KUALA LUMPUR, Malaysia: Malaysia's government is planning to subsidize locally-grown rice to prevent consumers from being hit by record high prices of the staple food in the world, a Cabinet minister said Monday.
"The main priority is that the government wants to assure the lower income group that local rice will remain affordable to them," Shahrir Samad, the Domestic Trade and Consumer Affairs minister, told reporters.
World rice prices have risen sharply this year because of growing demand and poor weather in some rice-producing countries. Some Asian countries, including Vietnam and Cambodia, have curbed rice exports to guarantee their own supplies.
Malaysia grows about 65 to 70 percent of the rice its people consume, while the rest is imported, mainly from Thailand. With the price of Thai rice nearly tripling in the last five months, the government expects consumers to switch to local rice, whose price — so far steady — is expected to rise.
The government currently does not subsidize local rice but provides free fertilizer and other concessions to farmers to ensure the price remains under control. In 2007, the government spent more than 900 million ringgit (US$290 million; €200 million) on these concessions.
"At the moment there is no rice subsidy. We just control the price. But that (subsidy) will come," he said. However, imported rice will not be subsidized.
"We can't say that we must have Thai rice at lower prices than what the Thai themselves have," Shahrir said.
He said the new rice subsidies might be funded by the money saved by a planned reduction of fuel subsidies.
The government said earlier that it is considering charging car owners more for gasoline while maintaining the cost of gasoline and diesel for motorcyclists, school bus operators, fishermen and other needy groups.
"Maybe we can see how we can save subsidies on petrol and diesel. Perhaps we can re-channel to food subsidies," Shahrir said without elaborating. He did not say when the fuel subsidies would be reduced.
The government spends 4 billion ringgit (US$1.3 billion; €810 million) per year on the food related subsidies, including directly subsidizing flour, white bread and cooking oil.
Shahrir warned that Malaysians must face the reality of the global food crisis.
"We will need to see changes in lifestyle among Malaysians to accommodate this economic situation," he said.
He said the government is also looking to boost rice stockpiles and establish a new supply chain system to ensure continuous supply in the market.
Malaysia recently announced plans to boost domestic food security by growing rice on a massive scale in a state on Borneo island.
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