Malaysia cannot subsidise its way to food security

SHAH ALAM - Malaysia cannot subsidise its way out of a food security problem rooted in ageing farmers, high production costs, shrinking agricultural land and inefficient supply chains.

The real test is whether decades of government support have made production more competitive and food more affordable.

Malaysian Consumer Associations Federation chief executive officer Dr Saravanan Thambirajah said structural reforms were needed rather than reliance on subsidies and short-term programmes.

“We need to ask whether subsidies are increasing productivity, or merely maintaining the existing system,” he told Sinar Daily.

Agrofood imports declined slightly from RM93.7 billion in 2024 to RM92.7 billion in 2025, but Saravanan said the improvement needed to be sustained. Import dependency remained high for mutton at 90.7 per cent, beef at 82.6 per cent, ginger at 82.7 per cent and chilli at 67.9 per cent.

Malaysia was more than self-sufficient in eggs, duck meat, papaya, watermelon and tomatoes.

“We should concentrate public resources on commodities where Malaysia has a genuine comparative advantage rather than trying to produce everything locally,” he said.

Expensive land, labour, fertilisers, feed, machinery and financing squeeze farmers, while fragmented farms lack the economies of scale of major exporters.

The supply chain warrants scrutiny, as consumers can pay high prices while farmers receive low returns.

He said middlemen were not necessarily the problem.

The 13th Malaysia Plan sets 2030 self-sufficiency targets of 80 per cent for rice, 83 per cent for fruits, 79 per cent for vegetables and 50 per cent for beef and buffalo meat.

Saravanan proposed an annual national scorecard of targets, achievements and spending for every strategic commodity.

“We should not have to wait until 2030 to discover whether a programme succeeded or failed,” he said.

Meanwhile, Putra Business School lecturer Professor Datuk Dr Nasir Shamsudin said rice self-sufficiency fell from 62.1 per cent in 2020 to 52.9 per cent in 2024 despite government support.

He proposed splitting paddy subsidies into basic assistance for livelihoods and performance-based incentives tied to productivity, grain quality and good agricultural practices.

He also called for tenant farmers to be registered so assistance reaches those who actually bear production costs and risks. Nasir also proposed a federal-state Fiscal Transfer Payment for Food Security, modelled on the Ecological Fiscal Transfer, to reward states for preserving strategic agricultural land.

“The issue is whether there are excessive layers, anti-competitive practices, information asymmetry or unreasonable margins,” Nasir cited the Malaysia Competition Commission’s Paddy and Rice Industry in Malaysia Report 2024.

The report found the four largest rice wholesalers controlled about 46.2 per cent of the market in 2023 and Padiberas Nasional Bhd remained the sole rice importer.