Health scare, globalisation and the country's high import bill are among the dominant factors in causing the price hike of basic products in Malaysia, said the Federation of Malaysian Consumers Association.

In a research carried out by the consumer organisation at various cities and towns, it found the five-sen increase in oil prices early this month is not the only reason for the price hike in other products.

"Public opinion suggests that the contributing factor that has led to the price increase in almost all goods is due to the increase in oil prices. Nevertheless, we at Fomca believe that other domineering factors play a role in the recent price hike of food products," it states in a statement today.

It pointed out diseases like bird flu and mad cow, and the fear of mercury in canned tuna are among the reasons why consumers are consuming more vegetables and fruits these days.

"Due to the change in consumption pattern, prices of vegetables and fruits have increased. The leading factor in the price hike of vegetables and fruits are because of inadequate supply of these food items."

"Because of market forces, when supply does not meet demand, automatically the determinant of the price lies on the shoulder of the suppliers, making it a supplier market."

It also claimed that the World Trade Organisation (WTO) played a role in the increase of prices stating that globalisation has changed the way businesses are conducted today.

"The volume of world food trade is enormous and there is a significant increase in both the quantity and variety of food moving in international trade... Prices of food have increased as food producers need to adhere to the standards and rules of the WTO."

The high import bill has also been identified as one of the causes for the increase of food prices in the country.

"Last year alone, our food import bill was recorded at RM12.44 billion while our food export bill only amounted to a mere RM7.4 billion."

This indicated that Malaysia is relying heavily on foreign countries to cater to our growing food demand, said the statement.

"We import dairy products from New Zealand while vegetables and fruits products mainly originate from Australia and United States. Malaysia is a net importer of seafood products mainly from Thailand and Indonesia. The increase of our food import bill has inevitably led to the increase in food prices in this country."

Other reasons cited are middleman, climate change, increase in living costs, increase number of middle-income group and use of high external input.

Recommendations

Fomca recommended that the above contributing factors can be overcome if the government take adequate steps such as advancing the country's agriculture sector.

"We strongly support the government's move in making the agricultural sector as the third engine of economy growth in Malaysia. Fomca believes that with the latest ICT tools, creation of the Bio Valley and the crucial role placed on Universiti Putra Malaysia as the leader in agricultural education, this sector will leapfrog and boost the country's efficiency and productivity, and more importantly reduce our food import bill."

It calls on the government to convert the 800,000 to one million hectarage of idle land to agricultural land to increase food production in this country.

It also proposed that the government to reintroduce the 'Rancangan Buku Hijau' campaign that was initiated by former prime minister Abdul Razak Hussein to encourage the public to carry out backyard farming, hydroponics planting and organic farming.

He said the authorities must also take efforts to reduce the role of the middlemen by improving the marketing efficiency of food products.

Other efforts that the government can consider includes increasing agriculture efficiency, encourage farmers' cooperation, and to monitor the role of Federal of Agriculture Marketing Authority (Fama).