Rising Food Prices - Who Should Be Blamed?

[bslee]

I just continue NOT to have anymore confidence in BN or UMNO led gahmen till the end of my days. The rakyat just have to wake up and realize that we're all ultimately shortchanged. Malaysia is almost fully dependent on essential food imports like rice, vege, coconuts, flour, fish, meat and milk products. What's happened to our industries?.. Its still in STONE AGE!. I need not elaborate the consequences the rakyat are now facing. Its all showing up and our gahmen as actually done little to improve the situation, but only know how to point fingers anywhere else except themselves.

[Brian]

Originally Posted by bslee

I just continue NOT to have anymore confidence in BN or UMNO led gahmen till the end of my days. The rakyat just have to wake up and realize that we're all ultimately shortchanged. Malaysia is almost fully dependent on essential food imports like rice, vege, coconuts, flour, fish, meat and milk products. What's happened to our industries?.. Its still in STONE AGE!. I need not elaborate the consequences the rakyat are now facing. Its all showing up and our gahmen as actually done little to improve the situation, but only know how to point fingers anywhere else except themselves.

Bad argument there about relying on imported foods...

Prices are increasing worldwide for staple foods such as wheat, rice and blah due to the increasing prosperity of China and India, which lead to more demand. Meat requires feedstock, which is derived from agricultural produce, whose price has been going up, and overfishing has led to reduction in stocks.

To be honest, the only real argument there is about growing our own food is food security, not price, and we don't have much problems right now with that.

I know Vietnam's started to reduce exports so as to keep their own prices low for rice, but they're a communist government for goodness sakes.

Personally? I think the market's going to start making farming a much more attractive option to many people. Not a bad thing after all in a place where farmers are usually thought as poor

And that's something I'm happy about

No, I don't think that having all our rice produced here in Malaysia would do much for prices, unless you're proposing that we fix the price when we buy it from the farmer, which may be a lot lower than the market price, keeping them poor so we can all enjoy the benefits of cheap food.

As for industry, the problem with Malaysia is that we have wayyyy too much government interference in industry.

I guess we'll all have to look forward to spending more of our salaries on essential items and have much less disposable income.

[Adrian Wong]

Originally Posted by Brian

Bad argument there about relying on imported foods...

Prices are increasing worldwide for staple foods such as wheat, rice and blah due to the increasing prosperity of China and India, which lead to more demand. Meat requires feedstock, which is derived from agricultural produce, whose price has been going up, and overfishing has led to reduction in stocks.

I don't think he was talking about food prices although it is a concern.

The increased prosperity of China and India isn't the major cause of increased demand and higher prices. It's a fact that the increase in the price of oil and the resulting increase in biofuel product has caused a surge in demand for crops like corn, sugarcane and oil palm.

Hence, the surge in prices of related industries as well. Like meat production, which now has to pay for higher feed prices. If the farmers can sell their corn to biofuel producers at a higher price, why should they have to sell it for food?

Originally Posted by Brian

To be honest, the only real argument there is about growing our own food is food security, not price, and we don't have much problems right now with that.

Food security is one thing. Growing our own food also reduces the impact of global shortage/oversupply from affecting the country. For example, Bernas, which is supposed to encourage rice production in this country has not done that. Instead, they were more interested in being rent-seekers and make money by importing rice from Thailand.

So, whenever there's high global demand for rice, we have no choice but to pay even more for Thai rice. Ultimately, food security is as much about stabilizing food prices as well as ensuring sufficient supply.

Originally Posted by Brian

I know Vietnam's started to reduce exports so as to keep their own prices low for rice, but they're a communist government for goodness sakes.

Hehe.. Political idealogies aside, Communist governments like China and Vietnam are doing very well. Much better than Malaysia, that's for sure.

Originally Posted by Brian

Personally? I think the market's going to start making farming a much more attractive option to many people. Not a bad thing after all in a place where farmers are usually thought as poor

That's true. But the government has to get rid of the Little Napoleons in the agencies who are more interested in making money by stifling local farming and importing food instead.

Originally Posted by Brian

No, I don't think that having all our rice produced here in Malaysia would do much for prices, unless you're proposing that we fix the price when we buy it from the farmer, which may be a lot lower than the market price, keeping them poor so we can all enjoy the benefits of cheap food.

Actually, based merely on market forces, increasing local production is certain to reduce prices. Right now, we import rice from Thailand. The cost of transporting the rice alone is a fixed cost we have to bear now. Local rice would definitely be cheaper if there's enough to make a difference.

And it need not be at the expense of the farmer. Rice price is at an all-time high. Malaysian farmers should be making lots of money now....

