Policy Response Measures and Best Practices against Impact of COVID-19 Pandemic on Agrifood: Malaysia Experience

Policy Response Measures and Best Practices against Impact of COVID-19 Pandemic on Agrifood: Malaysia Experience

Published: 2021.01.08
Accepted: 2020.12.01
11
Socio Economy, Research Intelligence and Agribusiness Research Centre, MARDI
Center of Socio Economic, Market Intelligence and Agribusiness Research, MARDI

ABSTRACT

Due to the worldwide spread of the COVID-19 virus, the Malaysian government has taken concrete steps in containing and reducing the risks of spreading the virus by initiating the Movement Control Order (MCO) measures. Since then this nationwide action has observed encouraging results in flattening the curve and controlling the pandemic. However, the MCO has also proven to be affecting the agrifood supply chain domestically and globally as well as labor shortage.  Therefore, the Economic Stimulus Package (PRE) worth RM 250 billion (US$ 61.12 billion) is introduced to ease the burden of the people. Among others, the cash handouts will help the most needed group to obtain the essential needs and special incentives will also be channelled to farmers, fishermen, breeders as well as MSMEs through the RM 1 billion (US$ 240 million) Food Security Fund allocated by the government. To facilitate and enhance the food supply chain, the Ministry of Agriculture and Food Industries (MAFI) and its agencies has implemented various key initiatives and actions like establishment of Controlled Fresh Market (PST) outlets, leveraging e-commerce platform, strengthen storage and distribution facilities, and providing financial relief support. The ministry also conducts its public awareness and outreach to the concerned agricultural stakeholders which includes initializing the awareness to assuring the continuous supply of the food in the market, deploying enforcement personnel to observe the conduct of the market, and seeking support from industry stakeholders to minimize disruptions in the domestic food supply chains and ensure that trade lines remain open. On top of these, the government has established a Cabinet Committee chaired by the Prime Minister to identify issues pertinent to food security and draft policy, strategies and action plans to ensure national food security and strengthen the food supply chain.

Keywords: COVID-19, agriculture, agrifood, policy intervention

INTRODUCTION

The COVID-19 pandemic has caused an unprecedented impact to the whole world. It also has reached far beyond the expectations of a socio-economic downturn. More than half of the world’s population has experienced a lockdown with strong containment measures. The Malaysian government has taken concrete steps in containing and reducing the risks of spreading the virus. Containment measures like the Movement Control Order (MCO) were enforced nationwide. The public has observed encouraging results in flattening the curve and controlling the pandemic. However, this measure has affected all economic sectors by disruption of supply chains, weaker demand for goods and services, a drop in international tourism, a decline in business travel, and most often a combination of these (OECD, 2020). The declining demand for food products from all sectors has a direct impact on the agrifood industry. Hence, the Malaysian Government has made any activities, businesses and services related to food supply and classified them as top priorities in which essential services are allowed to operate throughout the MCO period. This is to ensure sufficient and continuous food supply. There is no restriction imposed on the inputs, production, processing, logistics and marketing activities along the food supply chain to ensure no disruption to food availability.

COVID-19’s IMPACT ON MALAYSIA’S AGRI FOOD SECTOR

Labor shortage, domestic and global supply chain disruption on food industry are recognized as the leading impacts due to the COVID-19 pandemic and the Movement Control Order (MCO). When MCO was imposed in March 2020, the supply chain for locally produced food commodities was disrupted at various stages before it began to gradually stabilize in the later phases. At the downstream stages agricultural production was affected by setbacks from limited operating hours and workers. There are also cases where collection and transport are delayed due to reduced workforce. At the retail end, closure of restaurants, hotels and roadside sellers meant a significant reduction in demand. This then impacted the supply side, resulting in incidences such as a surplus of vegetables in Cameron Highlands. At the inputs end, there were reports of increases in the prices of seeds, animal feeds, and chemical inputs due to limited movement and transport. This needs to be monitored to ensure that it does not hinder farming activities (Sarena et al., 2020).

