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Abstract

This paper examines the factors that led to the recent price hikes in food commodities and the implications to food security in Malaysia. Unlike the previous price crises, the price upsurge in 2008 resulted from the convergence of fundamental and technical factors and the increase of energy prices. The high price of crude oil has increased the demand for biofuel such as biodiesel, which utilises palm oil as the main feedstock. If this development continues, it may affect Malaysia’s capacity to produce more food as arable land will be dedicated to oil palm plantations. Hence, the landscape for food security concern has changed as energy and food demand are competing for the same pool of resources, in particular land and water. Further, low investments in agriculture and heavy emphasis on export crops have left the food sector unattended. Rice, which is the country’s “security crop”, failed to progress despite heavy subsidies and incentives provided by the government. This paper highlights the major issues faced by Malaysia in its bid to achieve “food security” as well as identify future challenges and policy options.

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