Originally Posted by Brian

As for industry, the problem with Malaysia is that we have wayyyy too much government interference in industry.

Yeah, too much interference and for the wrong reasons. Agencies like BERNAS should encourage rice cultivation, not discouraging it in favour of foreign rice import. Doesn't make sense.. unless you are interested in making some less-than-legal money.

[Brian]

I don't think he was talking about food prices although it is a concern.

The increased prosperity of China and India isn't the major cause of increased demand and higher prices. It's a fact that the increase in the price of oil and the resulting increase in biofuel product has caused a surge in demand for crops like corn, sugarcane and oil palm.

Hence, the surge in prices of related industries as well. Like meat production, which now has to pay for higher feed prices. If the farmers can sell their corn to biofuel producers at a higher price, why should they have to sell it for food?

Rice isn't being used for biofuels in any large scale right now, yet the price of rice has jumped up (not locally, but in the global market). If it were corn or soya or palm oil, then yes you would be right.

Global rice production to rise by 1.8 per cent in 2008, says UN agency

Hehe.. Political idealogies aside, Communist governments like China and Vietnam are doing very well. Much better than Malaysia, that's for sure.

Personally, it's more of a function of poverty to me more than anything else. Chinese and Vietnamese workers are certainly much more willing to work at a lower price than most Malaysians, thus they're much more competitive and you would get a larger foreign direct investments in their country and hence larger economic growth. We went through that period not too long ago too . We now have to move on to the value added industry, providing a skilled workforce with extras that China/India/Vietnam can't offer yet.

Actually, based merely on market forces, increasing local production is certain to reduce prices. Right now, we import rice from Thailand. The cost of transporting the rice alone is a fixed cost we have to bear now. Local rice would definitely be cheaper if there's enough to make a difference.

And it need not be at the expense of the farmer. Rice price is at an all-time high. Malaysian farmers should be making lots of money now....

Doubtful. Malaysia has a price control system implemented. I doubt Bernas actually buys the rice from the farmers at market prices.

There is indeed a fixed cost in Thai rice, but my question would be, how much more? With volume the extra cost might be negligible. We've always had problems feeding our population, even when we had 20 million people, Bernas or no Bernas. It's now almost 30 million. Even if Bernas managed to use market forces (i.e. increasing prices) to make rice cultivation a much more tempting prospect, I doubt we would get enough farmers to help reduce prices by much.

As for Bernas, I've not read much about it, but as with other government agencies, there's probably some corruption here and there as per usual. That, however, can't be used as an excuse to keep prices steady if the market price is truly increasing (which I believe to be so, see India's restrictions on exports, Vietnam's restrictions on exports and I think Egypt's too)

It's time we moved to a free market model

[Adrian Wong]

Originally Posted by Brian

Rice isn't being used for biofuels in any large scale right now, yet the price of rice has jumped up (not locally, but in the global market). If it were corn or soya or palm oil, then yes you would be right.

Global rice production to rise by 1.8 per cent in 2008, says UN agency

Yup, rice is not used as biofuel. But the fact still remains that without self-sufficiency in any crops, we remain at the mercy of price changes.

Right now, Vietnam and Thailand have started restricting rice exports. This means the global supply of rice will drop, increasing price. Because we do not have enough supply of rice in the country, we have to pay more for imported rice, driving up the cost of living.

With self-sufficiency in rice (or any other crops for that matter), we can at least choose to sell or store. Now, we have no choice but to pay for what we need. Of course, the issue bslee mentioned is not about rice per se but about the cost of daily necessities.

Originally Posted by Brian

Personally, it's more of a function of poverty to me more than anything else. Chinese and Vietnamese workers are certainly much more willing to work at a lower price than most Malaysians, thus they're much more competitive and you would get a larger foreign direct investments in their country and hence larger economic growth. We went through that period not too long ago too . We now have to move on to the value added industry, providing a skilled workforce with extras that China/India/Vietnam can't offer yet.

Well, they have a larger population but it's still a matter of supply and demand. In China, many people are already earning more than we do. It depends on what they do, and the industry they are in. If there's a high demand with little supply, then the salary will rise to commensurate with the demand and supply.

Unfortunately, we are not going up the supply chain. The stupid government still thinks we can survive by making our graduates "cheaper". So, they try to churn out thousands of unqualified graduates. But obviously, no one wants them... so we end up with thousands of jobless graduates.

Originally Posted by Brian

Doubtful. Malaysia has a price control system implemented. I doubt Bernas actually buys the rice from the farmers at market prices.

I'm not sure what system they use, but instead of encouraging rice cultivation, Bernas is currently trying to curb it in favour of more lucrative rice importation.

