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

While the status quo of the national rice economy remains ambiguous, the Malaysian rice policy stand and tendency is more likely to move to a self- sufficiency strategy. Despite this, Malaysia has made an extreme policy decision to pursue an autarky economy in its primary staple, i.e., rice, thus closing its borders from international markets. The existing body of evidence shows that self-sufficiency is not an efficient policy strategy to address food security concerns and to alleviate poverty. Thus, this study evaluates and analyzes the impact of two alternative approaches to achieve food security. In particular, these approaches are through pursuing rice self-sufficiency and through free trade in rice. The results indicate that although Malaysia could achieve rice self-sufficiency, the net welfare impact on Malaysia would be negative and would be driven primarily by consumer welfare losses. This is because pursuing rice self-sufficiency may result in significantly higher rice prices, which would accordingly offset the gains acquired in producers’ welfare. On the other hand, free trade results in lower consumer prices and greater rice consumption. This would consequently increase consumers’ welfare and would yield a net welfare gain for Malaysia. However, this approach may deteriorate producer welfare due to higher import competition and lower producer prices.

Vol. 16 No. 1, June 2019

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