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The conflict involving Iran, supply chain disruptions, and concerns over rising food prices have put food security back in the spotlight. Nailah Huda speaks with researchers from the Khazanah Research Institute about how Southeast Asia's reliance on imported food and agricultural inputs leaves the region vulnerable to global shocks.
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00:07This is Awani Global with me, Naila Huda.
00:09The US-Israel war on Iran, disruptions to global supply chains,
00:13growing competition between the US and China,
00:16and rising food prices have reignited concerns about food security around the world.
00:22A new paper from the Kazanah Research Institute ,
00:24argues that food vulnerabilities in Southeast Asia are not necessarily a result from temporary shocks,
00:32but stemmed from deeper structural food dependencies embedded in the global economy.
00:38And joining us today are the researchers behind the discussion paper titled
00:41The Geo-Economics of Food Dependencies in Malaysia and Southeast Asia
00:45to tell us about what these trends mean for the region and the world.
00:49And joining us Dr. Theo Ayni, Research Associate at the Kazanah Research Institute,
00:54and Nick Shafia, Anis Nick Sharifuddin, also Research Associate at the Kazanah Research Institute.
00:59Thank you so much Dr. Ayni and Anis for joining us today on Awani Global
01:03to tell us about this newly launched discussion paper,
01:08essentially arguing that the issue of food security in this region particularly,
01:13should not be viewed solely through the lens of the Iran war recently.
01:17But as part of this broader geoeconomic story, tell us what this means.
01:23Maybe Anis you can start off with this.
01:26What this actually means?
01:28What is the geoeconomic context that can help us understand the food dependency structure in this region?
01:35Thank you Nala for having us.
01:38So I think the key point from our paper is that the war in Iran is not the whole story,
01:44but instead it exposed the vulnerabilities that already existed within the Southeast Asia's food systems.
01:50So basically over the past two decades, Southeast Asia has become increasingly integrated
01:56within the global food and also the agricultural trade networks, right?
02:01And also it has also become more strategically more important amid the growing economic tension between U.S. and China.
02:11So both of these countries view Southeast Asia as an important market.
02:17So basically also an important source of food supply and also an important strategic region, right?
02:26So what does this mean practically?
02:28So it means that when the U.S. and China competes, whether through trade wars, through tariffs and also competing
02:36for influence.
02:37So Southeast Asia's food supply chains, it get pulled in both directions, right?
02:43So our dependencies become leverage points.
02:46So food is no longer just an agricultural issue right now, but it is tied to trade relationships and supply
02:56chains and also geopolitical competition.
02:58So what our data shows is that many countries in the region depend not only on imported food,
03:04but also on imported feed, fertilizer and also other agricultural input.
03:10And mostly it comes from a small number of supplying countries, right?
03:15So when geopolitical disruption occur, whether it is a war, a trade dispute or we have like shipping disruption,
03:23these shocks able to travel through supply chains and eventually affect the food production and food prices in Southeast Asia.
03:31So Dr. Aini, what does food dependency actually look like in Southeast Asia?
03:36And if you were to look at the supply chain, where do these vulnerabilities lie or are more focused in?
03:42Thanks for the question.
03:44So perhaps I'll give a broad overview of four countries here, each with different profiles, including Malaysia for sure.
03:50So start off with Malaysia.
03:51Malaysia is a net food importer or importing country.
03:56That means we import more than we export into our food commodities.
04:00That's because our self-sufficiency is uneven across key food commodities.
04:06For example, like rice, chicken, egg, beef, fish, fruits, vegetables and other essential ones that household consume a huge higher
04:16proportion of.
04:18So that means we must rely on import to actually fuel or supplement the supply in our food to meet
04:26domestic demands.
04:27But that means Malaysia is exposed to dual risk, first with the import dependency and second with our domestic production,
04:36which is prone to any risk that comes with import shortages or climate disruption that lower or reduce our production
04:44capacity.
04:45So Malaysia, yes, as a net food importer, we are also embedded in this global and regional trade.