Originally Posted by Brian

There is indeed a fixed cost in Thai rice, but my question would be, how much more? With volume the extra cost might be negligible. We've always had problems feeding our population, even when we had 20 million people, Bernas or no Bernas. It's now almost 30 million. Even if Bernas managed to use market forces (i.e. increasing prices) to make rice cultivation a much more tempting prospect, I doubt we would get enough farmers to help reduce prices by much.

The fixed cost is only one part of the equation. Like I mentioned above, if we are self-sufficient, we can decide whether to buy (if it's cheaper) or sell (if it's more expensive). Right now, we have no choice but to buy.

Nah, look at China. They have even more people but they are still doing fine. Feeding the people is not about how many people there are, but rather about growing enough crops to feed them.

Actually, that's Bernas' job. They should be blamed if rice cultivation drops. That's what they are supposed to do - encourage rice cultivation. What's the point of funding Bernas if all they do is import rice? We can leave that to businessmen.

Originally Posted by Brian

As for Bernas, I've not read much about it, but as with other government agencies, there's probably some corruption here and there as per usual. That, however, can't be used as an excuse to keep prices steady if the market price is truly increasing (which I believe to be so, see India's restrictions on exports, Vietnam's restrictions on exports and I think Egypt's too)

It's time we moved to a free market model

No one is saying the price should be fixed. In fact, I think we must move to a free market model. This includes the price of oil. But it must come across the board, which includes removing spurious duties and taxes on vehicles.

That's why I say Bernas should not be importing rice but encouraging rice cultivation. Bernas' job is NOT to import rice. Their job is to ensure self-sufficiency so that we will not have to resort to imported rice. It will also reduce the effect of global price changes on the price of local rice.

[Brian]

Originally Posted by Adrian Wong

Yup, rice is not used as biofuel. But the fact still remains that without self-sufficiency in any crops, we remain at the mercy of price changes.

Right now, Vietnam and Thailand have started restricting rice exports. This means the global supply of rice will drop, increasing price. Because we do not have enough supply of rice in the country, we have to pay more for imported rice, driving up the cost of living.

With self-sufficiency in rice (or any other crops for that matter), we can at least choose to sell or store. Now, we have no choice but to pay for what we need. Of course, the issue bslee mentioned is not about rice per se but about the cost of daily necessities.

I'm fine with food security as a reason, but you seem to be quoting price changes too, so, which one are you really advocating? Prices or security? Here's my stance: I support price rises, but I agree that we should do it for the sake of food security

Thailand hasn't yet, thank goodness, but Egypt, Vietnam, China and India have (for India, not their basmati though).

Your reasoning about self sufficiency is perfectly reasonable, but the thing is, this wouldn't have been a very good strategy in an era (actually about 10 years ago) when the price of rice was actually going down in real terms instead. Sure, for food security, it is good, but if I were an investor back then I wouldn't have invested in it. Same with the farmers. The kids saw that all their parents' work didn't account for much at all, and thus left for the cities where they could earn more instead.

bslee has a valid complaint, but BN or no BN, food prices, the price of oil has gone up. We are kidding ourselves if we're going to continue subsidies, especially if oil's going to run out soon in the next 10-15 years. Subsidise all you want, but when the money tap stops working, we're going to see a very painful correction in our markets. Which is why I advocate a slow increase in the price of our daily necessities.

I prefer a slow gradual increase over a sharp correction, the choice is really yours. And also the cash can be used to invest into items which actually return the investment. Yes, it's true that BN will probably take 10-20% or something outta it, but overall there is still a net improvement. Besides, with today's political climate we will get a more accountable government, with PR being a viable alternative to BN, so I really doubt that they'll do any of their old tricks, or make it as blatantly obvious as before [i know it remains to be seen in the next few years, but they're doing fine as of right now].

Well, they have a larger population but it's still a matter of supply and demand. In China, many people are already earning more than we do. It depends on what they do, and the industry they are in. If there's a high demand with little supply, then the salary will rise to commensurate with the demand and supply.

Unfortunately, we are not going up the supply chain. The stupid government still thinks we can survive by making our graduates "cheaper". So, they try to churn out thousands of unqualified graduates. But obviously, no one wants them... so we end up with thousands of jobless graduates.

Many people in Malaysia are also earning more than we do, it only depends on the size of their population and the percentage of the population. In that regard I think Malaysia is still ahead of China (feel free to correct me if you find any statistics showing otherwise, I'm making an assertion not based on statistics).

Really, my point about China is this. What is China? It's simply the world's factory. Most of its economic miracle can be attributed to one simple thing: cheap, and plentiful amounts of workers, which are mostly migrant workers. That's their main source of their boom, and we've gone through that before.