In 2019, there were an estimated 522,690 workforces, where 35% or 184,986 are registered as foreign workers, being employed in agricultural production. The crops subsector registered 109,433 foreign workers, the livestock industry employs 31,768 foreign workers and fisheries industry employs 43,785 foreign workers. Among the three subsectors the livestock industry is the most highly dependent on foreign labor. In general Malaysia’s agrifood sector is highly dependent on foreign labor. Furthermore, unsavoury living conditions like cramped and unsanitary environment of most migrant workers do not help in the implementation of social distancing thus could pose a genuine threat for an outbreak. This also would reduce the hiring of manpower in the agrifood business hence affecting the food production capacity of the country in the long run (Sarena et al. 2020).

Almost 90% of agricultural establishments in Malaysia are considered as micro, small and medium enterprises (MSMEs). A survey conducted on 1,500 agrifood entrepreneurs indicated that around 64% of the MSME’s were not able to sell their produce, 48% had distribution constraints and only 17% had managed for normal operating capacity during the MCO (MAFI, 2020). Globally, the COVID-19 pandemic has also been affecting Malaysia as a net food importer. The balance of food trade stood at a deficit of RM17.4 billion (US$ 4.25 billion) in 2019. Under normal economic climate and market conditions, food trade deficit will not raise a major concern on food security for a trading nation with strong economic fundamentals like Malaysia. However, the COVID-19 pandemic is challenging this assumption under the fear of global supply disruption if exporting countries began to reduce export (Sarena et al., 2020).

ACTIONS TAKEN

There are countable measures undertaken to curb the impact caused by the COVID-19 pandemic. All levels of government have been constantly in sync with the planning strategies and action plans that have been put into place. At the macro level the policy, strategies and action plans are being drafted while the micro level is where the programs and activities by respective Ministries and their agencies been executed and monitored. Despite that all government sectors are equally responsible in comforting the public through awareness campaign during crisis.  

Macro strategy

Malaysia recognizes that this could be the most challenging time for the nation during this pandemic and the MCO period. At the time of crisis as such, Malaysian government is committed to ensure that the national food security will not be compromised in whatever circumstances. Therefore, the government has established a Cabinet Committee chaired by the Prime Minister with members from ministers, senior government officers, academicians, think-tanks, private sectors, industry players and NGOs to identify issues pertinent to food security and draft policy, strategies and action plans to ensure national food security and strengthen the food supply chain. As such, the Economic Stimulus Package (PRE) worth RM250 billion (US$61.12 billion) is introduced to ease the burden of the people. Among others, the cash handouts will help those most needed group to obtain the essential needs and special incentives will also be channelled to farmers, fishermen, breeders as well as micro, small and medium enterprises (MSME) through the RM1 billion (US$0.24 billion) Food Security Fund allocated by the government (Ahmad A.S., 2020).

Micro strategy

The government is to monitor and take stock of the essential food items in the market to ensure that they are available, accessible and affordable to all people. To facilitate and enhance the food supply chain, the Ministry of Agriculture and Food Industries (MAFI) and its agencies has implemented various key initiatives and actions as follows:

(i) Establishment of Controlled Fresh Market (PST) outlets

Throughout the MCO period, MAFI has established its Controlled Fresh Market (PST) outlets. These initiatives were made possible through agencies under MAFI which plays a pertinent role in connecting the local farmers and the public market through efficient agricultural supply chains. Until 22 April 2020, 144 PSTs have operated throughout the country in distributing agricultural products.

(ii) Leveraging e-commerce platform

A field survey conducted on 1,500 respondents stated that 24% of them opted for online sales during MCO. It shows that diversifying channels for consumers have been increasing and are considered as necessities in the agrifood industry. Hence the Federal Agricultural Marketing Authority (FAMA) and National Fishermen Association (NEKMAT) and other agencies under MAFI have been expanding marketing outlets such as Agrobazaar, Desaraya, FAMACO as well as online sales through Agrobazaar Online and Nekmat Biz. In order to enhance the online sales, MAFI collaborates with existing e-marketplace platform providers such as Shopee, Lazada, MyGroser and Food Market HUB. MAFI is also partnering with the Malaysia Digital Economy Corporation (MDEC) under the eRezeki Program for the delivery services platform. There are 11 bulk shipping companies involved under the program such as JustLorry, GoLog, Zepto Express and Dego as well as nine (9) retail delivery companies such as Foodpanda, Lalamove and BungkusIt. Besides that, MAFI aims to expand and strengthen agricultural products marketing through e-commerce platforms that have been identified to enhance the marketability and viability of agricultural products for the domestic market and the international market. MAFI has started the discussion on how to collaborate with Ourshop Airasia, Dropee and CP3 to develop a business to business e-commerce platform. In the long term, MAFI is working on developing disruptive innovation to expand online marketing / e-commerce to create an alternative to conventional methods (in-store / retail sales).

