Govt urged to secure food supply chain

The disruption is not expected to be drastic if countries worldwide continue to keep their trade open, says expert


MALAYSIA’S food supply remains intact even with disruptions from the coronavirus, but experts said the government needs to introduce measures now to prevent possible problems in the future.

The coronavirus and measures to mitigate it have disrupted the food supply chain, but overall, there is no danger of shortages in the near term, said Khazanah Research Institute senior research associate Dr Sarena Che Omar.

However, due to the global impact of the Covid-19 pandemic, Malaysia needs to secure supply that may depend on the action of other countries, some of which have announced reduced exports of certain food items.

Sarena said Malaysia, which relies heavily on food imports, will experience some supply disruptions due to supply or logistical problems.

“This is because some countries may still be under lockdown, thus experiencing limited logistical services.

“As such, we will likely experience some inconveniences in the form of either delay in the arrival of goods or fluctuations in imported food prices,” she told The Malaysian Reserve (TMR) in an email reply.

She said, however, the danger of food exporters implementing export bans simultaneously is slim.

“The disruption is not expected to be drastic if countries worldwide continue to keep their trade open,” she said.

As of August 2019, Malaysia’s food imports amounted to RM34.2 billion, highlighting the increased dependency on food purchases from other countries.

The country’s food import bill rose by an average of 6.5% per annum from RM30 billion in 2010 to RM50 billion in 2018, according to numbers from the Agriculture and Agro-based Industry Ministry.

Sarena said although Malaysia relies on food imports, the country produces 50% of its key food such as poultry meat, eggs, fish, rice and fruits.

“We produce more than half of our local demand. It is mainly luxury food items such as temperate fruits, beef, milk and lamb that are mostly imported,” she said.

Malaysia mostly imports food from China, India, Thailand, Indonesia and New Zealand.

Government statistics showed the highest amount of imports in 2018 were for cereals at RM7.1 billion, followed by coffee, cocoa, tea and spices worth RM7 billion.

Institute for Democracy and Economic Affairs senior fellow Dr Carmelo Ferlito said now is the time to secure the country’s food supplies for the future.

He said the food industry is much more interdependent on its players than what most people think of.

“For example, if a hatchery can produce around two million chicks per week and it is not authorised to operate during the Movement Control Order (MCO), this would lead to a loss of the 13% weekly production of chicken in Malaysia, with all the consequences on prices that follow.

“The same goes for related industries such as packaging. An egg producer recently said he could not deliver to supermarkets because he could not get the carton boxes for the eggs,” he told TMR by phone.

He noted that the MCO does not simply “freeze” economic activities, but shuts some completely, as companies that are externally related to the food segment do not operate for two months.

These economic activities and their related jobs are simply lost and cannot be recovered with a magic stick after the MCO is lifted.

“At this moment, we may face two major risks, which are lack of food on the shelves and rising prices, as well as angry people with no job, no food and no money. It is a social time bomb,” Ferlito said.

While the country’s food security situation stays stable, Ferlito believes the government should focus on encouraging businesses to reopen while adhering to the clearly stated Covid-19 curbs.