04:56We are therefore vulnerable to trade disruption.
04:58So the next country, Indonesia, presents a different picture.
05:03Indonesia has high self-sufficiency level or the extent to which a country can meet the domestic demand by its
05:12local or domestic food production.
05:14So Indonesia has high self-sufficiency level across most key food commodities.
05:21Therefore, it does not rely on import to actually supplement its food supply.
05:26At the same time, it actually does not export much of the food commodities that it is self-sufficient in.
05:34And I'll discuss a little bit further when I go to Thailand and Vietnam.
05:37So that means Indonesia is really focusing a lot more on local production.
05:44So if any factors such as I mentioned, the dependency on inputs like fertilizer,
05:50which Indonesia's high self-sufficiency is really partly fueled by its strong focus on fertilizer use and provision,
05:59can be prone to the current times now where fertilizer supply is heavily disrupted.
06:06And also because it can be disrupted due to climate disruptions with the upcoming El Niño risk,
06:13its local domestic production can be at risk.
06:16So when their local production is at risk, it has to then turn to external market, which is export.
06:24But because of its more protectionist or nationalist trade model, especially with food commodities,
06:32it means that it does not have a readily available relationship with supplying countries.
06:38It's more ad hoc then.
06:39Yes, correct.
06:40Because it does not rely much on import and also does not really export as well.
06:45So that's a mean it can also face gap in the supply if say the domestic production face disruption.
06:52And especially at the times where it's increasingly volatile and uncertain with the kind of trading environment that we face
07:00now.
07:01Very different situation Malaysia and Indonesia, but both have their different risks as well.
07:06Correct.
07:07So the next two countries, Thailand and Vietnam, both are strong food exporters in the region.
07:15So this is because of their high self-sufficiency levels across the key food commodities like for example rice.
07:22And also they are also actively participating in international markets to export their food to Malaysia and other partner countries,
07:33not just in the region but also globally worldwide.
07:36But the export, this high export orientation can also expose them to a similar but different risk.
07:44When say because they rely so much on, they export so much of their food commodities.
07:48If let's say a buyers, any disruption at the buyers end, for example if the buyers decide to impose say
07:56import restriction,
07:57disrupting the supply from Thailand and Vietnam to the buyers.
08:01Or if the buyers impose price controls or if there's any logistical disruption which is common at times during times
08:09like this.
08:10It can affect the export earnings.
08:12And this is important because export earnings are important to also finance imports of certain key commodities such as food.
08:22And also important for the growth and also environments within the country.
08:26And this can lead to then economic crisis due to external factors like trade.
08:32But the most important findings that we discussed in the paper is of course all these four countries, they have
08:38a common vulnerability.
08:39Which is their import sources are highly concentrated in just a few countries.
08:47Mostly just four or even two supplier countries.
08:51That means the bulk of their food supply when they do import just come from two to four partner countries.
08:59If anything happen to just one supplier, their food supply will be significantly disrupted and they'll have to seek an
09:06alternative source.
09:07I mean that's interesting again you know different import-export levels, different models but each with their own set of
09:16risks.
09:16And you emphasize on you know the heavy concentration in imports of particularly key commodities even input like fertilizers and
09:24feed.
09:25Why does this concentration matter so much in the supply chain?
09:30And perhaps I think you know haven't we learned the lesson from the COVID-19 pandemic where we've seen you
09:36know disruptions.
09:37And you know there's been a lot of talk about the need for market diversification not just in food but
09:44you know across all economic sectors.
09:46A lot of analysts have been calling that for years now.
09:49But you know why is this concentration still the case to this day?
09:53Is it due to these you know geo-economic contexts that we were talking about?
09:57Maybe Anis can help us.
10:01So I think what we need to understand is that import dependence is not really a weakness.
10:08But if the sources that we import our food from is adequately diversified.
10:15So in a way that no single supplier can significantly disrupt the supply continuity.
10:21Right.
10:22So the real risk is when the import dependence is coupled with market concentration.