(iii) Strengthen storage and distribution facilities

RM 10 million (US$2.44 million) has been allocated to FAMA in the PRE to supplement and maintain existing facilities for food storage as well as logistics services. This will increase the storage capacity of the food stock and the mobilization of the product, reducing the risk of dumping due to reduced demand.

(iv) Providing financial relief support

FAMA has launched a rental exemption initiative for FAMA marketing outlets at the Farmers’ Market and Permanent Farmers’ Market for 6 months from the MCO's enforcement date on 18 March 2020. In addition, Farmers’ Organization Authority (LPP) has implemented a 3 to 6 months moratorium of financial repayment from March to August 2020; and to ease the burden of the farmers, the Malaysian Pineapple Industry Board (LPNM) will cover the cost of transporting pineapple fruits to manufacturers during the duration of the MCO.

Public awareness campaign

MAFI also conducts its public awareness and outreach to the concerned agricultural stakeholders which includes initializing the awareness to not engage in ‘panic buying’, and provide advisories on essential agricultural services, operation of agricultural activities and assuring the continuous supply of food in the market through social and mainstream media. MAFI is also deploying enforcement personnel from MAFI agencies to stock-take and observe the conduct of the market pertaining to agricultural products throughout the value chain. Selective MAFI personnel will continue to undertake activities that include inspections on food and crops, food safety for human and animal consumptions as well as ensuring the availability and continuous supply of the essential food staples such as rice. Under this public awareness campaign, MAFI executes outreach and meetings to the public specifically to the local supermarket operators, importers, logistic providers, agricultural practitioners, distribution centres and State Exco’s for Agriculture Portfolio in relaying the right message and seeking support to minimize disruptions in domestic food supply chains by working closely together to ensure that markets are kept open and transportation of agricultural and food products are facilitated; and to ensure that trade lines remain open to facilitate the flow of agricultural and food products to support the viability and integrity of supply chains.

CONCLUSION

The Movement Control Order that been issued to contain and reduce the risk of spreading the COVID-19 virus has proven to be affecting Malaysia’s agrifood supply chain. The downstream of the supply chain faces setbacks from limited operating hours and workers. As government economic stimulus package prioritize local citizens, the foreign labor has become a genuine threat for an outbreak due to unsavory, unsanitary and cramped living environment. As local food production is reduced, a deficit food trade would cause a major concern if exporting countries began to reduce export due to the disruption of food supply. To overcome this, the government has set up policies, strategies and action plans that prioritize national food security agendas. Initiatives starting from the establishment of special Cabinet Committee chaired by the Prime Minister itself to the decree of providing Economic Stimulus Package (PRE) as well as cash handouts have been deployed by the government. At the ministry levels, initiative programs like establishing Controlled Fresh Market outlets, leveraging e-commerce platform, strengthening storage and distribution facilities as well as providing financial relief support to farmers have been implemented. The public awareness campaign to relaying positive message regarding agrifood concern has also been taken concurrently.

REFERENCES

OECD (2020). The territorial impact of COVID-19: Managing the crisis across levels of government.  Oecd.org/coronavirus. updated 10 November 2020

Ahmad A. S. (2020). Protecting the Agriculture Sector During the COVID-19 Crisis. Khazanah Research Institute.

Sarena C. O., dan Shaufique F.S. (2020). Food Security: Impact of COVID-19 Recovery & Reform. Khazanah Research Institute.

MAFI (2020), Facilitation od Supply Chain for Food Security During COVID-19 Outbreak. Meeting Report for COMCEC COVID-19 Agriculture Consultation Meeting. 30 June 2020

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