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Malaysia charts new steps to keep rice prices low, supply high

By SEAN YOONG,Associated Press Writer AP - Tuesday, May 13

KUALA LUMPUR, Malaysia - Malaysia's government has announced fresh measures to stabilize rice prices and supply, including spending at least 725 million ringgit (US$230 million; €150 million) on imports of the grain.

Prime Minister Abdullah Ahmad Badawi said in a statement late Monday the steps were meant to ease pressure on consumers who were struggling with escalating prices of necessities.

He said the government will impose price controls on high-quality grades of locally grown rice starting June 1 because retailers were selling those brands at increasingly high prices.

Authorities will encourage Malaysian farmers to grow more rice to bolster supply by raising the minimum guaranteed market price that they receive for selling the commodity, Abdullah said.

The government also plans to spend at least 725 million ringgit (US$230 million; €150 million) to subsidize the import of 550,000 U.S. tons (500,000 metric tons) of rice, he added, without specifying from where the rice would be obtained or when.

Malaysia currently imports about 30 percent of its rice needs. Rice prices have surged amid poor weather in some nations that produce the crop, and due to demand outstripping supply.

Officials "have considered the interests of all parties to protect the welfare of consumers and rice farmers in the issue of rising rice prices," Abdullah said.

The measures are likely to increase the burden on state subsidies for gasoline, food and other essential items, which are expected to hit 50 billion ringgit (US$16 billion; €10 billion) this year. Fuel and food costs in Malaysia are among the lowest in Asia.

The government provides rice farmers with free fertilizer and concessions to keep prices under control and spends about 4 billion ringgit (US$1.3 billion; €810 million) per year on the food-related subsidies, including directly subsidizing flour, white bread and cooking oil.

Separately Tuesday, Malaysia's rice industry regulator, Padiberas Nasional, signed a pact with Thai rice exporters in Bangkok to buy 220,000 U.S. tons (200,000 metric tons) of rice, Malaysia's national news agency Bernama reported. There were no immediate details on how much the rice would cost and when it would be delivered.

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