10:26So whereby one country is relying on just a few partner countries for the bulk of the key food commodity
10:34with high demand.
10:35Right.
10:36So we acknowledge that sourcing from fewer suppliers do have its own benefits.
10:41Like for example operational efficiencies and also the prices are generally lower as well.
10:49But there are risks that comes with this right.
10:52So whenever like the supplier country cuts off exports and if they impose like price controls or shifts their trade
11:01policy.
11:02Right.
11:03So in that scenario the country will be left scrambling to seek for alternative.
11:08And this is especially I think important because they need to fill such a large supply gap.
11:18Right.
11:18Like for feed for example we source our soybean.
11:2490% of it is sourced from just one country which is Argentina.
11:28So I think this risk is especially costly and increasingly volatile and also uncertain trading environment that we are in
11:38now.
11:39Dr. Aini earlier you were talking about you know the different models in you know major countries in Southeast Asia.
11:45Looking specifically at Thailand and Vietnam being crucial food exporters.
11:50Not just globally but of course within ASEAN.
11:52And you were talking about potential disruptions to food production say of course with climate with the El Nino phenomenon.
11:58There could be several factors that we're looking at.
12:01How important are these countries specifically Thailand and Vietnam to the Southeast Asia's overall food security architecture.
12:10We were looking at you know say any of these climate you know cause disruptions or any other disruptions.
12:15You know would we be looking at severe disruptions in supplies of rice perhaps.
12:21Okay maybe I'll start with just talking about how Vietnam and Thailand contribute to the regional food security.
12:29Because both Vietnam and Thailand mentioned just now they are strong food exporters in this country.
12:36Because they have strong domestic production capacity with surpluses that can be channeled to the international market.
12:42In that way they are actually directly contributing to a country food security.
12:47To put that in scale for example for Malaysia Thailand is the largest supplier of chicken,
12:54third largest supplier of fruits and vegetables and the fourth largest supplier of rice and fish to Malaysia.
13:02Vietnam on the other hand is also a major supplier of rice and vegetables to Malaysia.
13:08That means a lot of our supply what we see of these food commodities part of this come from just
13:14these two countries.
13:15So in a way that if they are doing well with their harvest, food production and also supply chain,
13:22that means consumer or supplier in Malaysia will reap the benefits of having an assured supply stability
13:30and also certainty especially in volatile times like now.
13:35But in the case that they are not doing well if they face production shortfalls due to import shortage
13:42or due to climate disruption due to El Niño for example.
13:46If they let's say decide to change their trade policies due to reasons such as dual political tensions or logistical
13:55disruption
13:55or change in just trade policy can mean that what is being flowed to us will be reduced.
14:02And I mentioned just now, Malaysia we do rely on import because our domestic production capacity is not there yet.
14:11At the same time, like Anis mentioned, import dimension is not a problem when we adequately digestify our sources.
14:18But the problem is we do concentrate where our food comes from and that just tends to be in a
14:24few countries.
14:25So yes, our food security, not just Malaysia food security but in the region, in Southeast Asia,
14:33food security of that region is also dependent on these countries like Vietnam and Thailand
14:38who are strong suppliers to the region.
14:44Now, in the context of geo-economic issues that we are seeing causing a lot of uncertainty and instability in
14:51the past few years,
14:52how does keeping Southeast Asian countries' import dependent play into the global power competition?
14:59There is a lot of mention of this, of course, that it is not just due to the recent conflict
15:04in Iran
15:04but it stems from much, much longer than that, a much longer historical arc, particularly drawing on the US-China
15:12global competition.
15:14So how can we understand it in that context?
15:19The context of our paper is actually not focusing on just on the war in Iran
15:23but also how we put the context of the greater geo-economies focusing on the major powers, US and China.
15:33So the food structure, like I mentioned just now, is not a purposive design of the respective countries in the
15:41region.
15:42We don't design the trade structure ourselves.
15:46It's shaped by other external factors that are beyond our control.
15:49For example, the interaction and the geo-economies of the major powers, the US and China,
15:56they can shape how the long-term structure of the trade, supply and also investment.
