Minister: Relying on food imports affects ringgit’s value

KUALA LUMPUR: Over-reliance on food imports could further weaken the ringgit, says Agriculture and Agro-based Industry Minister Datuk Seri Ahmad Shabery Cheek.

“If our currency weakens, the import of food becomes expensive. If we continue to rely on imports to address food shortage, it will cause our currency to continue to fall and food becomes more expensive as a result,” he said.

Ministry’s statistics showed that Malaysia’s gap between food imports and exports had been widening in the past decade. Its balance of trade for food worsened from a deficit of RM11bil in 2009 to RM18.1bil in 2015.

To address the issue, Ahmad Shabery said Malaysia not only had to focus on improving the productivity of the agriculture sector but also maintain financial resilience.

“We need to discuss issues involving our foreign currency reserves, our currency and how the reliance on imports will affect our currency,” he said at the Agrobank Business Dialogue on food security and TN50 yesterday.

TN50, or the 2050 National Transformation, is a national discourse to chart the country’s direction. It was announced by Prime Minister Datuk Seri Najib Tun Razak during the tabling of Budget 2017.

Ahmad Shabery said Bank Negara currently maintained a foreign reserve that could sustain 6.7 months’ worth of imports.

This explains why Malaysia was ranked 35 on the Global Food Security Index 2016, outperforming Thailand, Indonesia, the Philippines and even China.

The index, a project of the United Nations Food and Agriculture Organisation, ranked countries based on food accessibility, affordability, and quality and safety.

Ahmad Shabery pointed out several weaknesses in the agriculture sector’s current framework.

“From my experience, rice is our staple food but our padi production model is akin to a welfare model rather than an industry model,” he said, adding that this reduced the competitiveness of Malaysian farmers.

Ahmad Shabery said the Government provides subsidies by buying local padi for US$500 per metric tonne but the international market price was only US$350.

He foresaw a problem when Malaysia reaches a capacity to export its own rice.

“Who would you prefer to buy rice from? Would you rather pay US$350 to Thailand or US$500 to Malaysia?

“Every tonne of padi produced will involve a big amount of subsidy from the Government. When we reach the export stage, the Government will lose out as we have been subsidising the farmers. We need a new model to ensure our padi production can become internationally competitive,” he said.

At a press conference later, he denied that the Government was going to remove the subsidies but said a model must be tailored to Malaysia’s needs.

Ahmad Shabery said the United States adopted a free-market model with hardly any subsidies while Japan’s padi farming is heavily protected due to its traditional significance, stressing that there is no single model that fits all countries.