Date of Graduation

12-2017

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Public Policy (PhD)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Eric Wailes

Committee Member

Alvaro Durand-Morat

Second Committee Member

Jeff Luckstead

Third Committee Member

Valerie Hunt-Whiteside

Keywords

Food Security, International Trade, Malaysia, Political Economy, Rice Policy, Self-sufficiency

Abstract

Despite the fact that the recent rice policy has been moving to a strategy of self-sufficiency while the status quo of the national rice economy remains ambiguous, Malaysia has made an extreme policy decision to pursue an autarky economy in its rice sector, thus closing borders from the international markets in the future. The goal of this dissertation research is to comprehensively evaluate a deep-rooted rice policy in Malaysia and analyze the holistic impacts of the self-sufficiency and international trade policies at the national and farm-household levels, utilizing economic frameworks. The protectionist policy measures using a Policy Analysis Matrix reveals that Malaysia is not a competitive rice producer since domestic production is unprofitable at the comparable world price level which leads to significant losses without providing subsidies and producer price support by the government. Since a comparable world price is lower, Malaysia has no comparative advantage in rice production, hence the ongoing interventionist policy approach causes inefficient market outcomes as a result of policy distortions. The analysis of spatial, partial equilibrium model indicates pursuing self-sufficiency would effectively punish consumers due to tremendous increase in prices, thus reducing demand for consumption. The government suffers from the self-sufficiency due to substantial requirements on additional subsidies, land inputs, and technological inefficiency which leads to economic losses. With affordability is a key pillar of food security, self-sufficiency policy strategy does not guarantee food security, instead, free trade allows a more food secure economy. These findings are supported by a farm-household model that shows free trade decreases poverty rates by allowing greater rice consumption. Rice farmers would benefit from self-sufficiency, yet losing from the international free trade, without subsidies. The impacts of protectionist, self-sufficiency, and free trade policies are often misconstrued to focus only on the production side protecting rice farmers’ livelihoods and welfare. The government must consider the policy effects on the economy as a whole, including farmers’ and consumers’ welfare, and agricultural economic efficiency. While political economy dominates policy outcomes relative to the goal of economic efficiency, this study provides key insights and empirical measures for non-distortionary policy options and future policy directions.

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