Demand and Supply of Rice in Malaysia

The research paper that I am going to comment about is the “demand and supply of rice in Malaysia” written by Kelly Wee Kheng Soon, a Professor at Management and Science University, it aims on micro-economics level for the food focusing on the demand and supply of rice specifically in Malaysia. Globalization and the implementation of ASEAN Free Trade Agreement (AFTA) had raises challenges and fears that Malaysian rice sector is unable to withstand the impact of competition rising from this trade liberalization, in addition the smuggling and illegal trading activities of rice from neighboring countries had threatened the local rice production. Rice is being the staple food and the pillar of our food security. Malaysia also has shown strong economy growth over the past few years. Rapid expansion of Malaysian economy with all the economic policy of transformation for development recently is concern on the demand and supply structure for food in Malaysia. Domestic production cannot cater to the rising of demand in Malaysia. This study aim to look on the demand and consumption for especially for wheat-based products (cereal), livestock (animals grow), dairy product, sugar, fruit and vegetables compared to rice which has shown declining in demand. There is increase in demand for livestock and dairy food in Malaysia. Usually in a developing countries such as Malaysia, there tends to be changes on diet by the society due to the increase in per capita income that contributed by the development of the economy and the quality of life. It is vital for us to know how this changes of food consumption in Malaysia as for the future to indicate the commodity consumption of the population. This is common when looking into high income countries or developing countries. Therefore, this study aim to look into the demand of food in different aggregate food items in Malaysia.


     There are lacks of barriers with illegal of rice from neighbouring countries such as Thailand, Indonesia or even Vietnam had multiple impacts on various levels of the supply chain. Millers are forced to sell their rice at a much lower price due to uncompetitive prices. Farmers will have to suffer due to the decline in paddy prices. Government had to intervene to ensure the curb of this illegal activities that will impact the local consumption of local rice industry and also to maintain local rice stability, which had led to lower profits in the rice industry.Other reason is that as mentioned earlier the lifestyle change of the society with the constant growth of economy in Malaysia, the people of Malaysia in all races group (Malay, Chinese and India) has been impacted with this globalization change that will impact the behavior of food consumption in their daily life. They tend to change their consumption habits by consuming less rice and more cereals or fiber grains, livestock such as poultry or fish, vegetables and fruits. This lead to a healthier lifestyle within the society resulting in better health condition among its citizens.

     Rice is part of controlled items in Malaysia. We know that majority of the household in Malaysia consume rice as the staple food, therefore, the buyer had limited power to demand and bargain even though the volume of consumption daily can be high. Despite the price increase, the consumer will continue to buy rice. Currently, our rice industry in the countries is falling shortage in supply even when measuring to the context of self-sufficiency (Domestic consumption). In addition there is export ban of rice for certain countries recently from low-cost neighboring countries such as Thailand due to had pressuring due to low prices, an assault of pests which caused damage to crop, and the presence of low-cost competition from emerging rivals such as Cambodia and Vietnam and lower-than-expected production. The other factor is that with the increase in income levels and higher standard of living, we can expect the changing preference towards higher quality rice which are largely imported. Given the premium price for higher quality rice, there is potential for domestic production of this type of rice to meet the increasing local demand.

     Supplier could not demand higher price due to government policy and regulation. Instead, government had guarantees subsidies to help the rice industry to encourage more supply of rice to the local demand. Government subsidy is channeled to the suppliers in order to lower down their production cost which comprises of the increase in fertilization cost, land acquiring cost. Further step by the government, is to ensure minimum domestic price to the rice farmers. Guaranteed minimum price has been implemented through a trading company, BERNAS (sole exporter and importer for rice in Malaysia) which buys paddy rice from farmers. Government have reassessed and tightened the food security policy. This is to ensure guarantees enough supply of food, especially boosting the rice productivity. Government initiatives it to provide assistance to local padi growers and encourage private companies to be seriously involved in padi farming.


     When we examined the food trend consumption, the substitutions to rice are wheat, corn and meat. In Malaysia, cereal and flour consumption had risen over this recent years and it has slowly impacting the rice consumption. Economic growth in Malaysia is the cause to the change of lifestyle by the people of different races in Malaysia, however it still depend on areas such as semi-urban or urban areas population tends to adapt to a healthier living lifestyle, encouraging the consumption of less carbohydrates food but more of fiber diet such as cereal. However, there is also trend showing that meat consumption is also high for those who enjoyed the western eating habit mainly meat. In order to gain greater consumption of rice by the population in Malaysia, we can promote the net complement of fish, fruit and vegetables together with rice. Based on studies on nutritional food such as fish, fruit and vegetables, we can relate the importance of such nutrition and it usually goes well-balanced with the right consumption of rice.
     In conclusion, there are many factors to be considered about the demand of rice in Malaysia. It should have to do with changes in eating style for Malaysians and more awareness towards healthy way of life. Prosperous economy brings in wealth and higher income for Malaysia citizens to elevate their lifestyle towards better living in the future.

Posted by Aizat Naimi.