It doesn't have anything to do with supply and demand. Point is, when it comes to making stuff, China's bloody cheap. And that's why everyone's going into China to build factories and stuff. Same with Vietnam.

I don't disagree with you about our government's failure to produce a good educated workforce, in fact, I agree with you on most of your points.

I'm not sure what system they use, but instead of encouraging rice cultivation, Bernas is currently trying to curb it in favour of more lucrative rice importation.

Again, I don't know what Bernas is for, and what crimes they've committed, so I've no comments here

The fixed cost is only one part of the equation. Like I mentioned above, if we are self-sufficient, we can decide whether to buy (if it's cheaper) or sell (if it's more expensive). Right now, we have no choice but to buy.

Nah, look at China. They have even more people but they are still doing fine. Feeding the people is not about how many people there are, but rather about growing enough crops to feed them.

Actually, that's Bernas' job. They should be blamed if rice cultivation drops. That's what they are supposed to do - encourage rice cultivation. What's the point of funding Bernas if all they do is import rice? We can leave that to businessmen.

The point is, while it looks oh so obvious now, there was a time when supplies were plentiful and the prices were low.

It's easy to say that we have the choice to do this and that, but the problem is this:
Assume we have excess food production. Prices are low as usual. We have a nice store of rice and it's increasing every month, with no end in sight when it comes to the increase, and no one ever expects the price of rice to increase. Storage costs increase, we sell rice at a very small profit, which provides minimal returns compared to say, industry, factories, banking sector or something else. Is it really a good investment?

With hindsight we could've said its obvious, but no one spotted it for many years.

China might be self sustaining, but would you want to be told that your job is to farm and you're not allowed to pursue something else? I can't agree with that, food security or not.

Again, I don't know what Bernas' role is, so I reserve comment.

No one is saying the price should be fixed. In fact, I think we must move to a free market model. This includes the price of oil. But it must come across the board, which includes removing spurious duties and taxes on vehicles.

That's why I say Bernas should not be importing rice but encouraging rice cultivation. Bernas' job is NOT to import rice. Their job is to ensure self-sufficiency so that we will not have to resort to imported rice. It will also reduce the effect of global price changes on the price of local rice.

Personally, I'm a fan of taxes on vehicles, yes those massive 200% taxes on imported cars and stuff, though I wish they would be fair and apply it not as a form of protectionism for the local carmakers, but instead use it as a form of a progressive tax. You want a nice car? You pay extra into government's coffers. But I'm digressing....

The inherent problem, as it appears to me, is that self sufficiency in the production of rice is one thing for food security. Price rises are another. Because it involves implying that we will fix the price with local farmers so that we can get cheap rice. And that's something I'm extremely uncomfortable about. I don't want to trample on other people so that I can get something with little cost.


Really, I want to go back to my original assertion. The rise in prices has a fundamental factor. Increased demand due to increasing prosperity in China and India, and that includes the price of oil too. No, we're not going to see starvation, we'll just have a lag of a few years where we'll see production of foodstuffs increase to compensate for the demand as farming becomes an attractive option again. It will hurt for all of us, but I think it's a price I'm willing to pay for if it means my fellow humans in China and India can have a better standard of life.

It appears to me that people want the best of both worlds. To be happy that others are also doing well, and yet want to have prices to be low. To an extent, this is incompatible. The choice is really yours to be honest. I've made mine.

[Adrian Wong]

Originally Posted by Brian

I'm fine with food security as a reason, but you seem to be quoting price changes too, so, which one are you really advocating? Prices or security? Here's my stance: I support price rises, but I agree that we should do it for the sake of food security

They are not exclusive, food security and food price. In fact, they are rather closely-related. You cannot change one without changing the other.

Food price can change up or down. It doesn't necessarily have to go up. But food security (as in food sufficiency) determines how affected we are by global changes in food prices.

Like I mentioned earlier, if we are self-sufficient in food, then we have the freedom to play the global market for our own benefit. If food prices go up, we can export. If it drops, we can always "store" the excess for the future. Either way, food prices would stay pretty stable.

But if we NEED to import food, then we have no choice but to pay the higher costs when food prices go up. In other words, food security affects the price of our food.

Originally Posted by Brian

Thailand hasn't yet, thank goodness, but Egypt, Vietnam, China and India have (for India, not their basmati though).

Actually, it's hard to be sure if Thailand has already restricted rice exports or not. They are denying it, but even the IHT reported that...

