PETALING JAYA: Reforms such as reducing farmers’ reliance on bank loans and cutting out the role of the middlemen in the agricultural sector are needed if Malaysia is to reduce its massive food import bill, say economists.
With the world facing an economic crisis – no thanks to the ongoing conflict in Gaza and between Russia and Ukraine, they said Malaysia needs to rethink its priorities by looking at a long-term solution instead of expecting handouts from the government.
At the same time, the devaluation of the ringgit has also contributed to the increase in Malaysia’s import value, they added.
“The selling price (of products in the overseas market) are in US dollars or other currencies that have gone up. But our exchange rate has decreased.
“So, there’s a double effect here, that’s why our import value is increasing yearly,” said economist Prof Emeritus Dr Barjoyai Bardai in an interview.
According to a report by a global data and business intelligence platform, Statista Research Department, the import value of food in Malaysia had been increasing steadily – RM38.86bil in 2013, RM51.29bil in 2017, RM63.65bil in 2021 and RM75.71bil last year.
Prof Barjoyai said there needs to be a shift in the mindset among food producers who are looking for an easy way to make money by borrowing from either banks or moneylenders.
He said such a reform could start with padi farmers, who are burdened by high debt while suffering from low yields of rice.
“Even if the government gives subsidies to padi farmers, that money is going to the moneylenders or banks because the farmers have to pay off their debts.
“The reason they are in debt is because they borrow money to pay foreign workers to work on their land and to have money in advance,” he said.
Prof Dr Mohd Nazari Ismail of Universiti Malaya said that while the government has to continuously support the local food industry to ensure food security, society itself needs to make changes to its routine of borrowing money from banks.
Prof Mohd Nazari pointed out that the prices of food items will remain high as long as food producers continue to borrow money from banks to pursue their economic activities.
“We do have enough supply of food but the problem is that the prices are high. If you are rich, you can enter any supermarket and the food items are all there. So who says there’s a lack of food?
“The problem is – those food items can’t be sold to the people in lower income brackets because they can’t afford to buy them.
“How did this happen? It’s because the food producers or farmers have to sell the items at higher prices since the cost of production is high and also because they need to pay back the loans from the banks.
“As a result, the burden to pay high prices on food items is placed on the consumer. This is why borrowing money from banks too often is bad for both the producers and consumers,” he added.
Prof Mohd Nazari said it is time for society to demand long-term solutions from the government because a short-term solution of receiving subsidies will get them nowhere.
He added that the current mentality among the public is causing politicians to be populists, which stops the country from moving forward to introduce progressive changes that could benefit all segments of society.
“We expect subsidies all the time but this is increasing the government’s debt because it has to borrow money for this purpose.
“It will only get worse and worse unless Malaysians understand the economy and refrain from borrowing money from banks in order to pursue their economic activities. That’s the only way,” he said.
All Party Parliamentary Group Malaysia for Sustainable Development Goals constituency coordination unit director James Ryan Raj said the government must address issues regarding middlemen in the food sector.
He said there must be a mechanism to protect farmers and ensure that they are not being stepped on by the middlemen buying raw products at cheaper prices.
“One way to resolve this is by having more cooperatives but unfortunately, that is not the case in Malaysia because existing cooperatives continue to favour big corporations. There must be a change here,” he said.
“The middlemen buy the products at cheaper prices but then sell these at much higher prices so those making gains are the middlemen, not our farmers. There must be fair play.”
