in sustainable farming practices, integrated pest management (IPM) (9), weather-resistant crop varieties, and efficient water management systems—must be assessed.

It is also prudent to ensure that key food crops are not overly concentrated and thus susceptible to a single extreme weather event. Strategic food import methods such as diversification of suppliers, strategic stockpiling, preferential Trade Agreements, market intelligence and forecasting, can be used to complement these measures, further enhancing Malaysia’s food security. To this end, diversifying the sources of staple foods and strengthening food supply chain infrastructure can reduce susceptibility to global shocks.

Food prices and affordability

Securing food supply is not the only aspect of food security. Food prices, wages and competing expenses shape household access to food. Household food insecurity especially impacts children, and Malaysia has seen a rise in child stunting, undernutrition, and obesity (10). Malaysia already employs several measures to ensure the affordability of food, from price controls to subsidies for producers and consumers.

These measures have brought the cost of food in Malaysia below other countries in the region; nonetheless, the per-person cost of nutrient-adequate food is over 2 USD per person per day, with a healthy diet costing over 3 USD per person per day—or over RM 1,700 per month for a family of four (11), therein highlighting the ongoing challenge of cost in ensuring access to nutritious food for segments of lower-income households.

While the price of rice is in the spotlight, it represents just 6.1% of all expenditure on food and non-alcoholic beverages in the average household (12). Even for the bottom 40% of the national income group, this figure only rises to 6.5%. While rice is a caloric staple, the double-burden of undernutrition and obesity indicates that food security in Malaysia needs to be framed in terms of affordability of and access to a balanced diet.

Beyond Rice?

While Malaysia’s agricultural policies have kept rice self-sufficiency levels between 60-70% since the 1960s, these policies have not kept costs of production low or grown producer income (13). 70 percent of paddy farmers in Kedah reportedly in debt (14), and most paddy farmers earn less than the minimum wage of RM 1,500 (15). This is despite subsidies of RM 0.79 for every kilogram of local rice sold (16). Indeed, as young people going into farming are more likely to farm vegetables, fruits, and aquaculture, often adopting organic farming practices and other innovations that enable them to reach high-end market segments, tellingly, the average age of paddy farmers has risen to 60 years (17).

These challenges illustrate the difficulties that paddy farming has in competing against other, more profitable crops. Indeed, paddy acreage has remained stagnant since the 1960s while five times as much land is now occupied by oil palm plantations (18). Structural changes to the regulation and financing of Malaysia’s rice industry together with investments in technology and innovation can improve the productivity and profitability of paddy farming. Still, an evaluation of what crops might contribute most to improving Malaysia’s nutritional health and the welfare of producers should guide investment and policy priorities (19,20).

Paddy acreage has remained stagnant since the 1960s while five times as much land is now occupied by oil palm plantations

Alief Baldwin / Pexels

Potential Futures:

What might Malaysia’s food landscape of the future look like? Here are some possibilities:

1. Malaysia’s investments increase paddy productivity in the Northern states of Kedah and Perlis, which now supply 70% of Malaysia’s rice needs. Saline-resistant strains thrive even with saltwater intrusion, keeping supply stable and prices low. However, two consecutive years of climate-induced drought creates a crisis. A massive and expensive project to transfer water from Perak must be undertaken. Rice imports fill the gap in supply but cause a price shock.

2. Malaysia aims to reduce the net food import bill by cultivating globally in-demand food crops for export. This contributes toward higher wages for agricultural regions in Malaysia, improving welfare and nutrition in these communities. However, food prices remain volatile as increasing food imports and exports raises exposure to shifts in the global food market.

3. To mitigate against volatility of food prices, Malaysia locks in long-term contracts for imports of several staple foods while also increasing production of vegetables for the local market. Strategies taken to ensure the stability of food supply and prices come at the cost of higher baseline food prices. A focus on raising wages for low-income households helps to ensure affordability of food.

4. Recognizing the importance of regional collaboration, Malaysia engages in partnerships with neighbouring countries to establish a food-sharing initiative. While this initiative fosters food security in the region, unforeseen geopolitical tensions disrupt the supply chain, prompting the need for diplomatic interventions and alternative sourcing strategies and an expansion of regional collaboration to ensure a consistent and reliable food

Conclusion

Malaysia stands at a critical juncture where the intersection of climate change, food security, and economic stability necessitates proactive and comprehensive policy responses. Strategic choices today will shape the resilience of Malaysia's food producers and of Malaysian society to the challenges that lie ahead. By embracing climate-resilient agricultural practices, diversifying food sources, addressing economic drivers, and reframing food security to focus on overall nutrition, Malaysia can chart a course toward a more secure and sustainable food future.

