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Demand patterns of rice imports in Malaysia: Implications for food security

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Abstract

Malaysia is a net importer of rice. More than a quarter of its rice requirement is met by import. Rice imports play a crucial role in determining the country’s food security. Import strategy of the company, which owns the exclusive import right, has a profound impact on an array of economic, political, and societal stabilities. However, domestic agricultural policies and relevant past studies have not addressed the strategic concern in the current food security framework. Therefore, this study analyzes demand patterns of rice imports in Malaysia with an ultimate intention to provide policy implications for its food security. From the Error Correction Model of Almost Ideal Demand System (ECM-AIDS), estimates of demand elasticity suggest that rice imports will be narrowly sourced, largely from Viet Nam with Thailand second in importance. Such an import strategy is similar to the pre-crisis model, which was weak in mitigating negative effects of supply disruption during the Food Price Crisis 2007/08. Instead, the exclusive importer could (1) multi-source rice imports, (2) import paddy (for longer storage life and supporting downstream activities), and/or (3) balance its business orientation with the national food security. In sum, this study provides evidences for the need to consider rice imports in the country’s future food security framework.

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Notes

  1. The minor Food Crisis was a compound effect of El-Nino on rice production in 1997 and the depreciation of the Malaysian currency exchange rate in 1998.

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Acknowledgement

This study is a research initiative (Vot 91892) under the Research University Grant Scheme of Universiti Putra Malaysia that is supported by the Malaysian Ministry of Higher Education. The authors thank two anonymous reviewers for their comments on an earlier version of this study.

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Authors and Affiliations

  1. Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia

    John Yeong-Sheng Tey

  2. Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia

    Alias Radam

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  1. John Yeong-Sheng Tey
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  2. Alias Radam
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Correspondence to John Yeong-Sheng Tey.

Appendix

Appendix

Table 2 Result of the unit root test in individual series
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Appendix table 2 Result of Engel-Granger cointegration test
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Appendix table 3 Estimated parameters of the ECM-AIDS for rice import demand in Malaysia
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Tey, J.YS., Radam, A. Demand patterns of rice imports in Malaysia: Implications for food security. Food Sec. 3, 253–261 (2011). https://doi.org/10.1007/s12571-011-0128-1

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