Self-sufficiency and International Trade Policy Strategies in Malaysian Rice Sector: Approaches to Food Security Using Spatial Partial Equilibrium Analysis

While much evidence shows self-sufficiency is not an efficient policy strategy to address food security concerns as well as poverty alleviation, Malaysia is following a self-sufficiency strategy in its primary staple, rice. This study evaluates and analyzes the impact of two alternative approaches to achieve food security, namely, pursuing rice self-sufficiency, and allowing free trade in rice. The results indicate that even though Malaysia could achieve self-sufficiency in rice, consumers are worse off, since consumer rice prices increase sharply. On the other hand, rice producers are better off due to higher producer prices and domestic production. The government welfare worsens from the self-sufficiency policy due to massive requirements on additional subsidies and the loss of import tariff revenues. Free trade results in lower consumer prices and greater rice consumption, thus favoring consumer welfare. Producer welfare worsens due to higher import competition and lower producer prices. Pursuing self-sufficiency would effectively punish consumers, and even the government loses from the policy. Otherwise, self-sufficiency could also be a political strategy in political economic environment to become an independent region without relying on external food sources. This study provides economic measures on self-sufficiency and free trade of non-distortionary policy options of Malaysian rice sector. Acknowledgement : First and foremost, I am very grateful to the Malaysian Agricultural Research and Development Institute (MARDI) and the Department of Agricultural Economics and Agribusiness, University of Arkansas for providing financial and technical supports to conduct this research. I would like to extend my gratitude to Dr. Eric Wailes and Dr. Alvaro Durand-Morat for their tireless assistance, outstanding knowledge, expertise in methodologies, and insightful comments to improve research and writing. Special thanks go to Ms. Hannah Allen, Mr. Lucas Palmer, and Mr John Mahany for their assistance in reviewing and correcting this writing.