Socioeconomic impacts of food price changes in Malaysia

What is it about?

This study uses a computable general equilibrium approach to investigate the impacts of high global food and agricultural commodity prices and two mitigation options (a rise in agricultural input subsidies and an improvement in agricultural productivity) on the poverty and economic performance of Malaysia. Simulated results showed that, as a whole, the high global food price has a negative impact on economic growth of Malaysia. It decreases real GDP of Malaysia by 0.53%. Although the food price hike initially increases poverty in urban areas, it would significantly decrease the poverty of rural and noncitizen households. However, both mitigation options can reduce the negative impacts of the shock on the poverty and economic growth of Malaysia. The agricultural subsidy rise option cannot reduce the poverty level of all household groups, whereas the productivity improvement option can alleviate the poverty level of all household groups. In conclusion, results suggest that the agricultural productivity improvement option is more effective than the agricultural subsidy rise option to mitigate the negative impact of global food price shocks on the economy and poverty of Malaysia.

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Why is it important?

It provides a significant insight for policymakers to more attention the impact of global changes in agricultural prices.

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