Tuesday, February 14, 2023

Food security to food sovereignty

The conversation on the concern for food security have long been heard. Since the days of yours truly's early career in banking and later in the capital market, concern over food security due to high food import have long been the talk. 

However, a serious government policy was not forthcoming. Availability of land for agriculture was increasing in scarcity and losing to the more lucrative sectors such as property development, tourism and leisure industries, manufacturing, etc. 

Financiers were saying why reinvent the wheels as it is more  efficient to import. They prefer to invest into food retailing, high-end agri-product, or easy cash crop in which planting is once for every 15 years but harvesting every quarterly.   

The attitude then and in fact still remain so. When there was a shortage of chicken prior to GE15, the  former PM Ismail Sabri's natural affinity was to import chicken. 

This is strange because Malaysia is one of the world's cheapest and efficient broiler producer. So efficient that CP Pokhphand could not enter the highly competitive Teo Chew clan dominated industry. The first sight of problem and government  open the local market for foreign entry.   

The early part of the shortage in certain food items was blamed at global supply chain problem during the C19 pandemic and later, the war in Ukraine. It rightly is but as time goes by and more realisation creeped in, the age old conversation on food security began to emerge. 

In a 2021 article on NST, Muhammad Hisyam Mohamed highlighted the need to deal with issues of availability, access, utilisation and stability in food security. By December 2022, Dr Goh Chun Seng in Borneo Times shifted the food security discussion to food sovereignty. 

Food security from the perspective of United Nation definition is "when all people, at all times, have access to sufficient, safe and nutritious food to meet their dietary needs". 

The discussion has transcended into international power play, social and cultural aspect, environmental sustainability, health risk of homogeneity, etc. 

Thus came the concept of food sovereignty which takes into account the peoples' needs, diversification of food supplies, local sourcing, local production, retaining traditional knowledge, and co-existence with eco-system. 

The Edge weekly this week discussed the food sovereignty issue with a more positive note. By attaining food security and sovereignty, Malaysia will help to restore the global food system. 

United Nation have been sounding their concern for famine from global food shortage problems expected to arise from widespread war, geographical and climatic problems for decades.  

The article reproduced below: 

Malaysia’s path to food sovereignty could help restore the global food system

Growing Champions By Marc Schmidt and Andrey Berdichevskiy

Weekly Edge Feb 6- 12 2023

The global food system has reached a breaking point. The sector is embroiled in climate change, absorbing an estimated 25% of the total damage and losses from climate-related disasters. In addition, the ensuing disruption of global supply chains, reduced access to critical food staples and sky-high fuel prices due to the pandemic and the Russia-Ukraine war have culminated in a worldwide food crisis.

In Malaysia, food security challenges have been brewing, increasing the country’s dependency on food imports, which rose to RM55.4 billion in 2020 from RM51.4 billion in the prior year. Its smallholder farmers, particularly those in the bottom 40% and middle 40% household income groups, are among the biggest victims of high food prices due to inflated cost of production and reduced purchasing power. It is estimated that less than a third of the annual US$100 billion (RM424 billion) demand for smallholder finance in Asia is currently being met.

Despite this vulnerability, agricultural and resource-rich Southeast Asian (SEA) countries such as Malaysia can play a key role in securing their own food sovereignty while mitigating the global food crisis. Collectively, the region is a major contributor to global food supply of key commodities and staples such as palm oil, coffee and rice. Stakeholders in Malaysia must weigh all future possibilities of the country’s domestic agri-food sector and act in advance.

Four futures that could dictate Malaysia’s path towards food system resilience

We examined four very different scenarios and looked at their implications for public and private stakeholder groups in Malaysia: (i) uneven progress; (ii) the rise of Africa; (iii) every country for itself; and (iv) coordinated step forward.

Each offers a distinct vision of the middle-term future for the country, developed based upon overarching factors that will impact global food systems over the next five years, namely the state of the world’s agriculture; the success of climate action outcomes; and global economics and geopolitics.

