The Impacts of Trade and Self‐Sufficiency Policies on Heterogeneous Rice Farms in Malaysia

15 Pages Posted: 5 Jun 2020

See all articles by Roslina Binti Ali

Roslina Binti Ali

affiliation not provided to SSRN

Jeffrey Luckstead

affiliation not provided to SSRN

Alvaro Durand‐Morat

affiliation not provided to SSRN

Eric J. Wailes

University of Arkansas - Department of Agricultural Economics & Agribusiness

Date Written: November 2019

Abstract

This paper develops a farm household model of heterogeneous Malaysian rice farmers. The model determines the domestic price of milled rice in equilibrium. The model is simulated to analyze the effects of free trade, self‐sufficiency achieved through trade policy, and the impact of free trade and self‐sufficiency when rice productivity expands. The ex ante results for free trade predict that total rice supply rises as the increase in imports offsets the decrease in domestic production, causing the domestic price of milled rice to fall by 15.8 percent. While this price decrease generates negative income effects for rice farmers, it leads to an expansion of consumption of milled rice by both the farm and urban populations. The results for self‐sufficiency through heightened tariffs predict that production for domestic rice farmers increases. However, with fewer imports, total rice supply falls, causing the domestic price of rice to increase by 41.5 percent. Because free trade is politically unfeasible and trade‐driven self‐sufficiency policies contract total rice consumption, boosting rice production through research and development is an effective way for Malaysia to increase the total supply of rice while limiting its dependence on imports.

Keywords: farm household model, free trade, Malaysia, rice, self‐sufficiency

Suggested Citation

Ali, Roslina Binti and Luckstead, Jeffrey and Durand‐Morat, Alvaro and Wailes, Eric J., The Impacts of Trade and Self‐Sufficiency Policies on Heterogeneous Rice Farms in Malaysia (November 2019). Review of Development Economics, Vol. 23, Issue 4, pp. 1659-1673, 2019, Available at SSRN: https://ssrn.com/abstract=3618495 or http://dx.doi.org/10.1111/rode.12618

Roslina Binti Ali (Contact Author)

affiliation not provided to SSRN

No Address Available

Jeffrey Luckstead

affiliation not provided to SSRN

No Address Available

Alvaro Durand‐Morat

affiliation not provided to SSRN

No Address Available

Eric J. Wailes

University of Arkansas - Department of Agricultural Economics & Agribusiness ( email )

Fayetteville, AR 72701
United States
39-6-5705-6894 (Phone)
39-6-5705-4495 (Fax)

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