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KUALA LUMPUR: Export bans or food protectionism are not the answer to maintain or lower the cost of living, according to Apurva Sanghi, who is The World Bank lead economist for Malaysia.
“Self-sufficiency is not the same as food security.
“Food security is about the three As – affordability, availability and accessibility – underpinned by safety and quality of food.
“Countries like Chile, for example, and many other Latin American countries have abandoned food protectionism, subsidies, and self sufficiency targets because they realise that they could meet their domestic demand by filling in orders from international market as long as the citizens have purchasing power,” he said after the online presentation of the World Bank’s latest report of Malaysia Economic Monitor: June 2022.
Since June 1, Malaysia had imposed a ban on the export of chickens to Singapore until domestic prices and production stabilise.
Apurva said there are many things Malaysia can do to ensure food price inflation is low and the cost of living remains reasonable.
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“The first is to keep trade open, but increase targeted spending on those most effected. The second is diversifying away from rice. It’s interesting how 88% of the agricultural budget goes towards rice and rice-related activities,” he said.
Apurva noted that “Malaysians are starting to consume much more non-rice products such as cereal, fresh fruits and vegetables.”
“Something needs to be done about the subsidies and that will definitely help promote food security,” he said.
Apurva explained that countries resort to export bans because they are politically expedient, and help to control prices immediately in the short-term, and “seemingly increase availability of food.”
“They are attractive from that sense, but in the long run, they can actually do more harm than good. And why is that?
“You deny Malaysian producers the benefit of of higher prices and the wider market.
“The poor who rely on agriculture and farming are hurt typically because any benefit from lower food prices is outweighed by the decline in income.
“If you look at the average income of farming households in Malaysia and the poor, it is less than the typical B40 income,” he said.
Apurva added that as export bans deny producers from benefiting from higher prices, this results in less investments in domestic capacity to produce food.
“Importing countries can switch producers. There are news reports about how Singapore is now looking towards Thailand and other countries to meet the shortfall,” he said.