BUANASENI

SURPRISE! RISING RICE PRICE

By Johan Ishak

7 March 2024

RICE is a staple for us Malaysians as well as most countries in Asia. In fact, it is probably the ranking No.1 staple food surpassing fish, meat and vegetables. As simple as it may be, there is a need for many types of rice particularly those with medical condition. Given its importance, consumers reaction to any change in price of rice is highly elastic.

Since early 2023, price of rice has increased by 36% from RM2,350 per metric tonne to RM3,200, as reported in The Star on 1 September 2023, and consumers are angry. India, who is World's top exporter of rice has restricted its rice exports in order to satisfy their local consumption needs. As a result, the price of rice is now at RM6 per kilogram (expatistan.com). However, recent shopping done at the supermarket seems to price 10 kilogram at RM45, i.e RM4.50 per kilogram.

A kilogram is equivalent to 4.5 cups, enough to feed a family for a day. 30 days gives you RM135 per month. This can be sizeable portion of monthly household income of B40 segment of the market. That is assuming a small family of 4. What if there are more?

Malaysia produces 1.5 million tonnes of rice that can only meet 73% of the local consumer needs (ap.fftc.org.tw). The remaining 27% are imported from various countries including India, Pakistan, Thailand and Vietnam. The question is, why is Malaysia not addressing the supply issue and, hence, address the pricing issue. 

India has managed to become the No.1 rice exporter in the space of one decade since they embarked on their rice policies. What has the Malaysian Government done? Since the new Madani Government of Anwar Ibrahim came to power, a new ministry for food security has been created for which, Mat Sabu is the minister. Mat Sabu or even PMX Anwar should do what is necessary to address the situation we are facing.

According to Professor Fatimah Arshad of Universiti Putra Malaysia in a Breakfast Grill interview on BFM on 7 March 2024, the Government has introduced Beras Madani policy. The policy aims to combine local and imported rice, which means, combining low quality as well as high quality rice. This also means, the price averaging of rice deprives the poor from a cheaper rice price option.

What good does this policy bring particularly when the country is facing economic issues. The poor suffers more and the rich rice distributors make more profits. In any case, how does this address the issue of shortage of rice supply in the country? Fatimah further expressed her disagreement of such policy specifically and generally on the overall control mechanism for rice by the Government.

Whilst the Government is studying the monopolistic behaviour of Bernas for rice distribution on the pretext of fairness and equitability of the industry, the Beras Madani policy only tends to legalise the illegal activity of mixing low and high quality as well as depriving what could have been lower price for rice. Perhaps the rice subsidy mechanism needs to be overhauled as well and certainly, research and development needs affirmative action.

According to Fatimah, Malaysia is ranked second in the World for biodiversity behind Brazil, third in South East Asia for the number of scientist per capital, do not have climate issues like draught or elnino in India and a special ministry for food security. Shouldn't this result in better food economics? Fatimah further said that various studies suggest that seventy per cent of future supply of rice comes from research and development that we do, or can do, or should do, today.

The Professor's advice during the BFM interview was for Malaysia to upscale research and development, do away with monopoly and empower many small and medium companies to engage in distribution of rice as well as down stream pivoted product development from paddy or rice. Bernas can still be an important player if this is done as they have accumulated decades of experience since Lembaga Padi Negara days. What is left is just the political will to make it happen. Otherwise, we will always face many more future "Surprise! Rising Rice Price" again and again.

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