Rice is an important security crop which acts as a staple food in Malaysia. During the last 30 years, rice cultivation in Malaysia was converted from a subsistence farming crop, to a commercial crop which is highly controlled and subsidized by the Malaysian government. As rice is a major staple food in the country, a large range of protective policies has been introduced by the government to protect rice farmers’ incomes and to ensure the existence of sufficient rice supply in the nation due to the country’s interest in food security. Local rice farmers produce approximately 60-70% of the domestic rice supply in the nation, while imports fill up the remaining 30-40% of the rice supply. Another interesting aspect of the Malaysian rice market is that rice firm Malaysia’s Padiberas Nasional Bhd (BERNAS) acts as the sole importer for foreign rice. On top of that, BERNAS is also responsible for the distribution of paddy price subsidies to local rice farmers and acts as a last resort buyer at Guaranteed Minimum Price (GMP), fixed at RM550 per metric tonne. According to the Finance Ministry of Malaysia, the government allocated RM528 million as subsidy for approximately 700,000 metric tonne of rice as of 2013, under the nation’s Rice Subsidy Programme. The cheapest type of rice which is subsidized by the Malaysian government is the Super Tempatan 15%, priced at RM1.80 per kg.

The Malaysian government aims to protect the interest of local farmers as well as low income earners via its Rice Subsidy Programme. One of the main reasons as to why the nation’s government should continue subsidizing rice is to increase the self-sufficiency level of the local rice market. According to BERNAS, the firm imports around 30% to 40% of Malaysia’s domestic rice demand to fulfil the nation’s rice requirement. This shows that the local rice market’s sufficiency level is only around 60% to 70%. Therefore, in order for Malaysia to achieve a 100% sufficiency level, rice production in the country must increase.