Vietnam, the world's second-largest rice exporter after Thailand, announced Friday that it would reduce rice exports by 22 percent in the hope of curbing the rapidly accelerating inflation rates in the country.
Vietnam and India move to limit rice exports - International Herald Tribune

Originally Posted by Brian

Your reasoning about self sufficiency is perfectly reasonable, but the thing is, this wouldn't have been a very good strategy in an era (actually about 10 years ago) when the price of rice was actually going down in real terms instead. Sure, for food security, it is good, but if I were an investor back then I wouldn't have invested in it. Same with the farmers. The kids saw that all their parents' work didn't account for much at all, and thus left for the cities where they could earn more instead.

Oh, self sufficiency does not mean we should ignore free market forces, or not help our farmers. Rice imports have always been regulated by Bernas. It is their job to ensure that local farmers are not unduly affected by cheap rice imports.

But Bernas' job does not stop there. In fact, restricting imports of rice should have been only a temporary measure at most (like NEP). What they should have done is increase the productivity of the local farmers so that they can achieve the same kind of competitiveness as farmers from Thailand, etc.

If the Thais can do it, why can't we? Of course, Bernas did not do what they were supposed to do at all.

Originally Posted by Brian

bslee has a valid complaint, but BN or no BN, food prices, the price of oil has gone up. We are kidding ourselves if we're going to continue subsidies, especially if oil's going to run out soon in the next 10-15 years. Subsidise all you want, but when the money tap stops working, we're going to see a very painful correction in our markets. Which is why I advocate a slow increase in the price of our daily necessities.

Actually, the price of oil has gone up for two reasons - increased demand AND the falling US dollar. Don't forget, most of the oil is traded in US dollars. Everytime the dollar drops, oil "appears" to be more expensive even though the demand-supply and actual value may remain the same.

To cancel that effect, we must convert the cost of oil to the local currency because in most cases, other currencies are gaining at the US dollar's expense. Even when the price of oil goes over $100 a barrel, it does not necessarily mean the cost to non-US buyers would actually increase.

For example, the Malaysian Ringgit has gone up from RM 3.80 for each US dollar to RM 3.10, an increase of 22.58%. Therefore, if the price of oil goes up by 22.58% since Malaysia released the peg on the Ringgit, it would still be par value for us.

Again, I'm not for the oil subsidy. I see it as encouraging waste. But if the government is corrupt and merely leeching away our petrol-derived revenue for their own means, then I'm for the retention of petrol subsidy. No matter what, the oil belongs to the people. Revenue generated from its sale MUST be used for the good of the people, not for BN and their few well-connected cronies.

Originally Posted by Brian

I prefer a slow gradual increase over a sharp correction, the choice is really yours. And also the cash can be used to invest into items which actually return the investment. Yes, it's true that BN will probably take 10-20% or something outta it, but overall there is still a net improvement. Besides, with today's political climate we will get a more accountable government, with PR being a viable alternative to BN, so I really doubt that they'll do any of their old tricks, or make it as blatantly obvious as before [i know it remains to be seen in the next few years, but they're doing fine as of right now].

There can be an immediate removal of the subsidy but only if the government removes or reduces taxes on cars. Honestly though, I don't trust the BN government to do what's right. It's pretty obvious that most of them are in it for the opportunity to steal money from the government coffers. Why do you think so many BN people were pissed when they were not selected to run for elections?

Frankly speaking, the BN government is no more accountable than they were in the past. Yes, the opposition is stronger but most laws are still passed by a simple majority. The opposition can rise some hue and cry but generally, it will be business as usual for BN. In fact, I see some of them rushing to steal as much as they can from the cookie jar before the end (of BN or the petrol reserves).

Originally Posted by Brian

Many people in Malaysia are also earning more than we do, it only depends on the size of their population and the percentage of the population. In that regard I think Malaysia is still ahead of China (feel free to correct me if you find any statistics showing otherwise, I'm making an assertion not based on statistics).

IMHO, no matter whether you are in China or Malaysia or India, it really depends on where you are working, what you do and the demand for your skills. But one thing is for sure... while the average wage for a white-collar employee in China has growned by leaps and bounds in the last 10 years, the average wage here has remained stagnant.

Originally Posted by Brian

Really, my point about China is this. What is China? It's simply the world's factory. Most of its economic miracle can be attributed to one simple thing: cheap, and plentiful amounts of workers, which are mostly migrant workers. That's their main source of their boom, and we've gone through that before.

Ahh.. That's no longer true. Even China is astute to know that. Which is why they have been active in developing their own industries. They know that eventually their cost will rise, which it has. The rampant inflation over there is already evidence of the rapid rise in cost.

Unfortunately, we have not done one bit about this. Oh yeah, we have all kinds of stupid programmes from the government like K-Economy. But like always, they are merely mechanisms to help BNputras and their cronies to steal money from the government coffers. What world-renown company have we managed to create? Even Singapore has Creative Labs. We have nothing.