(i) Uneven progress

In this scenario, global coordination stalls but a few high-income countries in the global north lead a policy-driven development agenda, promoting the uptake of existing climate-smart technologies. Inequity worsens in low- and middle-income countries, including SEA countries plagued by high debt and extreme weather events that impact land productivity and agricultural output. With agricultural technology focused on industrial and contract farming, smallholder farmers in SEA become displaced.

The Malaysian public sector will need to consider strengthening regional trade to import key agricultural inputs while also ramping up domestic production. The private sector will need to invest in decarbonising their supply chains and developing healthier processed foods to better participate in high-tech global supply chains. Investments in climate resilience and adaptation that include smallholders will be crucial.

(ii) The rise of Africa

In scenario two, the African continent accelerates its agriculture potential through unprecedented South-South cooperation. Food availability and productivity increase, while prices and hunger fall. But continued unequal distribution leads to backsliding on climate goals. As global trade reduces, Asean becomes stronger.

Malaysia will benefit from leveraging trading blocs such as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership and the African Continental Free Trade Area. Private-sector companies will benefit from investing in climate-smart technologies to boost the local production of commodities and employing regenerative farming techniques.

(iii) Every country for itself

If this transpires, global agricultural trade will fall by 20%. Food costs will rise further as availability declines. Limited climate action will lead to extreme weather events, perpetuating the cycle of inequality.

In resource-rich countries like Malaysia, governmental action will be critical in reducing the risk of food price volatility and the resulting potential for unrest. Early investments in localising fertiliser production, strengthening strategic grain and crop reserves, such as corn and wheat, and alternative commodities through the local value chain, as well as improving coastal infrastructure will be needed. In the private sector, domestic and regional opportunities will be more profitable, especially for climate-smart food processing and technology investments, to increase yield and productivity.

(iv) Coordinated step forward

As greater global coordination in climate policy and agriculture gains momentum in the fourth scenario, climate-friendly innovations will spur global trade, strengthen resilience in food supply chains and increase demand for sustainable agricultural practices.

Resource-rich countries like Malaysia will feature more prominently in global supply chains. Public-sector players will need to encourage collective climate action and create demand for diversified crops via subsidies, minimum price supports and public procurement. Creating demand for a range of diverse crops through those means will help better position Malaysia to achieve food sovereignty. In the private sector, companies that innovate to simplify supply chains for staple crops, such as rice, wheat and corn, and that invest in alternative nutritious grains such as oats, millet and buckwheat, as well as alternative proteins will thrive.

Future-proofing Malaysia’s food sovereignty with no-regret moves

Regardless of how these scenarios play out in the near to mid term, Malaysia’s public and private sectors must take action.

Investments in coastal infrastructure will be crucial in reducing the impact of climate events. Positively, the country has recognised the need for nature-based solutions to address issues such as flooding, erosion, habitat destruction and bio­diversity loss. Greater enforcement is needed to scale efforts.

Immediate measures to boost production, increase yields and hasten the smallholders’ adoption of climate-smart technologies is needed. To this end, a RM200 million fund has been launched. However, more effort is needed in making these investments more accessible, for example, through dedicated microfinance solutions.

Recognising that stronger policies and financing are needed, RM1 billion has been allocated to the central bank’s Malaysia Agrofood Financing Scheme to encourage agriculture-focused entrepreneurship. A RM250 million scheme is being launched to provide funds to start-ups in the modern technology agriculture industry.

As additional land for agricultural production is unavailable, any increase would have to come from higher yields and productivity from technology investments. More local activity of innovative agritech enterprises combining traditional farming with climate-smart technologies such as Internet of Things, robotics, drones and artificial intelligence to equip farmers with regenerative farming techniques will be required.

These initiatives are among many that have been earmarked within the country’s Budget 2023. They are a key starting point to stabilising and creating a climate-friendly food system for Malaysians, while promoting a healthy food trade surplus. Ultimately, by securing its own food sovereignty, Malaysia can support a stronger and more equitable global food system.

Note: This article was prepared before GE15, and points covering Budget 2023 were accurate at the time of writing.

Marc Schmidt is managing director and partner at the Boston Consulting Group. Andrey Berdichevskiy is partner and associate director at the Boston Consulting Group.

The revised budget for 2023 will be tabled on February 23 in Parliament after Najib's judicial review dates. 

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