Let the market, not politicians, determine the flow of rice, oil and other commodities. Lower, more stable prices will ensue.
— Steve Hanke, American economist
STEPPING onto the stage, I felt as if I were about to give a TED Talk about my favourite morning coffee. Only it wasn’t. It was about rice.
Who would have thought that an entire investment forum’s main agenda would be rice? “Alright, guys!” I kicked off with an icebreaker, “Quick poll – who here had rice for lunch?” Nearly every hand went up.
I chuckled, “Just as I thought. Now, have you ever wondered about the journey that rice took before ending up on your plate?” The projector’s light kicked in, throwing up a set of dramatic headlines.
The one that stood out? India’s big rice announcement. “So, here’s the thing” I said, a hint of mischief in my voice, “India’s just pulled off a stunner. A 40 per cent export duty on onions and a stop on non-basmati rice exports! This isn’t just a policy shift. This is a rice revolution.”
“But why should we here in Malaysia care about India’s rice manoeuvres?” a gentleman asked, understandably curious. Leaning into the mic, I clarified, “Okay, think of India as the Amazon of rice. When Amazon has a sale, the world notices. When they hike prices, the world feels it.
Now, India? They’re the world’s premier rice dealer. We, in Malaysia, get a whopping 26 per cent of our rice fix from them. So when it pulls back, prices naturally surge.” Navigating to a chart with rising figures, I highlighted the stark reality.
“Here’s a stat that’ll knock your socks off: after India’s rice rumba, Thai white rice prices shot up to US$648 per tonne, the highest, since the economic crisis in 2008.” Spotting a raised hand, I winked, “Shoot!”
“So, just how many countries are we ‘seeing’ for our rice needs? “If rice was a dating game, we’d be quite the heartbreakers,” I teased, pointing at the animated numbers beneath each country on the chart. “In 2021, we imported rice from as many as 12 different countries.”
From the corner of my eye, I caught a trader – Mr Tan, if I’m not mistaken – shooting me a knowing smirk. He chimed in, “Smart move though, right? Like spreading out investments to protect against market tantrums?” Chuckling, I responded,
“Exactly, Mr Tan! Moving the laser pointer like a maestro leading an orchestra, I highlighted the flux in percentages from each country.
“Notice this trend?
No single country gets more than half of our rice business. Another question came in, “How’s our own backyard doing in production?” Rubbing my chin, I went in, “You know Sarawak and Sabah? They’re the Cristiano and Messi of our agricultural squad.
They make up 32 per cent of our agricultural GDP. But … and it’s a big but … Combined, they only put forth a mere 9.5 per cent to Malaysia’s rice pot. Since 2013, we’ve been slipping, losing 0.7 per cent in production year on year.” Drawing an imaginary chart in the air, I continued, “We churned out 1.57 million tonnes in 2022, sliding down from 1.68 million the previous year. As our fields went on a diet, well, our ports got busier.”
A ripple of laughter ran through the crowd. “Why the diet, you ask? You’d think with all this inflation and cost of living going up, we’d be growing more rice, not less.”
I clicked to the next slide. The graph showed a descending curve. “Back in the groovy 1970s, our parents gobbled down about 120 kg of rice a year. It was the era of ABBA and bell-bottoms. In 2022, amidst K-pop and slim-fit jeans, we’re down to 77 kg.” The audience seemed a little surprised.
“Ah-ha,” I said, catching their reaction, “we’re not cutting down just because rice prices are up. As we grow wealthier, our plates become more diverse.
That is the paradox of rice in our increasingly affluent Malaysia.”
As the murmurs settled, the stern bureaucrat stood up, an air of skepticism evident. “Hold on there! What about subsidies?
Weren’t they our safety nets?”
Pausing for effect, I nodded appreciatively, “That’s a question we all have, right?” I looked around, locking eyes with several attendees before continuing,
“And it’s a valid one.”
“You see,” I continued with a playful tone, “think of the market as nature’s own checksand-balances system.
Too much rain?
There’s a flood.
Too little?
A drought. It’s the same with prices.
When there’s an abundance, prices go down, making it accessible for everyone. Running low? Prices climb, signaling producers to supply more.”
Drawing them in further, I added, “Subsidies are like that backseat driver who keeps telling you to turn left when every sign and signal is saying turn right. So when subsidies become a way of life, you tell me.”
“I had a coffee with Lee just last week. He has been milling rice longer than I’ve been talking about economics,” I continued, pointing to the back of the room where Lee was seated. “He is getting pricier paddy, but he can’t charge more for his rice.
This is buying gold but being forced to sell it as silver.’… Since 2008, a third of our mills have vanished, down to just 160 now. Why? They can’t keep up!” The room was silent, absorbing the gravity of the situation. Wrapping up, I gazed into the crowd, “…with a decade analysing commodities at G.Sachs, I’ve seen the ebb and flow.
Our strategies from the 1980s? They won’t cut it in today’s dynamic world.” I stepped back, letting my message resonate. As applause erupted, one thing was clear: Rice might be a staple, but its economics? Anything but plain.
The views expressed here are those of the columnist and do not necessarily represent the views of New Sarawak Tribune
