Food supply secure but brace for price shocks, says expert

 Nazim Rahman warns rising global disruptions will drive prices higher, exposing structural weaknesses and straining public finances.

Government subsidies should not merely cushion costs, they should drive improvements, says Nazim Rahman. (Bernama pic)

PETALING JAYA:

 Malaysians should brace for higher food prices as global supply chain disruptions intensify, with the country’s heavy reliance on imports leaving it vulnerable to external shocks, an expert warns.

Nazim Rahman, who works for a global commodity fund in the United Arab Emirates and is an adviser to the plantation and commodities minister, said the real challenge lies not in food availability but in its affordability.

“At first glance, the answer seems reassuring. Supermarket shelves remain stocked. There is no widespread shortage. Malaysians are not going hungry,” he said.

“But this surface stability hides a deeper problem. The real issue is not whether food is available, it is whether it remains affordable.”

He said the ongoing conflict in West Asia has once again rattled global supply chains, with oil price volatility and shipping uncertainties beginning to push food prices upward.

Nazim said Malaysia’s dependence on imports for key items such as fertilisers, beef, dairy, animal feed and certain vegetables means global price increases are quickly transmitted domestically.

“When global prices rise, the effects are immediate and unavoidable. Import costs increase. Producers pass these costs along the supply chain. Retail prices climb. Consumers feel the pressure,” he said.

He said government intervention through subsidies and price controls has helped cushion the impact, particularly for lower-income groups, but warned that it comes at a growing fiscal cost.

“Each time the government intervenes to stabilise prices, it takes on a fiscal burden. Subsidies expand. Budget allocations rise.

“Over time, this becomes difficult to sustain, especially when shocks occur repeatedly,” he said.

Nazim said this dynamic has turned food security from an agricultural concern into a fiscal and political one.

“When prices rise sharply, public pressure increases. The government must act quickly to prevent hardship,” he said.

“But frequent intervention strains public finances and limits the ability to invest in long-term solutions. In effect, we end up treating symptoms rather than causes.”

He described Malaysia’s food system as one built for efficiency rather than resilience, warning that the country risks repeating a cycle of price shocks followed by costly interventions.

“This middle position creates vulnerability, especially on the fiscal front,” he said.

“If we continue on the current path, each external shock will trigger the same response: rising prices, followed by subsidies and controls, followed by increasing fiscal strain.”

Nazim said other countries offer lessons in managing such risks more strategically.

He pointed to China’s approach of investing heavily in domestic production and maintaining large reserves to stabilise supply during global price swings.

“When global prices fluctuate, these buffers help stabilise supply and reduce immediate pressure on consumers,” he said.

He also highlighted Singapore’s strategy of diversifying import sources and investing in overseas agriculture to reduce supply risks.

“When one supply source is affected, others can fill the gap,” he said.

“For Malaysia, which still relies on relatively concentrated import channels for certain products, this is a critical lesson.”

According to Nazim, some Gulf countries have taken a more direct approach by investing in global supply chains, acquiring farmland abroad, and securing long-term contracts.

“This reflects a clear understanding. Food security is not just about what you produce, but what you can access and control,” he said.

He said Malaysia must shift from its reactionary position to building systems that can absorb shocks before they reach consumers.

“We need systems that dampen volatility,” he said, citing better stockpiling, improved forecasting, and more efficient distribution as priority safeguards that must be built up.

Nazim also called for a redesign of subsidies. “Subsidies should not merely cushion costs, they should drive improvements,” he said.

He said diversification of supply sources and stronger coordination across government agencies are also critical, noting that food security is currently managed by multiple bodies with overlapping responsibilities.

“A more coordinated approach would improve both planning and response,” he said.

Nazim acknowledged that building resilience comes with upfront costs but warned that failing to act would be more costly in the long run.

“These costs are predictable and manageable. The costs of repeated crisis interventions are not,” he said.

He said the current supply shock is entirely driven by geopolitics, climate change and shifting trade dynamics. “Malaysia cannot control these forces. But we can control how prepared we are,” he said.

“If we do not act, the next shock will not just test our supply chains, it will test our fiscal limits.” - FMT