Malaysia to Stockpile Staple Foods to Avoid Shortage
By Soraya Permatasari and Manirajan Ramasamy
Jan. 24 (Bloomberg) -- Malaysia, the world's second-biggest palm oil producer, plans to stockpile cooking oil, rice and other essentials to safeguard supplies and stabilize prices that have surged to records globally.
An agency called the National Stockpile will be set up under the National Price Council, Deputy Prime Minister Najib Razak told reporters in Putrajaya, outside Kuala Lumpur, today.
Malaysia, like China, caps prices of some everyday commodities to contain inflation after wheat, soybeans and palm oil soared to their highest ever. The country's inflation probably reached a 10-month high in December as food costs surged and floods disrupted supplies in parts of the country, a Bloomberg News survey showed.
``This buffer stock is to make prices stable,'' said Mad Nasir Shamsudin, professor of agricultural and resource economics at Universiti Putra Malaysia in Selangor. ``Without subsidies, there's no way we can go against price increases.''
India, China, Indonesia, Thailand and Malaysia are among countries that have sought to control food prices to curb inflation and avoid social instability. Thousands of tofu and tempe producers rallied in Jakarta on Jan. 14 to demand the government lower soybean costs.
China froze energy prices this month, tripled price-fixing fines and added curbs on increases for meat, eggs, cooking oil and noodles. India cut the import tax on edible oils four times last year, and limited exports of rice, wheat, corn and lentils.
Cooking Oil
A cooking oil shortage in Malaysia forced the government to flood the market by raising supply to 70,000 tons in January from a monthly average of 55,000 tons in 2007.
Prime Minister Abdullah Ahmad Badawi may meet the National Price Council Jan. 27 to decide how much money will be allocated and which items will be included, Najib said. The proposal won't reduce palm oil exports, he said. Malaysia and Indonesia supply almost 90 percent of the commodity.
``The government wants to ensure a proper supply of essential items and the stability of prices,'' Najib said. ``This is a policy shift. We have yet to work out the details.'' He declined to say if fuel will be included in the plan, adding that most of the items will be ``non-perishable goods.''
Palm oil prices climbed 64 percent in the past year and reached a record Jan. 14. That may have driven some producers of cooking oil, a controlled item in Malaysia, to hoard supplies and hold out for a higher price, Minister of Domestic Trade and Consumer Affairs Shafie Apdal said Jan. 7.
To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