Originally Posted by Brian

It doesn't have anything to do with supply and demand. Point is, when it comes to making stuff, China's bloody cheap. And that's why everyone's going into China to build factories and stuff. Same with Vietnam.

Oh, it's always about supply and demand.

China used to be cheap, but even they know that Vietnam is cheaper because the high demand in China has led to a massive increase in cost. Why do you think some companies are moving to Vietnam instead?

Originally Posted by Brian

Again, I don't know what Bernas is for, and what crimes they've committed, so I've no comments here

The point is, while it looks oh so obvious now, there was a time when supplies were plentiful and the prices were low.

It's always easy to see things in hindsight, of course. But we have to prepare for the worst, not the best. That includes food security AND price. Like it or not, food price affects our economy. Everytime food cost increases, it reduces our competitiveness, especially when we only have dubious advantage of "low cost" to rely on.

Originally Posted by Brian

It's easy to say that we have the choice to do this and that, but the problem is this:
Assume we have excess food production. Prices are low as usual. We have a nice store of rice and it's increasing every month, with no end in sight when it comes to the increase, and no one ever expects the price of rice to increase. Storage costs increase, we sell rice at a very small profit, which provides minimal returns compared to say, industry, factories, banking sector or something else. Is it really a good investment?

When we assume, we make an ass out of you and me. Hehe... It's true.

Look at the US. In the 70s, they assumed that oil will always be cheap. Then came the '73-'74 oil embargo and they suffered a massive downturn in the economy. Now, they maintain a massive Strategic Petroleum Reserve at great cost.

Some things just cannot be measured by their immediate returns. You have to take the long view. While ensuring food sufficiency in good times may not pay well for the farmers, the government can mitigate that by buying up a portion to hoard and maintain a certain market price. Eventually, this "food reserve" may help prevent supply problems from affecting food prices too drastically.

Think of it as insurance. You may not need it but you buy it anyway because you just never know what will happen in the future.

Originally Posted by Brian

China might be self sustaining, but would you want to be told that your job is to farm and you're not allowed to pursue something else? I can't agree with that, food security or not.

Again, I don't know what Bernas' role is, so I reserve comment.

Huh? Who's forcing you to farm? This is about encouraging people to farm. With the right policies, farming can be very attractive. There is NO NEED to force people to farm.

One of the mistakes we made, for example, is to restrict automation so that more people can be employed. That's all nice for government reports (low unemployment rates) but it's bad for profit and productivity. This applies to farming as well as to our industries.

Originally Posted by Brian

Personally, I'm a fan of taxes on vehicles, yes those massive 200% taxes on imported cars and stuff, though I wish they would be fair and apply it not as a form of protectionism for the local carmakers, but instead use it as a form of a progressive tax. You want a nice car? You pay extra into government's coffers. But I'm digressing....

Heh.. Well, taxation on cars is a separate issue altogether. IMHO, taxes should be decided by more environmental reasons, to encourage people to adopt more environmentally-friendly vehicles. But it's a different issue altogether.

Originally Posted by Brian

The inherent problem, as it appears to me, is that self sufficiency in the production of rice is one thing for food security. Price rises are another. Because it involves implying that we will fix the price with local farmers so that we can get cheap rice. And that's something I'm extremely uncomfortable about. I don't want to trample on other people so that I can get something with little cost.

Nope. They are always intertwined. There should not be any need to fix the price of rice. The government can simply control the price in a free market economy by buying up excess, or selling stored food when prices are up.

BTW, who's saying anything about artificially reducing the price of rice? This is what Bernas has been doing though, by importing cheap rice from Thailand to undercut the local farmers.

Self sufficiency means you can PREVENT or REDUCE unnecessary rises in local food prices due to global changes. It doesn't mean squeezing our farmers just to make food cheaper. For cheaper food, we need to improve productivity, not fix prices.

Originally Posted by Brian

Really, I want to go back to my original assertion. The rise in prices has a fundamental factor. Increased demand due to increasing prosperity in China and India, and that includes the price of oil too. No, we're not going to see starvation, we'll just have a lag of a few years where we'll see production of foodstuffs increase to compensate for the demand as farming becomes an attractive option again. It will hurt for all of us, but I think it's a price I'm willing to pay for if it means my fellow humans in China and India can have a better standard of life.

Actually, demand for food in general does not rise with prosperity. Yeah, prosperity will increase demand for luxury food items, but not basic necessities. No matter how rich you are, there's only so much you can eat!

The cost of food is affected by fuel prices, of course... but like I said, you have to measure it against the local cost, not on the cost of each barrel in USD.