16:03For example, China.
16:05China is actually one of the top export destinations for the region, including Malaysia.
16:13At the same time, it's also a major supplier of key food commodity and also agricultural commodity to the region
16:21as well.
16:21But the relationship is asymmetrical.
16:24In terms of the US, the disruption to the US-China agricultural trade relationship has prompted the US to shift
16:33to now the Southeast Asia region
16:36as a market for their agricultural export.
16:41And that means Southeast Asia now is both a market for their agricultural export of interest
16:48and also at the same time we are also important agri-food producer of certain commodities that they need to
16:55meet their demand.
16:56That puts us in a relationship now where we have to navigate carefully between these two competing major powers.
17:05And the food supply and also the food and also input dependency that I discussed earlier can manifest as vulnerabilities
17:15that can be exploited
17:16when major powers or economies compete or with competing interests.
17:24And Southeast Asian countries because of this dependency on commodities, input, trade and export and import significance,
17:33that can put us at a tough position where we have to navigate this situation carefully now,
17:38especially during the crisis when trade is increasingly being used as a tool because of job political reasons.
17:49And we're seeing this a lot recently, especially with the issue of US tariffs over the past year.
17:54What comes to mind, I think, is the reciprocal trade agreement as well,
17:59where there wasn't a lot of talk about agricultural imports from the US, but I think if we were to
18:06look at the sort of footnotes,
18:08I think there's a lot that can be said about it, especially in this context.
18:12And if we were to see current geopolitical tensions continue, particularly the growing US-China competition,
18:19where would you see the biggest risks emerging for Southeast Asia over the next five years and Malaysia including?
18:26I think there will be several risks that might emerge for the next five years if the current tensions continue.
18:33So firstly, I think it's the lack between the producer and also consumer prices.
18:38So right now, consumer food prices are still relatively stable in Malaysia.
18:43But we can see that the producer prices, basically what farmers and also producers pay, are going up.
18:49So the consumer impact has not arrived yet because we have existing supplies and also we have price controls in
18:58place.
18:58But the effect might come in the next few months.
19:01So what happens is that in the next five years, these effects will keep on compounding, whereby each issue will
19:09add a layer.
19:10And then we can see that, we might see that the prices may never really come back down.
19:16And I think secondly is there is a risk of supply uncertainty as well, whereby Southeast Asia, as mentioned by
19:23Dr. Aini just now,
19:25relies heavily on trade, right, both within and outside the region.
19:28So if the tension continues, we might see like disruption in shipping routes, trade flows and also the key suppliers.
19:39So all of those disruptions might become more frequent, right?
19:43And I think third, there is also a risk of export bans.
19:46So this was not mentioned in our paper, but I think it's an angle that is really interesting because we
19:52have seen like similar things happening, right?
19:57During the past food crisis and also during COVID, whereby food producing countries like India,
20:04so they impose export ban, right, on certain food commodity.
20:09So, and these decisions I think are quite understandable because the country governments will usually protect their populations first, right,
20:19when a crisis happens.
20:21But what happens is that when large exporters start to limit trade, the effects can have like ripple, can have
20:29ripple effects across the global markets.
20:32So for countries like Malaysia, where we rely on a lot of imports for a number of food products,
20:38this can mean that we might have tighter supplies, our prices might go up and also we might have fewer
20:45options to source the food from.
20:48So with these vulnerabilities, these threats and risks in mind, what would be the best way for Southeast Asian countries
20:55to protect themselves without verging into isolationism, protectionism?
21:01You know, we don't want to fall into that trap either, but you know, what would be the best way
21:04to protect Southeast Asian countries, particularly the most vulnerable ones from these threats?
21:10So I think one of the key messages for our paper is that food security should not be seen as
21:18a choice between self-sufficiency and trade because all countries need both.
21:23So when we talk about cooperative self-reliance in the paper, so we mean that we should strengthen the domestic
21:30production while also strengthening the regional cooperation.