This is #1 of 6 blogs about Malaysia's future of climate and demographic shifts, ahead of the launch of an upcoming report, Transitioning Futures, Anticipating Change: Socioeconomic Futures of Malaysia’s Climate & Demographic Transition. Watch this space or follow us on social media for the report.

References

Malaysia Trade Statistic Review 2023, Department of Statistics, Malaysia.
Analysis of Annual Consumer Price Index, Malaysia, Department of Statistics, Malaysia.
Ragananthini Vethasalam, Gerard Gimino and Martin Carvalho. “Enough local rice in stockpiles to last five months, says Mat Sabu” The Star 18 September 2023, accessed 24 January 2024. https://www.thestar.com.my/news/nation/2023/09/18/enough-local-rice-in-stockpiles-to-last-five-months-says-mat-sabu
Agriculture, agrofood sectors suffer RM111.95m in losses due to floods – Mohamad Sabu, The Malaysian Reserve, 5 January 2023. Accessed 24 January 2024. https://themalaysianreserve.com/2023/01/05/agriculture-agrofood-sectors-suffer-rm111-95m-in-losses-due-to-floods-mohamad-sabu/
National Health and Morbidity Survey 2019: Non-communicable diseases, healthcare demand, and health literacy—Key Findings, National Institutes of Health Ministry of Health Malaysia
Ministry of Energy, Science, Technology, Environment, and Climate Change, Malaysia’s Third National Communication and Second Biennial Update Report submitted to the United Nations Framework Convention on Climate Change, 2018.
Ministry of Energy, Science, Technology, Environment, and Climate Change, Malaysia’s Third National Communication and Second Biennial Update Report submitted to the United Nations Framework Convention on Climate Change, 2018.
“Adaptation plan to address climate risks,” The Star 12 September 2023, accssed 17 January 2024. https://www.thestar.com.my/news/nation/2023/09/12/adaptation-plan-to-address-climate-risks#:~:text=KUALA%20LUMPUR%3A%20The%20National%20Adaptation,well%20as%20infrastructure%20and%20cities.
'Integrated Pest Management' by CropLife Malaysia: https://mcpa.org.my/crop-protection/stewardship/integrated-pest-management/
National Health and Morbidity Survey 2019: Non-communicable diseases, healthcare demand, and health literacy—Key Findings, National Institutes of Health Ministry of Health Malaysia
World Food Programme, Food and Agriculture Organization, United Nations Child Fund, and World Health Organization. Asia and the Pacific Regional Overview of Food Security and Nutrition 2020: Maternal and Child Diets at the Heart of Improving Nutrition.
Sarena Che Omar, Ashraf Shaharudin and Siti Aiysyah Tumin, The Status of the Paddy and Rice Industry in Malaysia, Khazanah Research Institute.
Sarena Che Omar, Ashraf Shaharudin and Siti Aiysyah Tumin, The Status of the Paddy and Rice Industry in Malaysia, Khazanah Research Institute.
“Malaysia’s price controls keep rice production low, exacerbating shortages,” The Straits Times 8 November 2023, accessed 17 January 2024. https://www.straitstimes.com/asia/se-asia/malaysias-price-controls-keep-rice-production-low-exacerbating-shortages#:~:text=While%20the%20retail%20price%20cap,prices%20has%20reached%20breaking%20point.
Shathana Kasinathan, National audit report shows nearly quarter of Malaysian paddy farmers earn below RM600 monthly, as rice cultivation programme fails to reach target, Malay Mail 22 November 2023, accessed 24 January 2024.
Sarena Che Omar, Ashraf Shaharudin and Siti Aiysyah Tumin, The Status of the Paddy and Rice Industry in Malaysia, Khazanah Research Institute.
“Make agriculture attractive among youths,” The Malaysian Reserve 23 June 2021, accessed 17 January 2024. https://themalaysianreserve.com/2021/06/23/make-agriculture-attractive-among-youths/
Sarena Che Omar, Ashraf Shaharudin and Siti Aiysyah Tumin, The Status of the Paddy and Rice Industry in Malaysia, Khazanah Research Institute.
Sarena Che Omar, Ashraf Shaharudin and Siti Aiysyah Tumin, The Status of the Paddy and Rice Industry in Malaysia, Khazanah Research Institute.
Fatimah Mohamed Arshad, “After half a century, rice sector monopoly ripe for change,” Institute for Democracy and Economic Affairs, 11 January 2023, accessed 24 January 2024. https://www.ideas.org.my/after-half-a-century-rice-sector-monopoly-ripe-for-change/