Poverty Effects of Food Price Escalation and Mitigation Options: The Case of Malaysia

• Published in: Journal of Asian and African studies (Leiden) Vol. 53; no. 5; pp. 685 - 702
• Main Authors: Solaymani, Saeed, Yusma Bt Mohamed Yusoff, Nora
• Format: Journal Article
• Language: English
• Published: London, England SAGE Publications 01.08.2018; SAGE PUBLICATIONS, INC
• Subjects: Agricultural commodities; Agricultural development; Agricultural economics; Agricultural production; Commodity prices; Economic conditions; Economic growth; Economic performance; Food; Food prices; GDP; Gross Domestic Product; Households; Mitigation; Noncitizens; Poverty; Productivity; Rural communities; Rural poverty; Subsidies; Urban areas; Urban poverty; Malaysia; agricultural productivity improvement; computable general equilibrium model; poverty; Commodity prices; agricultural input subsidies; mitigation options
• ISSN: 0021-9096; 1745-2538
• DOI: 10.1177/0021909617714275

This study uses a computable general equilibrium approach to investigate the impact 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 poverty and economic performance of Malaysia. Simulated results showed that, as a whole, the high global food price has a negative impact on the economic growth of Malaysia. It decreases real gross domestic product 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 impact 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.