AGRICULTURE and its related activities will remain an important component of the national economy notwithstanding its share in the nation’s total output. It can remain an important absorber of the country’s labour force while also playing the role of a food supplier to the population.
When observing economies of many parts of Asia, we cannot deny that the sector plays an important role as a buffer during economic crises when the economy is sluggish and job creation is slow. People may resort to farm employments when the other industries are not doing too well.
This is quite true in Malaysia when marginalised urban workers go back to their villages to tap rubber, plant paddy and short term crops, such as vegetables. It is equally interesting that there are urban workers who rush home during weekends to tap rubber when the rubber price was high.
In the context of Malaysia, which has pursued industrialization to diversify the economy and to provide jobs to its growing population, particularly to its youths, the share of agriculture in total output or the gross domestic product (GDP) has declined to just single digit although its share in total employment still remains significant.
These facts underscore the importance of the agriculture sector in the national planning of the country. It deserves support and budgetary attention befitting its role as stated above. Even developed countries support agricultural activities.
The United States of America (USA) defended its policy to subsidize its farm products in the face of competition from emerging economies whose farm yields have improved much.
Malaysia has subsidised its crops such as paddy to ensure food supply and sustained rural incomes given the importance of rural population in the political calculus of the country.
Hence, measures such as price support, fertilizer subsidy, research and development, and creation of specialized agencies to assist agricultural marketing, have been undertaken to ensure agriculture is supported and continuously improved.
Despite these initiatives, the sector seems to have an uncertain future as indicated by several indexes such as increasing food imports, significant area of unattended farm lands and increasing age of the farm workers. Additionally, with the shortages of workers in the general economy, foreign workers make up a significant share of agricultural work force.
The issue of food security brings to the fore again the importance of agriculture within the economy. The previous COVID-19 pandemic and the breakdown in the international supply chain of many commodities make countries revisit the issue of supply chain for grain. There is concern that some countries refuse to export rice.
In addition, the fear of climate change impacting our agricultural production system makes the issue of food security high in the list of national priorities. Agricultural planning and development therefore needs special attention in the coming 13th Malaysia Plan which is to be tabled soon.
In the past we had focused more on rice self-sufficiency. The issue of food security is certainly broader and wider than rice self-sufficiency and would cover aspects of production, supply chain, pricing and incentives, and not the least, land and implementation matters; some of these need detail re-examination too.
Even the cultural perspective surrounding food habit deserves some attention. Malaysians as a whole have an affinity to consuming rice, rather than other sources of carbohydrate.
Hence, we have to encourage consumption of more complex carbohydrates such as tapioca, sweet potatoes of so many varieties, and potatoes, and maize. The question remains whether these produces are readily available at reasonable prices.
Of rising issue is the presence of foreign workers, both legal and illegal, and these workers daily consume a significant amount of rice. This aspect was never part of the long term rice self-sufficiency planning done in the eighties and nineties.
It is timely therefore that these issues be examined and they warrant a comprehensive discussion and study. What more, these touch so many aspects of public policy and national planning. Amid the fiscal constraints that the nation is facing, one matter that needs reassessment is the use of subsidy or subsidies in promoting rice production.
We have relied much on the use of price support to augment rice production. This is a legacy of past policies which may have some unwanted consequences such as rice smuggling and unhealthy market conduct.
While we accept that rice is a political and security related product, thus qualifying it for lots of policy attention, we may want to re-examine or review as to the use price support and subsidy and its relevance now, given that rice is an internationally traded commodity with the price lower than the domestic rice price.
In social cost benefit analyses of internationally traded products, the border pricing criterion should be the basis of its Rate of Return calculation.
Tan Sri Dr. Sulaiman Mahbob is an Adjunct Professor at the International Institute of Public Policy and Management (INPUMA), Universiti Malaya