This article first appeared in The Edge Financial Daily on April 17, 2019 - April 23, 2019

KUALA LUMPUR: Sultan of Perak Sultan Nazrin Shah is urging the government to devise strategic measures to address the rising cost of food items — a burden on the people.

The measures taken must prioritise the agricultural sector’s crucial role and critical needs, Sultan Nazrin was quoted by Bernama.

“The rising cost of food items is a burden on the people. Their anxiety should be read accurately and serve as a warning for the government to quickly draft strategic measures,” said the Sultan.

The Sultan was delivering the royal address when opening the first meeting of the second session of the 14th Perak Legislative Assembly at Bangunan Perak Darul Ridzuan. Also present was the Raja Permaisuri Perak, Tuanku Zara Salim.

According to Bank Negara Malaysia’s data, the Food and Non-alcoholic Beverages Index, under the Consumer Price Index (CPI), has been rising except for a noticeable decline between February and June last year.

Nonetheless, the pace of increase in the Food and Non-alcoholic Beverages Index has notably decelerated over the past 12 months, except for between September and October last year when the government rolled out the new sales and services tax.

Sunway University Business School professor of economics Dr Yeah Kim Leng told The Edge Financial Daily that while food prices are generally volatile due to seasonal factors, a weakening ringgit has pushed food prices slightly above the overall CPI average, given Malaysia has a high import content of food.

“We are not only subject to rising import costs, but our self-sufficiency is also relatively low, plagued by low productivity within the agricultural sector.

“This is why there is a need to increase our food supply efficiency and to focus more on import substitution. We have seen many national agricultural policies promulgated over the years, but they have so far not made any huge impact. The failure, I think, has been on[their] implementation,” said Yeah.

He pointed out it is timely for the government to conduct a thorough review on policies, identify constraints affecting the production of each crop, and develop strategies to encourage more intensive farming and the adoption of advanced technology to improve agricultural yields and productivity.

Producers, especially those ready to expand but limited by capital or resources, should also be given sufficient support, he added.

Yeah observed that food inflation showed signs of easing in the first two months of the year, but noted it could be price shocks seen in several regularly consumed food items — such as eggs and poultry products, partly due to a supply disruption and higher feed costs — that may have led to consumers’ perception of a tighter household budget.

MIDF Research head of research Mohd Redza Abdul Rahman concurred, saying the country needs to address its supply chain issues, but added that another solution lies within more affordable housing and better transportation networks.

He said an increase in fixed expenses such as rent and fuel, making up a significant portion of household expenditure, leaves a smaller amount for food items.

“People can’t make part payments for, say, fuel. So, [coupled with the] rise in food prices, one ends up getting less food items over a smaller change that he or she has in the pocket … and while wage growth has been healthy, somehow the bottom 40% group isn’t feeling it.

“Another way is to increase the wage, but that’s not simply done by increasing it per se, but through higher-paying jobs that preclude the importance of higher productivity and higher value-added jobs,” he added.

Socio-Economic Research Centre executive director Lee Heng Guie said the Perak Sultan is using the cost of food to highlight the importance of managing the people’s cost of living.

“Like it or not, the cost of living is still the main issue dominating  the social and political debates. Although the pace of annual changes in the Food and Non-alcoholic Beverages Index is decelerating, but [in actual fact] it is still increasing.

“But when you talk about the cost of living, it involves incomes as well, and they link to productivity — not a simple issue to resolve.

“The government is implementing various measures to help ease the burden, such as target subsidies and freezing toll charges, while promoting a higher workforce productivity. But at the end of the day,  workers are still the key determinant for productivity,” he said.

“The government can intervene, but the people cannot expect Putrajaya to keep all prices under control. That is not healthy. So, the people have to control their spending as well, by prioritising their expenditure based on necessities.”