In any case, this is a free market economy. The high price of oil will drive up prices of goods. This will eventually reduce the demand. With the US economy in trouble, demand from the US will drop too. And when all that demand drops, so does the demand for oil... reducing its cost. In other words, it will self-correct over time.

Originally Posted by Brian

It appears to me that people want the best of both worlds. To be happy that others are also doing well, and yet want to have prices to be low. To an extent, this is incompatible. The choice is really yours to be honest. I've made mine.

Hehe.. You can't blame people for that la.

But one thing is for sure, coming back to the topic, the problems we are facing in this country cannot be so easily thrown upon the shoulders of faceless and nameless foreigners. Frankly, the BN government has played a VERY large role in this debacle.

In the last 10 years, the BN government has greatly reduced our competitiveness and squandered most of our natural resources for the benefit of a few. Can you blame the people for blaming them for the misfortunes that have happened so far?

[Brian]

Originally Posted by Adrian Wong

They are not exclusive, food security and food price. In fact, they are rather closely-related. You cannot change one without changing the other.

Food price can change up or down. It doesn't necessarily have to go up. But food security (as in food sufficiency) determines how affected we are by global changes in food prices.

But if we NEED to import food, then we have no choice but to pay the higher costs when food prices go up. In other words, food security affects the price of our food.

But then you're not advocating for the free market anymore, but instead you're advocating for more government intervention. Food security is for stability in food prices locally, yes, but that implies government controlling food prices, else our farmers would be much happier selling it overseas where they get a better price overseas.

Actually, it's hard to be sure if Thailand has already restricted rice exports or not. They are denying it, but even the IHT reported that...

Vietnam, the world's second-largest rice exporter after Thailand, announced Friday that it would reduce rice exports by 22 percent in the hope of curbing the rapidly accelerating inflation rates in the country.
Vietnam and India move to limit rice exports - International Herald Tribune

Now there, I've mentioned all those countries above, and thailand's making denials, nothing said about thailand curbing exports, no need to raise the spectre of thailand doing so.

Actually, the price of oil has gone up for two reasons - increased demand AND the falling US dollar. Don't forget, most of the oil is traded in US dollars. Everytime the dollar drops, oil "appears" to be more expensive even though the demand-supply and actual value may remain the same.

To cancel that effect, we must convert the cost of oil to the local currency because in most cases, other currencies are gaining at the US dollar's expense. Even when the price of oil goes over $100 a barrel, it does not necessarily mean the cost to non-US buyers would actually increase.

For example, the Malaysian Ringgit has gone up from RM 3.80 for each US dollar to RM 3.10, an increase of 22.58%. Therefore, if the price of oil goes up by 22.58% since Malaysia released the peg on the Ringgit, it would still be par value for us.

Again, I'm not for the oil subsidy. I see it as encouraging waste. But if the government is corrupt and merely leeching away our petrol-derived revenue for their own means, then I'm for the retention of petrol subsidy. No matter what, the oil belongs to the people. Revenue generated from its sale MUST be used for the good of the people, not for BN and their few well-connected cronies.

I know, and I've said so in another thread in this forum, but it has also increased in real terms relative to the ringgit because Bank Negara has been trying to control the rate of increase of the ringgit. [60USD -> 100USD = approx 50-60% rise]. That's still an approx 30% rise in real terms.

Look, the government is corrupt. But for all the large sums thrown about, it's still a relatively small percentage. I'm still going to argue based on one fact: investment gives returns, subsidies don't. I'm no fan of BN, but having a viable alternative to BN will keep them on their toes. They know if they continue their practices, they'll get kicked out in 2013. They're not stupid. Which is why I've always advocated a strong Opposition in Malaysia.

And no, I hope BN will have control of the Federal Government till 2013. The PR guys need to learn the ropes at government, too many of them have been 'Opposition' for so long, and have no experience in the reins of government. I rather a slow gradual change.

Ahh.. That's no longer true. Even China is astute to know that. Which is why they have been active in developing their own industries. They know that eventually their cost will rise, which it has. The rampant inflation over there is already evidence of the rapid rise in cost.

Unfortunately, we have not done one bit about this. Oh yeah, we have all kinds of stupid programmes from the government like K-Economy. But like always, they are merely mechanisms to help BNputras and their cronies to steal money from the government coffers. What world-renown company have we managed to create? Even Singapore has Creative Labs. We have nothing.

Oh, it's always about supply and demand.

China used to be cheap, but even they know that Vietnam is cheaper because the high demand in China has led to a massive increase in cost. Why do you think some companies are moving to Vietnam instead?

