Food Prices Malaysia Malaysians enjoy one of the world's best cuisines, rich with influences from Tamil, Malay and a number of different Chinese cuisines. For the most part, traditional foods match high quality with low prices -- the nation's breakfast staple, nasi lemak, retails for 1RM ($0.30) a bundle even in central Kuala Lumpur. From a 3RM char kway teow at Penang's famous hawker stalls to a whole fried chicken for RM5 at the Kampung Baru night market, lunches and dinners can be had for little more than that. But digging deeper, one finds that food prices have been steadily increasing in Malaysia in recent years. This paper will investigate the impacts that higher food prices will have in Malaysia. The country relies primarily on local produce for much of its food needs, and despite the nation's rapidly advancing economy, many Malaysian remain trapped in low-income jobs, reliant on cheap food in order to survive. The paper will address the issue from an economic perspective.

Malaysian Food Industry and Price History

Malaysia was at one point nearly self-sufficient in food. In the 1970s, the country produced 90% of its rice needs, but this has declined significantly. The rice production level in the 1990s -- around 70% - is now the target for the government's rice padi development efforts (Bernama, 2010; Netto, 2008). The country remains, however, a net importer of meat and has seen its fish production decline in recent decades. Compounding the problem, as Malaysian increase their wealth, they also increase their diets. Obesity is now a critical health issue for the country (Simon, 2010). Another contributing factor to declining agricultural output in Malaysia has been the repurposing of rural land for palm oil plantations. These plantations, which sprawl for miles to the south of KL and which dominate the landscape in Sarawak, have resulted in the destruction of fishing grounds and a reduction in the agricultural land for food production. Malaysia therefore has...

The first major bout of food price inflation in Malaysia occurred in 2008. Investors, exiting global real estate markets and Western stock markets, turned to futures as a means of making money. This resulted not only in oil price run-ups but also in substantial increases in the price of food staples, many of which are traded on the global commodity markets. The proliferation of global trade policies aimed at opening up agricultural sectors around the world contributed to the problem by creating uneven trade policies around the world. Rice prices increased 20% in the first half of 2008 because the major rice producing nations limited exports, while other countries did not. Flour prices have also increased due to higher global wheat prices, resulting in increases in noodle prices (Ali, 2008).
Malaysia's emphasis on non-food agricultural production has also been fueled by these global trade policies, to the detriment of the nation's food security and to the detriment of its ability to control food price increases (Netto, 2008). Recently, the trend of food inflation has continued, with costs increasing 1.6% in May 2010 and 1.7% in June 2010 and food price increases accounted for over half of the country's total inflation (RTT News, 2010).

Impacts of Inflation

There are few beneficiaries of food price inflation. For consumers, increased prices simply means less money for savings as total consumer consumption decreases (ADB, 2008). Food-loving Malaysians are unlikely to decrease their intake unless absolutely force to. However, for poorer Malaysians, the consequences of increased food prices are dire. Those living at or below the poverty line are hit hardest by food price increases, as food accounts for a much more significant portion of the budget.

Ultimately, there is the risk that food price inflation in Malaysia may…