21:35So for ASEAN, that means investing in domestic production where possible and also making better use of regional trade, information
21:43sharing and also existing ASEAN mechanisms.
21:46So we already have a lot of mechanisms in place like the ASEAN plus three emergency rice reserve.
21:53We also have the ASEAN food security information system.
21:57But the problem is that these platforms or mechanisms, they're not fully utilized.
22:03So, and then we have countries like Thailand and Vietnam who are already major food suppliers in the region.
22:11So food security can be strengthened by leveraging these strengths rather than having all countries to produce everything on its
22:20own.
22:21So this is what distinguishes cooperative self-reliance from protectionism.
22:27So protectionism basically focus on restricting trade and also acting alone.
22:32So as I mentioned just now, we saw during the food crisis and COVID whereby export bans, they help one
22:40country but hurt its neighbors.
22:43So cooperative self-reliance I think is important because it recognizes that no country can produce all of its food
22:50and also agricultural inputs on its own.
22:54But instead it focuses on reducing excessive dependence, diversifying risks and also building stronger regional partnerships.
23:04I mean, this idea of cooperative self-reliance, how do you think policymakers in the region can balance or navigate
23:14this idea of cooperation within the region?
23:17But at the same time, navigating this tight rope that is the growing competition between the US and China.
23:24I mean, we're seeing things like US tariffs, the art agreement being used as a tool, as you said.
23:31I can assume it's not easy to navigate that and we're increasingly seeing, you know, food exports or imports being
23:37used.
23:38You know, if we're looking at the fine print of the art agreement, there's a lot to do with food
23:43security.
23:44How do you think policymakers might want to navigate that?
23:48Do you think that is sort of mutually exclusive or do you think that's something that can be balanced?
23:54Yeah, I can take that question.
23:56I think yes, it is not, it's something because I say it's cooperative self-reliance, meaning that it's more about
24:04one country's strength can complement the other country's weaknesses.
24:08And already we have existing mechanism through ASEAN to actually, to foster collaboration.
24:14It's just that the mechanisms in place currently we have in place are not effectively or frequently used enough to
24:22actually foster the concept of cooperative self-reliance.
24:27But like what Anis mentioned just now, no one single country can rely, produce everything on its own, can rely,
24:33and especially in a currently increasingly volatile and uncertain environment right now.
24:39No country should take on a national protectionist model.
24:47But at the same time also, that is, we can see in our food supply dependencies and also straight structure.
24:55There is already a certain level of relationship or cooperation in the regions between Southeast Asian countries in terms of
25:05trade.
25:06But are these being used strategically to actually form some form of, not just bilateral trade relationship,
25:16but also regional cooperation that is beyond just two countries bilaterally.
25:22So yeah, I think this is also requiring policymakers to move away from the concept of food security means we
25:31must boost our domestic production.
25:34And just acknowledge the fact that import dependency is not necessarily a bad thing.
25:40At the same time, we should not be closing inwards by adopting a protectionist and nationalist approach
25:46because there are advantages to embedding itself in the regional and global trade.
25:53Then it gives us, in times like this, at least give us a bit of token for negotiation.
25:58Let's say with other countries, in terms of your strength and their weaknesses,
26:03or even for the channeling of food commodities for, let's say, internet use,
26:09even though it's a question of substitutability is something that we need to explore a little bit further.
26:17And perhaps this can be presented with the opportunity of more South-South cooperation as well,
26:21which is what was discussed in the paper.
26:23And of course, plenty more I'd like to discuss with the both of you.
26:26A very interesting topic, but that is all the time that we have today.
26:29Thank you so much, Anis and Dr. Aini, for joining us today on Awani Global to tell us what the
26:35trends mean
26:35in the geoeconomics of food dependencies in Malaysia and Southeast Asia,
26:39talking about deeper structural food dependencies in the region and how cooperative self-reliance might look like
26:48in the ASEAN mechanism and framework.
26:52That is all on Awani Global this week with me.
26:53And I would have to catch you next time.
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