Of course they do, and of course Malaysia sucks in comparison. But China's still cheap compared to most countries for one reason: the numbers of workers. I don't know the population in Vietnam, but I wager that China probably has 10 Vietnams worth of population. And assuming the poverty rate in China, I can see why China's still competitive vs Vietnam in terms of cheap workers, and that'll last for quite a while. Look, you might want to discredit the assuming part, but surely a poverty rate of 10% in China is way too low? And I wager that it has 1 or more vietnams in terms of population.

IMHO, no matter whether you are in China or Malaysia or India, it really depends on where you are working, what you do and the demand for your skills. But one thing is for sure... while the average wage for a white-collar employee in China has growned by leaps and bounds in the last 10 years, the average wage here has remained stagnant.

If you were a white collar worker in Malaysia during its boom periods (rapid industrialisation), you would have benefited to the same degree. We are at another phase now, and we're simply the products of the boom period, a large middle class and a slower growing economy. Surely you can't say that US and UK workers are getting small increases in wages compared to us because their economy grows much more slowly than us? It's not always the rate of increase, it's the phase we're at that matters.

When we assume, we make an ass out of you and me. Hehe... It's true.

Look at the US. In the 70s, they assumed that oil will always be cheap. Then came the '73-'74 oil embargo and they suffered a massive downturn in the economy. Now, they maintain a massive Strategic Petroleum Reserve at great cost.

Some things just cannot be measured by their immediate returns. You have to take the long view. While ensuring food sufficiency in good times may not pay well for the farmers, the government can mitigate that by buying up a portion to hoard and maintain a certain market price. Eventually, this "food reserve" may help prevent supply problems from affecting food prices too drastically.

Think of it as insurance. You may not need it but you buy it anyway because you just never know what will happen in the future.

Malaysia has its own equivalent of the Strategic Petroleum Reserve for rice to combat shortages. The point is: They're simply short term buffers. You simply can't store rice for too long.

Nope. They are always intertwined. There should not be any need to fix the price of rice. The government can simply control the price in a free market economy by buying up excess, or selling stored food when prices are up.

BTW, who's saying anything about artificially reducing the price of rice? This is what Bernas has been doing though, by importing cheap rice from Thailand to undercut the local farmers.

Self sufficiency means you can PREVENT or REDUCE unnecessary rises in local food prices due to global changes. It doesn't mean squeezing our farmers just to make food cheaper. For cheaper food, we need to improve productivity, not fix prices.

I've got a question. Is it because Thai farmers are much more competitive than our farmers, or is it because Bernas wants to kill our country for some reason or another and reduce prices from Thai farmers further so that our farmers will all die? I doubt that scenario. Either way, if Bernas is truly for what you say, then it points to their failure at making our farmers more competitive.

Huh? Who's forcing you to farm? This is about encouraging people to farm. With the right policies, farming can be very attractive. There is NO NEED to force people to farm.

One of the mistakes we made, for example, is to restrict automation so that more people can be employed. That's all nice for government reports (low unemployment rates) but it's bad for profit and productivity. This applies to farming as well as to our industries.

China. Communist state. Central planning. Government dictates what you do, free market doesn't come into it.

Actually, demand for food in general does not rise with prosperity. Yeah, prosperity will increase demand for luxury food items, but not basic necessities. No matter how rich you are, there's only so much you can eat!

The cost of food is affected by fuel prices, of course... but like I said, you have to measure it against the local cost, not on the cost of each barrel in USD.

In any case, this is a free market economy. The high price of oil will drive up prices of goods. This will eventually reduce the demand. With the US economy in trouble, demand from the US will drop too. And when all that demand drops, so does the demand for oil... reducing its cost. In other words, it will self-correct over time.

No, it will. Increased prosperity means more meat, which requires more resources and demand increases, and we get higher prices. Increased prosperity means people who previously scraped day by day for food have enough now to fill their stomachs, and that's a big difference. Also, there's waste. Poverty ensures that they eat each and every grain of rice, but as you get into middle class syndrome, you don't do that any more when you're full, and waste occurs. Multiply it by millions of people, and you get a large surge in demand.

If the US economy goes into a recession, naturally prices will go down, but it's by no means a self-correction. A correction occurs when prices are inflated to be too high. Sure, we have speculation and stuff driving the price of oil up, but this increase is more fundamental. China and India use a lot of oil.

Hehe.. You can't blame people for that la.

But one thing is for sure, coming back to the topic, the problems we are facing in this country cannot be so easily thrown upon the shoulders of faceless and nameless foreigners. Frankly, the BN government has played a VERY large role in this debacle.

Mahathir was dumb, and I think we were just a victim of a correction in the value of our ringgi